Q1 18/19

Aug 2, 2018

Good day, ladies and gentlemen, and welcome to the Q1 FY 'nineteen Earnings Conference Call of Piglight Industries Limited hosted by ISL Capital Limited. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Listen Please note that this conference is being recorded. I now hand the conference over to mister Abhi Mehta from IFL Capital Limited. Thank you, and over to you, mister Mehta. Thank you, Margaret. Hi. Good evening, everyone. On behalf of IIFL, I would like to welcome all of you to the one q f one nineteen conference call for Pedalite Industries. From the company, we have with us the key senior management, including Mr. Raghuva Parekh, Executive Director and Mr. P. Ganesh, CFO. I would now like to hand over the call to the management for their comments. Over to you, sir. Good evening, everyone. I will begin with a summary of the financial performance for the quarter ended June 2018 for the stand alone business. On a comparable basis, net sales at INR $15.92 crores grew by 21.2% over the same quarter last year, with underlying volume and mix growth of 17.9%. This was driven by a 20.2% growth in sales volume and mix of Consumer and Bazaar products and 7.3% growth in sales volume and mix of Industrial products. EBITDA before non operating income at INR $3.59 crores grew by 17.3% over the same quarter last year on the back of input led contraction in gross margin and higher ANSP spend. Profit after tax during the current quarter at INR $2.67 crore grew by 23% over the same quarter last year. Now I will move to a summary of the consolidated business for the quarter ended June 2018. Net sales at INR $18.18 crores grew by 23% adjusting for GSP impact over the same quarter last year. This excludes the sales of Cyclo division of Pignite USA, which was sold in June 2017. EBITDA before nonoperating EBITDA stood at INR $3.84 crore for the quarter and grew by 19.6% over the same quarter last year. Profit after tax during the current quarter at INR240 crore grew by 6.3% over the same quarter last year. The lower rate of growth in consolidated PAT as compared to the growth in EBITDA is mainly on account of elimination of profit on intercompany transfer of certain intangible assets and the effect of tax thereon during the current quarter and the profit on sale of SyFlo business in the first quarter of last financial year. We have delivered another quarter of strong double digit volume growth. We see gradually improving demand conditions, while input cost volatility and currency led inflation remain areas of concern. We remain committed to our strategic agenda of delivering consistent and profitable volume led growth. The floor is now open 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 telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset mode while asking your question. Anyone who would like to ask a question, please press star and 1 at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Please go ahead. Sir, thanks for the opportunity and with the volume growth. Congrats on that. My first question is on ICA. After three quarters of negative growth rate, we are seeing 41% growth rate in this quarter. Is it because of the sales and marketing efforts? Or is it because maybe the new factory has started? Could you discuss whether this is sustainable? Yes. So couple of points on this front, Adhanesh. One is that the last couple of quarters were also impacted to some extent because of the DRL matter which we had. That is behind us. The supply situation is back to normal, and the results is gearing up on that front. So that's one part of it. The second part, which I would also like to highlight is that the western part of the business is now with ICAPID Lite and for for part of the quarter. So that's also contributing to, an increased growth rate. If you normalize for that, iCapitalite has still grown strongly at 20%. And the margin profile, where do you see currently, it's around 5% kind of margin. Obviously, the longer term, they should be much higher. But when do you see the margin trajectory actually improving towards the double digit? So as we mentioned previously as well, very soon, would have manufacturing, which is starting off, and the business is also, as it grows, will develop in terms of scale. And both of these factors should contribute to an improvement in margins. So going forward, we would expect margins to get better on these comps. And when does the factory start? Any time line, can give? Yes. It's a it's factory start in a quarter or so. The whole of the manufacturing has started. Right. And you get any tax benefit there? No. My second question is on the If I see most of the subsidiaries, if you see, either EBITDA is down or it is negative except Middle East Business and Bancorp. And on the one twenty five core sales, you're doing just a three core EBITDA. So any comments why such a low EBITDA and what is what is the game plan here? So if you look at the international business, The US business had some impact on account of a drop in the adult coloring space. And a couple of geographies like Brazil and Egypt, they have a bit of uncertainty on the macroeconomic front. Beyond that, the other factors which have impacted is an increase in book cost in some of the geographies and a couple of geographies like Bangladesh