Q3 17/18

Jan 25, 2018

Ladies and gentlemen, good day, and welcome to the Pixite Q3 FY 'eighteen Earnings Conference Call hosted by Mozilla Roswell Securities. As a reminder, all participant lines will be in a listen only mode and there will be an opportunity for you to ask questions as the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Punya from Motilal Wholesale Securities. Thank you, and over to you, sir. Thanks, Aman. Good evening, everyone. On behalf of Motilalu Swal Securities, I welcome you all. We have with us mister Apoorva Parekh, executive director and mister P Gane, CFO from the management. Without much ado, I will hand over the floor to Mr. P Ganesh for his opening remarks, and thank you. Over to you, sir. Thank you, Vishal. Good evening, everybody. I'll begin with the summary of the financial performance for the quarter ended December 2017 for the stand alone business. On a comparable basis, net sales at INR $13.63 crore grew by 20.2% over the same quarter last year with underlying volume and mix growth at 22%. This was driven by a 23% growth in sales volume and mix of Consumer and Buzzard products and 18% growth in sales volume and mix of Industrial Products. EBITDA before non operating income at INR $3.59 crore is higher by 28.9% over the same quarter last year. Profit after tax during the current quarter is at INR $2.39 crore and increased by 17% over the same quarter last year. Now I'll move over to our summary of the consolidated performance for the quarter. On a comparable basis, net sales at INR $15.33 crore grew by 17.3% over the same quarter last year. This excludes the sales of Cyclo division of Midlife U. S. A, which was sold to Midlife U. S. A. In June 2017. EBITDA before nonoperating income stood at INR $3.72 crores for the quarter and grew by 28% over the same quarter last year. Profit after that during the current quarter is at INR $2.39 crore and increased by 18% over the same quarter last year. In a steadily improving economic environment, we have delivered strong overall performance. This quarter saw robust broad based volume and mix growth across our categories. While there are signs of commercial cost inflation, we remain committed to driving profitable volume growth. We can now open the floor for questions. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Now we and the session. The first question is from the line of Abhi Mehta from Please go ahead. Hi, sir. Congratulations on the great volume growth performance. My first question was on sales. Now we've seen two quarters of very encouraging sales growth led volume led sales growth, if I may say. Would you last quarter, you were a little hesitant in calling out the recovery. Would you now say that we it kind of makes you increasingly confident that demand is still covering? If you look at the performance, think the second quarter sales growth was also partially due to low growth in the first quarter. Our sales had declined in the Q1 because of GST. So second quarter growth was partially aided by recovery from that. And in quarter three of this year, we have a lower base of last year. Having said that, we see steady improvement in economic condition. Most of our product categories have performed well. So we clearly do see improvement in economic scenario. However, we need to see for a couple of more quarters before we can make any statement like So you still remain you still believe it's but medium term target is there, but you're still cautious is what I should kind of take away, sir? We continue to be cautiously optimistic. Okay. And sir, what was the reason then for the pickup in this quarter? It was more a base effect is what you're deciding? Or was there a number? It's a mix of both. If you still look last year, clearly, because of demonetization, the base was fairly less. So lower base of last year did help us, without a doubt. However, we see improvements in economic situation. As Ganesh shared in his opening statement, we see steady improvement in economic condition, and that has also helped the growth. So it's a combination of both. Okay, sir. And sir, secondly, was on the just a clarification on the subsidiary. You have said that there is an issue with the ICA growth rate because of some reclassification issue with the authorities. Could you just clarify what that means? And second, would the footprint for MENA and Percept that we see ahead of time, is that like to like net sales growth? Or is it gross to net because of the reclassification of indirect taxes? So to answer the question on ICAP III Lite, in one of the product, we had a classification issue in terms of which chapter it should be classified and because of that, what kind of GST should be paid. And because of that difference, for some days, we stopped our operation until we get adequate clarification on that. So by that matter, still have a dispute with the concerned authority, and we are contesting the stand that they have taken. However, in the meanwhile, the business has started. So that has caused some disruption during the last fortnight of the quarter. And the business started at at our believe rate? Or are you doing it at the No. Currently, we have to do at that rate, but under protest. That is what we have done. And we will continue to contest and see where that goes. Okay. And mean, Dhanushar, if you could just clarify on the whether it's like to like business growth