Analyzing...
Good evening, sir. Yes, sir. So just continuing on his question, Birla Opus, last year wasn't much, you know, in the market. But right now, 6 to 8%, they have captured the market.
They should be around 9% for 25. They got a very strong access to the dealer network and they are targeting approximately to be the 2nd player in the next 3 to 4 years. So how would our company stay off this particular in the decorative market, seeing this coming up?
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- Right! Ya. So that's their ambition. As far as we are concerned, I think our choice of market is very clear. We are extremely strong in North and East and followed by West. So, I think our whole effort is to protect our market share in that particular market and resist all the moves from the competition to capture our market and grow at the market rate. That's our ambition. So, they'll try their best and we'll be obviously there to fight out battle in the market.
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- But now North, they're entering very strongly.
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- Sorry?
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- North, they're entering very strongly.
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- So, in fact, they started with the North plant first, then South plant. I think these two plants started. But again, you know, starting plant and extracting more from the markets, this sale has happened. So, we are watching that situation, and we will be definitely happy to see that this effort gets truncated someday, maybe this year.
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- What is your strategy for the dealer? Basically, vis-à-vis theirs, like, how they have captured so much of the dealer network. What is your go to market strategy? How are you planning to do that?
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- No, they copied our strategy. Right? I mean, we are here for the last 3, 4 decades and our old GTM was exactly the same what possibly they copied. I mean, we were there. Dealer, direct dealer distribution was there, then we added distributors to have to open up more retail points in the smaller towns and obviously using paint as a service, project business, all that thing is copied as it is. All that one did is, whatever I was giving, more than that I am giving. That's all. Now the question is, how long you sustain and whether consumer really buys that thing, whether pass through is happening to the consumer, etc. So, we will interface with the same. But there's nothing different and unique is the message. And then if it is not unique, sustainability or sustaining that effort for long is always a challenge.
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- Thank you, sir. Wish you all the best. Thank you.
- Mr. Darshad – Asit C. Mehta:
- Ya, hi! Am I audible? I'm Darshad from Asit C. Mehta and my question is towards subsidiaries' performance. You said that it's weaker and this is impacting the console results. So, could you elaborate more on that? And also, will it get better and if yes, then in what time frame?
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- Ya. Thanks. Prashant, would you like to?
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13 - Subsidy performance, is it, how was it and is it going to be better or what is your outlook on that?
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- So, as far as subsidiary, we are facing challenges in Sri Lanka and Bangladesh because of the local issues there. Currently, there is a stress. As far as Nepal is concerned, we are we are doing better than the market. And our domestic subsidiary, of course, we have done a revamp. We had not done well last year but there's a big change and there is likely to be, good improvement in the year, in the current year.
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- Hello Sir! Ajay Thakur from Anand Rathi Securities. So just want to get a sense on the growth volume, growth in the industry. How it had been in Q4 and what is the trajectory that we can expect going forward, say for Q1 and Q2, if some colors can be given on the same?
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- Ya. So as far as quarter 4 is concerned, results are not yet out but our estimate is that it will be about mid-single digit volume growth is our expectation. As far as quarter one and quarter two concern, it should be in the same range.
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- And sir, the volume value gap that we had been seeing, in the realization versus the volume growth for the decorative segment, which has been persistent for all the companies, all the industry players. It has been reducing, or it has been kind of, you know, indicated to reduce. How has the trend been now? Are we seeing that trend reducing further in Q4?
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- Volume value gap?
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- Yes.
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- Yes. It is improving now. Page 14 of 17
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- Okay. And, sir, last bit was on the crude oil prices. We have crude oil prices correcting quite a bit and quite sharply off late. Given the current at $60. If you can throw some broad numbers or you know, at least indicative number as to $10 kind of correction on crude oil prices, what kind of a benefit we can expect for our gross margins or the EBITDA margins?
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- Yes. So, see, this crude oil correction also has to be sustained for some time, you know, because we have inventory there and obviously, there are contracts. So one has to wait for this, you know, level to be settled and if that happens in the next contract, obviously, we will able to get that benefit. But right now, you know, it is very difficult to know that whether it will be sustained or whether dollar will be where it is and what happens after this geopolitical situation. So I think it's a wait and watch.
- And as far as industrial concern, obviously, there will be some pass through, some may be able to retain. As far as decorative, if it is either way, obviously, it will be straight pass through that will happen to market.
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- Understood. Thanks Sir.
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- Sir, you mentioned that you know your target would be to maintain your stronghold in the Northern and Western markets. But you have a new capacity that's come on stream in Southern India in Vizag. So, do you expect or are you targeting that, you know, because there's a new capacity installed in the South that you would want to, fight in that market and gain some share because, our market share in the Southern markets would be lower than our, pan India share. So any aspiration with respect to that area?
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- So North is obviously strong. There's no doubt. And as far as Vizag is concerned, our next best city, our next best state in South is Andhra and Telangana. So obviously, to service that, it makes sense that we have a capacity available there. That was the main reason why Vizag is there. So obviously the idea is to maintain and grow that particular state.
And second, we also have plants in Hosur, which is in Tamil Nadu, where also we have this entire range that we can produce to service the market. But Vizag expansion was purely from this Andhra and Telangana state. Page 15 of 17
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- So just to solve, is the existing demand in those states or you are targeting to, you know, ramp up? -
- No, existing because see, my existing plant in Kanpur obviously is getting saturated, so we had to expand in some region and target that particular sale for that state.
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- So there could be some benefit coming in from, lower transportation costs or things like that.
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- Exactly!
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- Ok.
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- Anyone else?
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- Hi! Thank you. This is Pratik from HSBC. My question is about the broad industry. Can you speak a little more about the unorganized segment? How do you see them? Do you see them losing market share further or will they remain around the current 20% on industry level? If you can split that between Deco and industry, that will also be great. Thank you.
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- So your question is organized sector, whether they will lose market share further?
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- Sorry, unorganized, unorganized.
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16 - Unorganized sector, ok. So, see, there's nothing, there's no systematic data as far as the unorganized sector is concerned. So, it's very difficult to say what is happening. Obviously over the years, there has been some shrinkage which has happened because organized paint players have expanded into rural areas also via distributors and so many other means. So as a result obviously, there has been some shrinkage that might have happened, I am sure. There are some sectors which obviously there is a great shrinkage that you've seen especially in the solvent based paint especially and after GST, that whole price arbitrage benefit is gone completely. So, there is a clear disadvantage to that particular segment, especially on higher working capital requirement, etc However having said that, there are some niche markets where they are present in some niche segments of projects and some particular items. It's very difficult to estimate whether that ratio has changed or not changed, very difficult to estimate. But obviously, if I enter a rural market, assumption is that I would have taken some share also. And if you look at last 3, 4 years growth of 33%, 24 %, obviously one is pent up demand and also some, I would say, trouble with unorganized player, I guess. But very difficult to put number. Frankly, it's a very qualitative answer in absence of proper data.
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- And is there an unorganized space in the industrial segment as well or is that larger or smaller?
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- Ya, there are. In our unorganized sector also, there is an organized segment as far as industrial is concerned. Very large, it's there. But they are primarily into economic segment, not into premium segments as I elaborated earlier. So as far as we are concerned, we are placed right in premium and mid-range where performance matters.
So frankly, it really doesn't matter for us whether they are there or not.
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- Thank you.
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- So, if there are no other questions, we can close this Q and A and please join us for high tea.
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- Thank you. Thank you so much.
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