and Sri Lanka, we are also investing significantly. So it's a combination of these factors, which has resulted in a lower EBITDA. Well, to add to it, if you look at our Bangladesh and Shilantra subsidiary, we have good position in both the countries. The sales growth is good. Quarter to quarter margins can get impacted, but we have good business in both the countries. As far as some of the other countries go, there are some challenges where in most of the places we have taken action like in U. S. And Middle East, not U. S. But Brazil and Middle East to cut down the losses into the Bakken. So some of those actions have been working. And the last question, what is the current van prices? And on pricing, due to, intend to take more hikes? In the past, you have, restricted your hikes to one in a year. Any change there? Yes. So if you look at bank prices, the average for us in quarter one was around $1,200. If you were to look at today's spot purchase rate price, it's closer to $13.25. Yes. Some amount of price increases have been taken both in q one as well as post end of Q1. And depending on how the raw material position shapes up going forward, in case of increases, we could see some further increases. Sir, what was the ad spend, around 3.5%? No. It was about 4.7%. Okay. Okay, sir. That's all I can say. Ad spend during the quarter has been higher than the annual average. But full year, you are still maintaining three and a half to 4%. Right? Yeah. Full year, you should still be in the 4% or thereabout range. Okay. Okay, sir. Thank you. Thank you. The next question is from the line of Gunjan Pithiani from JPMorgan. I had a couple of follow ups on the international business. On the Brazil, we've stated our intent to divest it at some point. Is there any progress on that discussion or this that plan is completely you know, it's not being considered at the moment? No. Our focus in Brazil has been, first, is to minimize our losses, which if you see over last several quarters, our losses have been minimized or and have come down. So that has been our primary focus. Brazilian economy continues to see various ups and downs, which is impacting them. So we have said in the past that we are open for strategic options, but the current priority is to continue to strengthen the business to eliminate losses. And, also, the the team local team has taken some good initiative to introduce some new products and, you know, try to find a way to grow, even though the economic situation has not been so good. But are we at all, engaging or trying to figure out a way to either withdraw from that market or divest that investment? No. Currently currently, we continue to operate. But if any strategic option were to arrive, we will carefully take a look at it. But local economic situation there is a bit difficult. So if any opportunity or any strategic option were to come up, we will certainly take a good look at it. But in the meanwhile, the effort is to continue to operate it in an efficient manner with minimal losses and some profits. And even on The U. S. Side, this this coloring business has been slow for last two quarters, if I recollect. Is there something to really worry about that this business is also going to have issues in future? If you look at Sajidar business, we had couple of years of very high growth. In America, there was this whole segment, which is adult coloring segment, which has seen huge growth. These are some trends which happen from time to time. So this trend has really picked up in America, and this result led into very significant growth for Sajidat. And the slow growth maybe for four to five quarters and not for a couple of quarters. So there has been slowdown mainly because of this, where we had seen very sharp increase in sales, which has now come down. But we continue to have some very good customers like Walmart, Amazon, Hobby Lobby. We continue to work with them, and we continue to have a good business with some of them. So U. S. Target our business is in better situation, but it's not a very large business in terms of The U. S. Type of a market. But we still have good product portfolio, and we have good good customer base. Okay. Moving on the domestic business, on the van prices, now you guys have taken some price increases. Are those enough to offset the input cost pressure that you've seen, or you would look at more price increases, going ahead? So if you look at the quarter one results, there is margin contraction of about point 9%. And as I mentioned, we have taken some increases in quarter one. We have taken some more increases towards the end of quarter one. Depending on how the margin depending on how the raw material prices situation goes forward from here, we will we will take cost in terms of pricing. Sir, what are the kind of price increases you've taken so far in 1Q? And I also noticed that you mentioned July also some price increases have been taken. So the prices which have been in the range of 3% to 5% in the product products that we have taken increases. Sir, the price increase is in in different products. We have not taken in the same product price increase in both June and July. And this is again not a possible increase? Okay. Only invited, is it? No. These are a specific product. So beyond van vessels, there are other raw