in subsidiaries? From a like for like basis. They are net sales, net sales, It's not gross and net because of the classification of indirect factors. I'll come back in the queue for any question. Thank you very much. Thank you. Next question is from the line of Gurjeet Prathyani from JPMorgan. Please go ahead. Yes. Thanks for taking my questions. Just two questions. Firstly, would it be possible for you to give us a little bit more color on the growth? Because you clearly seem to be suggesting that the environment is improving. But if you can share more color, whether it is you're seeing it in the adhesive segment or you're seeing water, you know, the construction chemical, waterproofing segment picking up now, any color? And secondly, if you could share the the VAM prices and the trend for and the trend that you're seeing in the in the in the current month? So Gunjan, on the first question, we see we have seen good growth across most product categories, adhesives and sealants and construction chemicals and food. So we have seen a fairly broad based good growth across most of the product categories. As you always do, I won't be able to give you exact growth figures for each of the categories. But I can tell you that most of our product categories have grown well during the quarter. As far as price of VAM goes, the price of VAM in the last quarter, the consumption rate was about $975 which in the second quarter was $920 So from $920 in the quarter ended September, it increased to $975 in the third quarter. But I would also like to add that because of appreciation, some appreciation in the Indian rupee, it has partially mitigated the impact of this increase. And what is it currently? Is it in the same range? Or has it appreciated further? It is slightly appreciated further from this. It is at around $1,000 level. And the supply shutdowns, which you had mentioned in the September, are those now stabilized? Are they back into operations for VAM? No, VAM, but the supply situation has improved. So if the significant shutdown, which was linked to Houston and all, that situation has improved from there. So now so the situation the supply situation has clearly improved from there. But at the same time, there has been a good appreciation in crude, and that has kept the prices high. Okay. And on the on the ad spend, if you can give a sense, because last quarter, it was lower. Right? Yeah. Ad spend and price hikes, which which you've taken in this quarter. So what was the ad spend in the quarter? Just one second. Yeah. Ad spend in the quarter was about 54. And and this is about 3.6% of sales. I did add, it means advertising and sales promotion Okay. So it's about 3.6% of net sales. And you know, our our range is, you know, typically our normal range between 3.5% to 4% of net sales. It was unusually low in the second quarter. During this quarter, the spend has been normal between 3.5% to 4%. And on a full year basis, our aim is to have a spend in that range. Okay. Got it. And did you take any price hikes during the quarter? So we have taken price hikes in few products where there has been a significant increase in input cost. In some products, the raw material cost has been high. One example of that is the product which are solvent based, rubber based adhesives, where the cost of rubber has significantly increased. So there have been some prices in some price increase in this product during the year. Quantum of that would be? The quantum of that would be, I think, between 5% to 10%. Okay. Got it. Thank you so much. Thank you. The next question is from the line of Rohit Kalam from Credit Suisse. Please go ahead. Hi, sir. Thanks for taking my question. So on the coming to gross margins, so both the crude and BAM are kind of up sharply over the last six months. And I'm kind of looking at our gross margins, which are flat. So how do we understand this? And I don't see any major pricing involved because your volume growth is still ahead of your value growth. So how do we then look at your margins, gross margins going ahead given the current input cost inflation? Sorry, can you just repeat the question? Sorry, I didn't hear properly. Sure, no problem. Sir, I was saying on the gross margins, despite crude and WAM inflation over the last six months or so, our gross margins are flat on a Y o Y basis for the first half this year. So how do we how should we understand this? Because one would imagine that your R and M cost as a percentage of sales should have in stock right now. So there are a couple of factors. One factor is clearly sales mix. Our domestic consumer and business has better gross margin than rest of the business. And that business has done much better, as you can see from the segment accounts. And even within the segment accounts of Consumer and Badrar, our domestic business has done better. So that is one factor. Second, there is slight factor in terms of the actual gross margin do not get fully reflected because of the after introduction of GST, there is a change in reporting compared to past. For example, in trading products earlier, the excise was basically to the price and in the cost, while now because of GST, it is excluded from both cost and the selling price. So there is a minor difference in reporting of certain products like that, which has also had some impact. But on a comparable basis, if you were to clean all that up, the gross margin may have deteriorated by around 1%. And yes, and partially, the rupee appreciation has mitigated some of the impact of increase in VAM and crude cost. Okay. Got it. That's helpful. So one more question. As far as the waterproofing side, I mean, business is just sort of more linked to housing construction kind of demand. So any trends you want to call out there? Because even when you look at your Percept plus Neenah together, they have sort of this year grown at 20% plus as a margin expansion. Is the Doctor. Fix It portfolio also showing some solid signs of turnaround? As I answered earlier, two questions from Gunjan, our waterproofing business has had good growth rate in the third quarter. Overall, we see in construction segment that some of the new construction, especially in larger cities, continues to be under some kind of stress. However, in India, the construction is very broad activity, a lot of figures to be construction, a lot of construction in smaller towns, that is doing a little better. So new construction in bigger town has some stress. However, overall situation appears to be improving along with other improvement in economy. As far as NINA and Percepta, both of them have a small base. And some of the growth is also because of the initiatives that we have taken to improve our presence in the market. So NEDA as a percentage growth cannot be linked to the growth in that sector. Got it, sir. Thank you. That's very helpful. Thank you. The next question is from the line of Kashuman Natsi from Haitong Securities. Please go ahead. Yes. Thank you for the opportunity. So my question is related to the service portfolio, which is Doctor. Fitbit, Neena Piglet. So given that Piglet is a market leader, what are the initiatives being taken to ensure that the usage increases both in the Tier one and Tier two, three, six, ten? Applicator, educate homeowners so there is a greater consumption of waterproofing chemical in retail channel. We have also done a significant advertising campaign with Avita Merchant over the last year or so. That has also had a positive impact. So we have taken several initiatives in terms of distribution, in terms of brand building, in terms of below the line activities. So all these activities are towards increasing the sale of waterproofing products through the retail channel. So this is a doctor fixing business. As far as NEMA and Perceptos, they are service companies, and they are largely currently targeting the builders, the large business segment as well as offices, some infrastructure projects. So that is a very different dynamics. There, as I said earlier, there is still some stress in the large builder segment. However, we are making a lot of effort to increase our share or presence in this market. So we are doing lot of business development activity, and we are trying to convert lot of users to our products and our services. So that has helped in the growth of nearly 9%. Okay, sir. The second question is regarding the raw materials. We have seen hello? Yes. Go ahead, please. Yes. In the raw materials, sir, we had also seen some disruption because of these Chinese winter cuts. So these will end in March. Do you expect the monomer supplies to improve and prices to cool off if assuming crude does not move up further significantly? We do not like to predict this thing. There are a lot of factors at play. There was a lot of difficulty because of the crisis in Houston. That situation is improving. But a lot of factors are at play, including crude prices, including demand and supply scenarios, sometimes shutdown can happen at a supplier. So we would not like to predict what would happen to raw material prices. However, we have whenever there is a need, whenever we feel that there is an increase in raw material prices, which is significant and over a longer period of time, we have been able to pass on these increases. Okay. Thank you, sir, and all the best. Thank you. You. Next question from the line of Kishore Kumar from Carvey Stock Broking. Sir, I have a few questions. One is, I just want to know the volume growth of Consumer and product on consolidated basis Y on Y and Industrial product. So Consumer and Bazaar product, as we told in our opening statement, there is a 23 growth in volume and mix of Consumer and Bazaar product and 18% growth in volume and mix of industrial product for the quarter. So is that on a consolidated basis? It's on a stand alone basis. Our stand alone is significant. So this is on the stand alone basis. Okay. And second question related to Industrial Products only. So in that, could you be substance on, I don't know, who is it like who means who and all are the major competitor on Industrial Products in India? In industrial product, we have several product segments and several industry segments, and there are different competitors in each. So in our organic segment business, we have competition from players like Subversion, Clariant, Make Money and others. In our Industrial Adhesives, there are different set of competition, including companies like Henkel. Our Industrial Razin business also had competition from many multinational as well as from small and medium sized Indian companies. So industrial business is composed of several different product segments and end user segment, and each one of them has some larger or multinational type competitors and some medium and small