materials which are in the solvent based, rubber based, etcetera, which have also seen price increases. So depending on the product, which has seen raw material price increases, we take price corrections. Okay. And then last question from my side. Now that this is fourth quarter of double digit volume growth that you guys have reported, now are you cons now are you would you now call out that there is a decisive recovery in demand outlook now and the industry is growing at this level or is it market share gains? Because this volume growth, if I notice, has been for the last four quarters, which is fourth GST, and we did see rates coming off for Adhesive. So is it market share gains? Is it industry growth being If you can just give more color around the demand outlook, please. So overall overall, the demand inflation definitely is improving. It's a gradual improvement which is being seen. So while there are volatility around input costs, while there is currency lag inflation, etcetera, overall, we are seeing a gradual improvement in the demand situation. Any market share gains? Yes. Certainly, some of the products, have definitely gained market share. Okay. Alright. Thank you so much. Thank you. The next question is from the line of Tien Tsin Kundaloy from Villa Mutual Fund. Please go ahead. Hi, sir. Congrats on good set of numbers. I wanted to understand more on the construction chemical. How is the growth beyond the construction chemical? Specifically on the application, Mina and Percept has done very good set of growth growth. So if you can highlight the growth plan there? Construction chemical business has done well. Most of our product segments have done well in Q1, and most regions have also done well. As far as V9 percent growth, a lot of initiatives after their acquisition, a lot of initiatives have been taken to improve demand to develop new customer segments. Some of these initiatives are now working. Earlier, they were very much dependent on one or two end user segment. We have expanded that base. We have added more people. And those initiatives are resulting into better growth despite the construction market being not so favorable. Sure, sir. If you can just highlight with MENA and Percept, how can that be a growth driver? Will you roll it to residential? Now if I'm understanding it right, this is mostly for industrial and residential building. Will it roll it to end customer also? And can this be a big road driver going forward? As of right now, we are not looking at individual small building or a plant or anything like that. There is a huge opportunity into, you know, commercial complexes, manufacturing plant, office complexes, infrastructure projects, and large buildings. So these are the kind of sectors where Nina and Percepta are operating. So basically, larger projects and not an individual small house or a a flat or anything like that. So we believe there's a big opportunity in that segment, and currently, we are focused there. Sure. Thanks, sir. I wish you all the best. Thank you. The next question is from the line of Gunal Shah from IFL. Please go ahead. Yes. Good evening, sir. Thank you for the opportunity. So my first question is regarding the gross margin moderation that we have seen. So while you have suggested that VAM prices have been higher and we have taken price increases, between the two segments we have, can you give a rough qualitative idea on where the margin pressure is higher? Is it on the industrial product side or on the consumer and bazaar side? And where the price increases have been as well? No pressure is in both. If you know, like, say, a product like vinyl acetate monomer is used across our portfolio. Our industrial business also uses it as well as our consumer and bazaar. If you look at imported raw material, again, both the segments use imported raw material. So there has been some impact on both. So again, the price increases which we have taken, that's also across both the segments. Okay. Okay. And my second question was regarding the tax rate. So you said it is because of intercompany transfer of some intangible assets. Can you give us a bit more details on, I mean, how the dynamics works exactly? Yes. So the so the IPR asset pertaining to the Woodfin business, Woodfinix business, which is there in FitLife, that has now moved to Aika FitLife, which is our joint venture because that's the company which specializes in Woodfinishes. So that is a, intercompany profit which arises on the transfer of these assets. On consolidation, this profit gets eliminated. But the stand alone business in which the profit the stand alone grid like business in which the profit is recorded, the stand alone business pays tax, which remains in GBM. So that's the reason that's the reason you are seeing a decent PAT increase. And in the same breath, last year, q one, we had the sale of Pyslo business, by Midlife USA and where there was no tax impact on the profit on sale of Pyslo business because of carryforward losses. So because of both of these factors, you are seeing a lower growth rate as per PAT concern. Sir, higher tax rate on consolidated, as Ganesh explained, is very simple that if there is interest of the income, because you are not in consolidated, that income gets eliminated, but tax paid on that income in the