competitors. Okay. Actually, I have two more questions. If you allow, so can I ask? Go ahead. Yes. Actually, one is guidance on taxes because we are seeing here in quarterly, like in this three quarters, we are around 31% to 33%. So like what is your guidance on tax rate? Second is, is there any CapEx plan for upcoming year? So our nine month tax rate is about 30%. About 32%. So for the full year, we expect our tax rate to be in that range. As far as CapEx, yes, we have CapEx plan. We have a regular CapEx plan, both in terms of increasing our capacity, setting up new manufacturing plants. So CapEx is a continuous process for a growing company. So we have normal CapEx for every single year. Thank you. The next question is from the line of Aditya Makarya from Motilal Oswal Asset Management. Please go ahead. Yes, sir. You have multiple distribution channels for various products. I was just wondering how much of your products are sold through the paint channel, if you were to take that as a percentage of your overall sales? In Planes, there are two types of outlet, pure paint outlets where we will have very little sales and then there is a paint hardware where we have reasonable amount of sales. But overall, at a company level, it's not a very significant figure. Our next question is from the line of Nitin Bhaskin, Navios Capital. Please go ahead. Sir, you mentioned in the earnings release that you acquired a small company also during or approved on the January 5. Could you just help us understand where does this go? Does it go into consumer and bazaar? And is it like a new product altogether? Or is it related to some existing products, etcetera, if you just explain as a business and selling mechanism? It's a company called CP. This our acquisition, we are hopeful of completing by February, where we will have a 70% stake in that company. There are certain conditions, decision and other procedural matters, which are going on right now, but we are hopeful to conclude the acquisition by February. Now CPE is a good, interesting and innovative company. They have a good portfolio of products, including polyurethane, polyuria, epoxy. It is in a segment called floor coating. And this floor coatings are used in industries like factories. They are used in hospital and health care kind of environment, and they also have application in buildings and malls and other places. So these are basically coatings which are applied on the floor. And it has several properties which are required in some of these kind of application, which I just said earlier. So they have very good product technology. Some of the technology, they are fairly good in their market. And this is similar in a way to Neenah and Prasad type of a segment, where this is something where our consumers would be industrial units, health care facilities and builders on the construction segment. And would you see it as product sales or a service sales sort of a mechanism? It would product sales, some service. They also do some projects on a apply, they take up the whole application job as well as they sell product to other applicators. Okay. And any size indications like INR 50 crores or under INR100 crores of top line? It's around INR100 crores. We have given that detail in the release that we gave at the time of acquisition. The top line is around INR100 crores. Okay. Okay. Okay. And can it go to 100%? Or you 30% will remain with the existing promoters and there will be the existing management? So currently, they will continue to be the existing managers. They will hold 30%. The Managing Director of that company, he will continue with us. He will ensure that we have good transition and we grow. He's a very flexible person. He has started this company and brought it to this level. So we will continue to be with us in this capacity. Okay. And second question would be around the change in the entire logistics or market reach strategy given the GST. So now with about six months, five months behind and all these changes going on, any meaningful changes in the entire distribution network, if you could just speak us through or key changes that have been made? As far as our own network goes in terms of manufacturing and warehousing, we may make some changes, but that is under the final plan is under development. Once we are ready with it, we will roll it out. Clearly, would be some changes. And we are about to formulate and then we'll move forward with implementation. Okay. So basically, the internal changes, not the market changes in terms like the wholesalers or distributors or retail points, etcetera, all that is not to be that much, but for internal changes are yet fixed. All that is part of process. For example, expanding our reach or increasing our distribution are important initiative. And with or without GST, those are important things. Okay. And sir, the last question would be in terms of the international businesses, where do you see the next six months or nine months sort of a little bit more headwinds continuing or which businesses could improve? Just to give us some near term outlook on the overseas performance. So in Middle East, in our international business, our focus is primarily on SART, which is Bangladesh and Sri Lanka. These are two both very good businesses. And both have good market position in respective countries. So we expect in medium to long term, our units in Bangladesh and Sri Lanka to perform well and to grow at good pace. In addition to that, our focus is also in Middle East and Africa. We need to get some of the things right, but these are important markets for us. The markets have some similarities to India, and we have now got several years of experience in this market. So we also plan to continue to focus on that. We need to do some work. We need to get some things right. But these are also good opportunities for us. Okay. So that was because one of the key segments is the Others. And if you see the Others EBITDA has gone from a loss of about INR 1 crore to INR 6 crore this year. So is it like an opening to one of its best numbers right now? Or is it just a balancing figure there? No, it's not very significant. It is some one off sale. So I think others, you should not give too much importance to. Okay. Okay. Okay. I'll do nothing with you if there are no more questions, if I get a chance. Thank you. You. Next question from the line of Kuljit Gangkar from ASK Investments. Like a small one, why the employee cost growth had been relatively lower? Any particular reason, like, only 7% in a stand alone over there. No no particular reason. It could be due to, you know, some some provision related thing. And and no no particular reason. I think you should not really look into too much quarterly number for staff cost. The year to date number is more reflective. Okay. And in console, other operating expenses, is it because of the divestment you had done? Or like it had gone only on 8% or so? Which number? Repeat the question. Other operating expenses in console. And other what is the question on that? Like the growth had been 8% Y o Y, vis a vis in the stand alone, it has been close to 20%. We'll come back to These expenses are not necessarily directly proportional to sales. So if you look at growth for nine months, it's actually even lower. Even that the sales growth for the quarter has been significant, is why you're seeing some amount of uptick here as well. So for nine months, if you see stand alone is $640,000,000 to $674,000,000 and for consolidated is $8.00 3,000,000 and $811,000,000 So it is not significantly different. So it's basically a timing issue, you're saying? It's a timing. It's not significant. If you look at the difference, it's INR24 crores in stand alone and some INR9 crores, INR10 crores in console. So it's not a significant difference. We are not directly proportional to INR10 Thank you. The next question is from the line of Prajash Shah from Spark Capital. Please go ahead. Hi, sir. Thanks for the opportunity. Five years, maybe Mister Tejas, sir, may I request the user handset, please? So we are able to hear you clearly. Is this mister? Yeah. Thank you. Yeah. Thank you. Hi, sir. If I look at your last four, five years number, there used to be a trend that we used to deliver best quarter in the first quarter and then just to gradually decelerate. But somehow, that has not happened this year, so So is it because of all the disruptions that we had this year? Or because of all the changes and acquisitions that we have done and launches, the seasonality because of the portfolio is coming down over a period of time? No, no, it's absolutely because of GST. The first quarter this year could not have been largest because of GST due to the implementation of GST from July 1. In June, we had inventory collection of channel partners, and we had declining sales year on year during the first quarter. This is the reason this is our first quarter is not the largest quarter. Okay. So even all this even after all these launches and acquisitions that we have done, the first quarter bias will still remain in the number. Is that correct understanding? It has nothing to do with launches or acquisitions. The first quarter bias has nothing to do with that. Generally, in our case, if the trade reduces their inventory towards the end of the year, We don't like to push a stop or anything. There is some inventory correction which happens towards March. So that has some favorable impact in the first quarter. Also for some of our businesses like waterproofing or some of the other products, just cool base, there is some amount of seasonality, the sale normally goes up. There is some favorable seasonality to some extent, not a very huge impact, but to some impact in the first quarter. And also, there is a benefit of some channel inventory correction, which then comes back to normal level during the first quarter. So these are the two factors. Sure. This is it, sir. So second, sir, if I go back to your commentary two, three quarters back, we clearly stated that our first part, we would be delivered back with a few different kind of growth trajectory. And if need be, we are ready to we are willing to sacrifice margins for that. So just wanted to know our thought on the trade off between growth and margins, how it stands today on that point? No, our thought continues to remain the same. It is important for us to achieve a top line a good top line growth while operating in a margin band, which we are comfortable with. As I've shared earlier, both are from a gross margin or a net margin point of view, we like to operate within a band. So within that band, some collection can happen. But otherwise, the objective is to accelerate growth while remaining within a particular gross margin band that we are comfortable with. And that thought still