stand alone account also shows in consolidation. So that results into a higher tax in consolidated without the corresponding income. Okay. Okay. And just a follow-up question, what would be your guidance for the tax rate for the full year in FY 'nineteen? So tax rate as well as FY 'nineteen would not be very different from FY 'eighteen. What we are seeing what we are seeing in quarter one is more of a one off impact. Okay. Okay. It is slightly higher. So also versus FY 'eighteen, the tax rate will be marginally higher because one of our clients, which have tax exemption, has now gone out of Okay. Okay. Okay. Thank you. That's all for me. Thank you. Anyone who would like to ask a question, you may press star and one. The next question is from the line of Ritesh Shah from Investec Capital. Please go ahead. Sir, my first question is on the market growth rates. If you could provide some color on the market growth rates for our key products, it would be helpful. So again, we are seeing good growth across the different categories that we operate in. So it's been across the board across the board growth. Alright. And, sir, would it be possible to quantify the market size over here? So if some does drill into your past annual report, can recover on 17% CAGR growth rate over the last ten years, which is quite encouraging. But if you could provide some numbers over here, like, what the market size is, like, is it, like, 10,000 crores or 13 to 15,000 crores? So that's something on the other side and specifically on the construction chemical side as well, what is the market size that we are looking at? There are no real published data. There is no real there is no accurate data which would define the market size. But in our consumer and butter adhesive, you can assume that it will be in the range of around 50% to 60% would be our best estimate. But there is no accurate data to support this. So I would like to say it with that disclaimer. As far as waterproofing market goes, again, same thing, there is no accurate data available. But in that case, the market size is not really relevant, but the market potential is very important. The current penetration level of waterproofing products still continues to be very low in terms of both either people are using conventional waterproofing method or not using waterproofing method at all. And hence, the growth potential of water cooking chemical is substantial. Current market share is not very relevant. In industrial product, if you look at it, in industrial product, our market shares are lower. There is a greater competitive intensity there. Okay. And, sir, in each of these three, how important is imports as a segment? Like, do we see this as a threat going forward? Or post USD, do you think this number actually will go down and it enhances our growth opportunity? See, most of these products, there is no I mean, there is there is the the the market share of imported products is quality, telling what you're asking. The market share of imported products is not very substantial at all. However, in all of these products, there is a good amount of competitive intensity. There always has been. There are large multinational players. There are national companies, regional companies. So there are various companies operating, but the share of imported products is not substantial. Okay. And sir, last question, if I may. In other sales, what is the segment which excites us more? So PVA definitely is something which is very big for us. But how do we look at Primo, Radiation, Clarabelle, the other sub segments which are there? We find all the segments exciting. We have a very wide range, which you know, right? It starts from school children to household to all kind of categories to industries. So we have a and all segments are exciting. Each segment is unique. And we have good product portfolio. We have strong brand across most of the segments. So I do not like to distinguish between one over the other. We believe there is a good growth potential in most of the resale product segments. Okay. That helps, sir. I'll turn back to two formal questions. Thanks. Thank you. The next question is from the line of Prashanth Kuti from Sundaram Mutual Fund. Please go ahead. Yeah. Hi. Thank you for the opportunity, sir. Just sorry for dwelling this question once again. But typically, if you look at our basis from here on in terms of both revenue side as well as our EBITDA growth rates, even for that matter, the gross margin numbers, we we feel pretty much in a high getting into a high base zone. Of all, just wanted to understand over here is that the gross margin that is clocked for the quarter, is it that Q1 is usually a weak quarter in terms of gross margins and then it usually picks up? No. I do not care that the gross margin level, you know, quarter to quarter, there should be significant difference. If there is a difference, it is not because of nature of business or seasonality, but it's more because of the prevailing raw material prices. What we have done on the selling price increases. So gross margin are not dependent on any kind of seasonality as far as you go. Okay. But the reason I ask that is because if you look at the base for the next three quarters, we're only looking at about 53% kind of the gross margin number, whereas we clocked