continues. Sir, and then that, Anans, would this quarter's margin be at the upper end of your band? Yes, sir. This quarter margin is at a comfortable I would not call it at the upper end of it, but margin is comfortable. It is within that band towards the upper end. And sir, lastly, if you can help us understand that. I'm pretty sure that there are a lot of competing opportunities for the capital. So in that scenario, why we went for the buyback? Just wanted to understand the rationale for the buyback. There is no competing situation of capital for us. We, as a company, have good cash accrual, good cash flow. We generate significant cash. And we make sure that the cash the proper cash request of each business is properly funded. So wherever we see that there is a good use of capital, those businesses do get the capital that they need. Our growth is not constrained by the need for capital. However, as a company, we are generating adequate cash. And once you have generate enough cash, we have to consider giving it back to the shareholder as one of the option. So the Board deliberated on our cash position. The Board felt that this is an amount which comfortably we can give back to the shareholder. Sure. And sir, just one clarification. Promoters are going to participate in this buyback? Promoters do intend to participate in the buyback. Thanks a lot, sir. And all this. Thank you. Next question is from the line of Abhi Mehta from IIFL. I just wanted to just check on how the inventory levels in the channel have behaved because you had said that the wholesale inventory level remains in the end of the second quarter. That kind of highlighted the economic pressure. Has it gone off? Is it back to the PGSE levels? It's a wholesalers are not we don't have an exact whatever information I give you will be more based on a feel because we do not have the actual figure of the inventory that the wholesaler carries because they are independent entities. However, it has improved. In the first quarter after GST, the inventory level had significantly corrected, and there is some improvement from those levels. Okay. And there has been some kind of pickup or improvement from that level? Some improvement is there, yes. Okay. And sir, secondly is on the VAM pricing. You said that this quarter was about INR $975,000,000. I recollect that even the last quarter, we had indicated a 1,000 kind of mark. So is this like a typical volatility that happens? We are seeing up and down movement. It's not a kind of structural movement upwards. Does that be a fair understanding? At least last quarter, that is how it was? So last quarter, which is Q2, our average consumption rate was about $920 or so, which has moved up to about $975 Sir, yes, but you had said September was about $1,000 That's what you had said. So I thought that's why I was just trying to understand. It's that range is very kind of Just one second. Ganesh will clarify. Yes. So I guess you are referring to the procurement price. So what's the current prevailing price? Because what comes into consumption is also the stock which you're holding. Okay. Fair enough. So this is the procurement. Okay. That helps clarify. Okay, sir. Thank you very much. That's all from my side. Thank you. Next question from the line of Anubhav Sahoo from Money Control. I had a specific question regarding sourcing of vinyl acetate monomer. So basically, I want to understand the supply dynamics of it and how much China contribute to this market and what are our tie ups with these sourcing partners? There are several manufacturers of Mineral Acid and Monomer in the world, and we work with most of those suppliers. The suppliers are in China, Singapore and even in Europe. And we work we are in touch with most of the suppliers. And the sourcing or the availability of VAM has never been an issue. Right. And so what percentage would be imported? Is it 100% or is it part of this demonstration preferred as well? All the VAM which comes into India is imported. So is all there is no VAM which is manufactured in India now. Okay. And what percentage globally, I mean, as far as the VAM market is concerned, how much China would be taking a share? I mean I don't have that figure with me. Okay. Okay. Okay. And so regarding the types of the supply partners, so what kind of pricing arrangement do we have? And generally, is it a monthly reset which happens with the pricing thing? Or how does it go? There is no long term contract of ARM prices. The VAM prices keep on fluctuating, and we don't have any long term price contract because it can go either way. So we buy from them on a month to month basis, but we have deep relationship with all suppliers. And sourcing of VAM has not been a problem. Next question is from the line of Prasad Deshmagh from Bank of America. Yes. Hi. Good evening. Two questions. Firstly, if the raw material prices keep going up, other than price increase, are there any offsetting cost offsetting cost initiatives that you guys are taking up where right now without taking price increase probably can be balanced? Yes. As a company, we are taking a deeper look at cost. We have hired Accenture as a consultant. They are doing a project for the last six months or so. So we are looking at all of our expenses in terms of manufacturing and related expenditure. And there is always room to cut expenses to mitigate some of these costs. So we are working towards it. Are there any targets, in house target? There are in house targets, but I would not like to share it. We are focused on a particular target and trying to achieve that. And the source of the cost savings or it's like across the board? Still all area, right, from the change in the design of some of the packaging material to change in manufacturing process or to think of it, it's a broad based project. And Accenture has deep experience in this. So they are looking at all the cost factors and trying to identify savings. Sure. And second question, in the adhesives market, are you seeing any signs of market consolidation, I mean, organized unorganized to organized? I think it's too early to say like that. The players still exist. They are still operating in the market, and I think it would be too early to talk about any consolidation. So would they also have grown at similar mean, obviously, you may or may not know, but would they also, in your opinion, would it also have grown at a similar I would not like to give opinion about what could have been the growth of other players in the market. Okay. Thanks a lot. Thank you. Next question is from the line of Mayank Bansal as an industrial investor. Please go ahead. Hello, sir. My question is, what is the reason for weak overseas performance? Can you please your question is, sir, what is the reason for weak overseas performance? Yes, sir. Yes, sir. See, we have given you know, if you you know, there are different factors subsidiaries which have underperformed. And the details of that are on our website, in our investor letter. So that can give you a idea. There are different factors like, for example, in Brazil, the economic situation still continues to be weak. That has had some impact. In our Bangladesh and Sri Lanka subsidiary, while their top line growth has been good, and we believe we have very good potential market for the future, We are investing in those markets through the SG and cost has gone up and has had some impact on EBITDA. So are we gaining market share in this market or is this due to overall economic condition, this downturn So international market, have to take up within that market in Bangladesh and Sri Lanka, we are performing well. In Bangladesh and Sri Lanka, we have very good business, very good brands. And we are systematically growing in those markets. Quarter to quarter performance can sometimes not be in line with that. However, these are the markets where we are making good progress with our brand, with our infrastructure manufacturing, etcetera. So in those markets, the situation is very different than a market like Brazil, where economic condition has been uncertain. And but however, in those in Brazil, our focus has been to eliminate losses. And if you see from last two years now, we are not incurring any losses in that market. In U. S, we had a business which had very high growth for two, three years, but there the trend has changed of adult coloring market and then hence, there has been a sales correction. So all markets are very different, but I think our key focus in international market is in the SARC region and SARC, Middle East and Africa. And in each of those markets, we are making some progress, and the results will follow. Thank you, sir. Thank you. The next question is from the line of Nitin Basing from Amnesty Capital. Sir, if you look at the last two quarters, especially this quarter, the kind of revenue growth that you posted roughly about 20%. But if you look at the nine month number, because you also said now it's a little bit longer, it's also 910%. So why is this quarter could be looking good because of last year and otherwise? Now when you speak to your marketing team, what sense are we getting? Are we going to be more easily closer to about 16% growth for the next year or so? Or are we saying that this 20% could actually be maintained for at least one more year before the base effect comes into play? So Nitin, we don't talk like that with our marketing. And I cannot share any kind of guidance in terms of what do we see as growth rates in next quarter and all of that. As I said earlier, we do see steady improvement in economic scenario. However, we need to see a couple of more quarters before we get a sense of what would be the new normal growth rates. Okay. Okay. And in terms of the product launches, is there any way to get a sense that new product launches in the last one year or two years, what sort of a proportion is that becoming now of your top line? Any sense on that? Because I know that you keep on launching new products, but any sense for all of us? Again, that percentage, we do not share in general, but I'll give you a good qualitative idea. We had launched a couple of products in Ferricol division. One is called Hyper, which is a very new next generation kind of adhesive, which minimizes the formation of bubble while doing good working. So that product has had very good response and is contributing well to our business. There is another product called Fevicol CPEX, which is again an adhesive which sets very fast. That again has had good response. So that way, in all our businesses, we have won new launches, and some of them have had that good response. Okay. But sir, Fevicol, these products are like extension of the existing brand of Fevicol application becomes even more specific and more technical. Something which also