about 50.5 for the quarter. So just understanding that even after taking some price increases, we haven't really seen a pickup or are we probably expecting this pickup to happen as the quarter goes by is what I was trying to understand. Some price increase action, as Ganesh covered with you, we have already taken some price actions in the first quarter. We took some price action in July. But you must remember that we have been saying for last few quarters or maybe last year, year and a half, that our gross margins were at historic levels and some correction in gross margin was possible. Some of the raw materials like Vaas were operating at $800 level, which was which was quite low. Now that is corrected to $1,213,100, so some compression on gross margin was likely to happen. But overall, our operating margin depends on both combination of the kind of sales growth that we achieve and the gross margin. So going forward, the operating margin will depend on what kind of top line growth we deliver, while there may be some contraction on gross margin as compared to last year. Okay. Another element which can come into play is the relative change in mix. So these are the factors which can impact the gross margin. Okay. Sure. But just as an extension, since you spoke about the mix as a whole, especially post GST and especially the cotton adhesives, have we seen an acceleration in growth rates for, let's say, our premium segment or probably the value added offerings in terms of or probably as the demand increase to that because that is probably what drives our mix element. Any such instance, Mooda? So again, as the tax rates moderate and come down, you should see a natural uptick as regards our demand situation is concerned. But there are multiple factors like you had a low base because of GST. Before that, you had demonetization, etcetera. So it's difficult to pinpoint how much of the growth is on account of which factor. But directionally, if you look at it with lower tax rates and cheaper products to consumers, demand should go up. But have we seen instances of that at least in the last three, four quarters because we've been seeing double digit volume growth rates? Again, as I mentioned, while that could be an element of that, it's difficult to pinpoint. And also, as I told earlier, we believe that we have gained share in some of our product categories. Okay. Okay. Okay. And just one clarification over here. The other expense number for the last two quarters has been reasonably high. Is only because of the ad expense element? Or is there any other element? Yes. The increase is primarily on account of higher A and S expense. Okay. Okay. Sure. Sure. Thank you very much, and all the very best to you. Thank you. The next question is from the line of Nimit Shah from ICICI Securities. Please go ahead. Yeah. Good evening, sir. Sir, I just wanted to know the amount of this profit because of the thing the company transfer, which has been included in stand alone and not in consult. Yeah. So it's an amount of about 33 crore. Okay. So entire difference between the other income on stand alone and consult is because of that. Yeah. Thanks. Thanks a lot. Thank you. Anyone who would like to ask a question, you may press star and 1. The next question is from the line of Amnesha Dharma from Prabhuda, Seradhar. Please go ahead. Yeah. Hi, Abhish. A few questions from my side. Yes. Yeah. First being that in this 33 crores of intercompany transfer, what is the how much tax we have paid on this? It's a 23% tax on that. 23 percent? Correct. Okay. Secondly, if we look at our stand alone numbers, our consumer and bazaar growth is 23%. Now out of this 23%, can you give some granularity that which segment, say, is Art Material, adhesives and Construction Chemicals, three segments are there. So which one has grown faster where we are witnessing more traction? So again, the growth has been good across the categories that we operate in. While we don't share category specific growth numbers, what I can share with you is that the growth has been good across segments. Okay. No, you see, my question was because if I look at, say, some of the other industries which are actually users of our products, may it be, say, your plywood or laminate or some of these, your ceramic tile companies, etcetera, there, the growth rates have been very muted. Even some of the largest players, have reported, say, very low single digit or even decline in sales. So there's a context in which I am looking at this question. No. I'm not familiar with the growth, which growth figure you are referring, but I can say that in, you know, most of our bigger product categories, we have seen good growth rate in the first quarter. Sir, my you have also indicated that there have been some price action. So can you give us some idea that what could be the quantum of prices on your average portfolio? Sorry, can you repeat the question? Sir, you have taken some price increases in, say, last quarter and this quarter. So can you quantify that on our average portfolio, what could be the quantum of that? So again again, it's it's difficult to put an average because we are talking about multiple, categories, multiple products. But what I can share is when we've taken price increases, we have been largely in the range of 3% to 5%. And it's not a not a price increase which is taken at a point in time. So depending on how the raw material prices move as well, you would have price increases for a set of products at a point in time for another set of products at a different point in time. Okay. Sir, finally, just one question. If I look at Pedilite over the years, the year our margin guidance year sustainable EBITDA margin guidance used to be something like 19%, which a few quarters back, we update to 21% and then to '22 to '23. So given the fact that now your input costs are firm, so and last year, we had margins of last two years 24, 25. Do you think that we can, again, what sort of, say, medium term margin, your guidance or range we should be looking at? Well, again, again, as we have mentioned, we expect to operate in a band of EBITDA margin, where you could look at a 21%, 22% on the lower end, and we have gone to a 25%, but it's at the higher end. Typically, we would expect to operate within this bank. Okay. So the bank will prevail? Yeah. Okay, sir. Thanks a lot. Thank you. The next question is from the line of Gentle, sorry, from from Medla Mutual Fund. Please go ahead. Hi, sir. On on the volume growth, last four quarters, we're experiencing strong volume growth, and this is also at the time when we were expanding the distribution reach. If you can quantify how much percent of volume growth has come from distribution reach and how much from the general including the demand? And the second question is on the industrial side in the margin. Specifically in industrial, normally, margin comes with a gap because it's difficult to take a price increase. Am I reading it right? So first answer, see, it is difficult to quantify that because when your sales goes up in a town, it's difficult to exactly quantify how much is because of the increase in demand and how much is because of addition of new outlets. One of the reasons for that is also very strong indirect distribution in India. So it is not very easy to quantify that. But one thing I can say that our smaller population sectors are doing at faster rate than the bigger population centers. And, you know, that And how is the mix in smaller population? Is the mix better normally? Mix in terms of product mix? Yeah. Yeah. So product mix is similar. Okay. So the So that's what Yeah. Sorry. The the smaller town you were expanding, has that expensively done, or you think there's more scope to do it? No. There is a yeah. You know, if you go in India, almost 75% of population stays in villages, which are typically 5,000 population and less. So that is real inter client and smaller population centers. So there is obviously significant potential to expand distribution over the years. It's a very, very large population of India stays in small population sector. All of that is all unserved today. A lot of that gets served through indirect distribution. But to answer your question, yes, there is good potential to keep on expanding distribution. Even within bigger cities, there is a lot of expansion happening in terms of periphery areas or new areas. So there is always, in country like India, good potential to expand distribution. So on the margin part? What was the second question? Yes. On the second The adjusted margin. As per the line, IT business is concerned, yes, your understanding is right that these are also negotiated prices because you are dealing with you're dealing with some B2B customers. So yes, these are negotiated prices. And then therefore, in a sense, when raw material prices increase, the pass on is not something which is immediate. Sure. Thanks. And also, lastly on the the XPEN, last two quarter XPEN, as you know, I assume that the margins cushion is not there next two, three quarters. Will you prioritize margin? Or I mean, how is the decision taken with margin in the accident? How does the math work? So in a sense, in a sense, the A and S is saying it's not something we would look at as a lever towards maintaining margins. So as far as EBITDA margins go, that would be more of a combination of things like sales mix, the pricing, cost optimization initiatives, etcetera. So there are multiple levers through which you can actually optimize your margin. And clearly, ANSP is something we would not look at as a primary driver for managing margins. Sure, sir. Thanks. Thank you, sir. All the best. Thank you. Before we take the next question, we would like to remind our participants, you may press star and one to ask a question. The next question is from the line of Amit Pruhit from CGS CIMB. Please go ahead. Yes. Thank you for the opportunity, and congratulations, sir. So just on the margin side again and on the price hike that we have taken. So is the price hike that you indicated is also on the industrial side? Or are we referring to only consumer segment? It is across both segments. Okay. So because at the consumer segment, most of margins have I mean, the performance has been decent. It's just the drag is largely by the industrial business. Is that the right assessment on a stand alone business? So yes, yes, the growth rates have been higher for the quarter as far as the Consumer and Bazaar business is concerned as compared to the Industrial Products business. So also can you speak what's your question on that? No, no. So I'm