gets new, like something I was reading about is that you have launched some roof vendor, roof insulation products or something of those lines. Any sense on such new simulation products? That is also a product which is a part of Construction Chemical segment. In Construction Chemical segment, there are different products with different applications. So it is one of our newer products, but that product will take time. Typically, in construction chemical, gestation period is very long because you have to change the habits of consumer. Okay. That's the perspective. Thank you. Thank you. The next question is from the line of Arun Bandh from BOB Capital. Historically, you had always been saying that the margins are very difficult to sustain. Now the tone, which I think is that these margins are sustainable. Is my reading correct, sir? I don't think I have said that our margins are sustainable. Yes, you are right, they have sustained despite us saying that they will not sustain. But we are at a higher margin than what we have. But margin depends on number of factors. I mean, EBITDA margin depends on number of factors, and the primary factor is the sales growth that we get. So if there is a robust sales growth, then you are able to have a better EBITDA margin despite some erosion in gross margin. So we still maintain that our gross margin and EBITDA margin are fairly high towards the upper end of what we have ever had. And hence, some correction is possible. And as we have shared earlier, our primary objective is to accelerate sales growth, but while operating within a certain gross margin and EBITDA margin bank. Okay, sir. If I ask the question in different way, assuming you're making the guidance of that 15%, which you're looking at stays, then because you have the volume growth there, obviously, for sure, then the charges are going to be broadly in this range? First of all, that is not our guidance. 15% is not So a I want to clarify that. Our targeted growth rate is our historic growth rate of 15%. So that is what we always say, we aspire or we desire to get back to those kind of growth rates, which we have achieved over a ten year period, number one. Second thing is, again, it's very, very difficult to predict or project our margins on a quarter to quarter kind of a basis. What we like to do is we want to, as I've said earlier, our aim is to accelerate our top line growth while operating in a comfortable EBITDA margin range that we as a company are comfortable. We've always had good margins. Our EBITDA margins are possibly better than most of our peers. And hence, we want to continue to operate a good EBITDA margin and accelerate sales growth. But our current EBITDA and gross margins are towards the higher end of our band. Sorry if I missed that thing. What is the bank, if you can give some broad indication? We are more comfortable with an EBITDA margin of about 21%, 22%. Currently, are at about 25%, Karnesh? Yes, 25%. 25%, 26%. 21%, 22%, 23 is a kind of range that we are more comfortable. Okay. Thank you very much. This was helpful. Thank you. The next question is from the line of Deep Gangwal from ASK Investments. Your line is unmuted for questions. If you're muted, please unmute. Yes, yes. So, sir, in consumer and product segment, at industry level, what would be the share of unorganized players both in volume and value terms? Any estimate regarding that? The entire consumer and barter segment. So overall market, what would be the unorganized players accounting for the overall industry level? If you look at entire consumer, I think very, very difficult to predict. We don't have a fair or a good estimate on that. But it could be in the region of, say, 334530%. Again, it's difficult to define what is unorganized. There are smaller players, okay, and people are completely unorganized. So it's difficult to estimate. So if just smaller players aren't completely unorganized put together in value terms, you're saying 25%, 30% or volume terms? Could be. Could be. When you look at entire consumer adviser as a segment. Both volume and value, you are saying close to 20%? It's difficult to say what volume and what value. It could be in the range of 3040% kind of range. If you count all small player and unorganized players. Sure thing. Sir, second question is regarding your volume growth. So what is the most important driver for your business, whether it's increasing the distribution reach or increasing the number of products on a particular dealer level? They both are not the main drivers. The main drivers cannot be just distribution and making our products available. Look, that is not just a growth driver. Growth driver has multiple elements in terms of how is the economic scenario, how each end user segment of ours, how is the consumption in that, how is the overall macroeconomic scenario, how are our other factors related to our advertising, brand building, new product, innovation. Lot of those factors are more important than just distribution and making our products available on the shelf. And gentlemen, as there no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you and over to you. Thank you, everybody, for participating in the call. Thank you, and have a good weekend. Thank you very much. Ladies and gentlemen, on behalf of Moten Telstra Securities, this concludes this conference. Thank you for joining us, and you may now disconnect your lines.