just saying that the EBITDA growth also for the Consumer Brands segment is up close to about 31% versus an Industrial Business EBITDA EBIT growth of about three percent on the segmental performance. So there is no and clearly, the margin concern is more on the industrial side, whereas consumer results, which grew at 20%, is still at the EBIT level is growing at 31%. So from that context, I'm just trying to understand Yes. Again, if you look at the margin profile, the Consumer and Bazaar business margin profile is definitely higher than the Industrial Products in terms of the margins you make. Sir, higher growth rate has helped that business help better the profit growth as well. Okay. Okay. So operating EBITDA is okay now. Of course. Yes. Operating growth. Yes, you're right. Okay. Rather than the gross margin percent. Gross margin are impacted in both, but higher sales growth in consumer and other help achieve better operating leverage. Okay. Fair. That's that's helpful, sir. Thank you so much. Thank you. Anyone who would like to ask a question, you may press star and one. The next question is from the line of Abhi Mehta from IFL Capital. Please go ahead. Hi, sir. So just a clarification on the margin front. Now, as you rightly as you know, this right to point out that contraction in margins that we see in the industrial segment has been much higher. I'm just trying to versus what we've seen in the consumer segment on a Y o Y basis. Is that that difference largely because of the operating leverage? Would that be a fair thing? No. That's not the only thing. Also, in industrial business, you know, if, I mean, you may be aware that our industrial business is made up of lot of different businesses like organic pigment, industrial adhesive, industrial resin. Each one of them have very different margin profile. So along with there is also a product mix, which also has an impact on margins. So as far as Industrial Products business growth, I would not look at very closely the quarter to quarter number for both sales growth and margin growth. You know, for that business, we have to look at a little longer time horizon. Because there is no impact, it can impact gross margin and sales growth. No, sir. You're right. But, you know, the reason why I was looking at that is because if I recollect in January '18 also, we had a very big impact because of the mix. You know, treatments had grown faster if I recollect. And hence, I was just trying to connect with it, you know, even this year. Is that is that what is the reason, or is there something else as well? So multiple reasons, it's a where there is a higher material cost as well as mix both are the reason. Okay, sir. Okay. So the second thing, sir, while you have indicated the range which you've maintained at around 22 to twenty twenty one to 26%, Would it given the price increases and given where the demand environment is, what could be the risk that you see in you know, would it be would it looks like you're more in the higher end of the range. Would that my understanding is incorrect, sir? Because, you know, you're already clocking at at this juncture, you have done almost 100 bps higher. So even you're almost at 21, 22% right now itself, and you've taken price increases beyond that. So what I'm using maybe do you expect the end of mix was poorer? So is it that you should that we should expect things to be in the higher end of range, or do you see I mean, you see my end. I think when Ganesh was saying a range like that, he's saying it over a long period of time, over the years. We see Opeli as a company in that kind of a band, not from quarter to quarter or this quarter to next quarter. One of the key reasons which will impact the margin is also the kind of sales growth that we achieved. So so what I'm trying to say is quarter to quarter, we're getting EBITDA margin and trying to project for next quarter is something which which cannot be done. The range that we are saying is that we would like to operate in 21%, 22% kind of a range. But actually, it has been fluctuating from around 19%, 18% a few years ago to about 25%, 26% in some quarters as well. Sir. So ideally, what we are comfortable with is it is what is about 21%, 22% kind of EBITDA margin. But it can go up. And if it can go up, for some quarter, it can go up as well. And also the input cost is also a dynamic phenomenon. So if you go back and look at quarter three, the demand prices for us was about $975 Right now, as far as quarter one is concerned, we look, we are looking at $100. If you look at today's spot price, it is about $13.25. It could go up. It could moderate and correct. So it's it's so it's also variable, which is not a predictable one. So I think just to give you an idea, our endeavor is to achieve consistent double digit volume growth while operating in a reasonable gross margin and EBITDA margin kind of a path. And for us, both of those bands are very healthy. While they they can go up or down from quarter to quarter, for last many years, both our gross margin and EBITDA margin has been in a healthy range. But they could go up and go down because of various factors like raw material cost, dollar exchange rate, etcetera. But our endeavor is to achieve consistent double digit kind of growth approaching towards 14%, 15% is the endeavor. And if you see in the first quarter of the last few quarters, we are now sort of inching towards achieving consistent double digit volume growth. So that is the key objective. We are not overly worried about gross margin and EBITDA margin as long as it operates within a healthy range. Okay, sir. Fair enough. Sir, the second was on something that I've always been asking. Would you still would you like to call out the recovery now? Or would you still say that you were cautious because last few quarters, I'm not asking for See, as you know us for many years, we don't like to call out the recovery or not call out the recovery because it's always very difficult to predict. But what you can see from our numbers and the trend appears to be favorable, there appears to be gradual improvement in demand. But we don't like to necessarily call out anything. But the figures are showing a gradual improvement demand and a more consistent growth rate. Okay. And the second, which was on the category, just a clarification. If you could help, a, clarify which categories have you seen market share gains? And b, if you could share the handicraft adhesives segment, has that seen a recovery from the earlier quarters where that was kind of being a drag on our growth rates? Overall, in some of several of the segment in adhesives, see that we have seen growth. As it was expected that after GST implementation, companies who are noncompliant or companies who are not paying their taxes will find it more difficult to do business. And some of that benefit will move to our finance player. So in some of our segments, we have seen that. One is because of GST as well as some of the initiatives we have taken to improve our share in some of the categories where we took several actions to do so. So I would say in some of the product categories within adhesives and CST market share improvement, waterproofing, chemical, I would not talk about market share because the main objective is about expanding the market and achieving higher growth. As far as handicraft, it is a good, it's a smaller part of turnover. However, that segment, while our sales and volumes have stabilized, but that segment has seen a significant trend change. With handicraft, the easy market, the type of beads people use and the kind of fabric design which is being done recently is a lot different than what it was done two to three years ago. So as some of the competitive pressure in that category, we have been able to overcome, There is a significant trend change which has happened, which has impacted the market. But overall contribution of this category is not that high. And the other part of the space present in the form of stationery, etcetera, the other parts of this this category, they continue to do that. Okay, sir. Perfect, sir. That that's all from my side. Thank you very much. Thank you. The next question is from the line of Rajeev Odikal from Bay Capital. Please go ahead. There. Nikunj Doshi here from Bay Capital. I just wanted to know, mister, after implementation of GST, have you seen any rationalization of warehousing costs and logistic costs or any benefits that you see coming in? We have worked on a new network design, certainly, there is benefit where very suboptimal depots in certain states we have shut down. So that impact has started flowing in. But in terms of significant reduction in freight costs, have not seen because there has been a quarterly increase in the freight cost because of the increase in oil prices. But we have shut down some of our smaller depots in in in in smaller states where where, you know, depot is no longer required. Okay. Thanks. Thank you. Anyone who would like to ask a question, you may press star and one. The next question is from the line of Abhishek Banerjee from UBS. Please go ahead. Hi, sir. Hi, sir. Yeah. Hi. Yeah. Could you just update some on the new product portfolio as in how they are doing? We have several new products, you know, which have been launched to us Some of them, which we have shared with you earlier, there are products like FeliCall E Tech, FeliCall Marine or a recent launch, which we have launched during IPL, a product called FeliCall EZ Spray, which is aerosol based, which is, are doing fairly well. Even within our construction in paint chemicals, we are doing some trial launch of a couple of products, which are giving us encouraging results. But in our larger categories, all the launches that we have had over the last few years, be it DeepX, be it Hyper or Easy Spray are used earlier. Sir, I mean, just to quantify, could you tell us on I mean, what percentage of your revenues have you been making up, certain new launches in the last two years? So we do not like to quantify. I know that sort of, you know, we do not like to give out the you know, that's duplicate sale of individual branch, so we would prefer not to do that. Okay. Okay. Okay. Thanks. Bye. Thank you. Ladies and gentlemen, that was the last question. And I'll hand the conference over to mister Abhi Mehta for closing comments. Thank you everyone for taking time for this call. I would now like to hand over to Mancin for their closing comments. Thanks everyone for coming on the call. Thank you. Thank you. Thank you. On behalf of IFL Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.