Thanks, Nisia. On behalf of ICICI Securities, we welcome you all to Q1 FY '27 results conference call of Kansai Nerolac Paints Limited.

We have with us today senior management represented by Mr. Pravin Chaudhari, Managing Director; Mr.

Yash Ahuja, Chief Financial Officer; and Mr. Jason Gonsalves, Director - Corporate Planning, IT and Materials.

Now, we handover the call to the management for initial comments on the quarterly performance and then we will open the floor for question-and-answer session. Thanks, and over to you, Pravin sir.

I'll request Jason to walk you through presentation.

Good evening and greetings to everyone, and thank you for joining us for this investor conference call. We appreciate the continued confidence of our shareholders, analysts, and stakeholders.

Today, I will walk you through the key developments of the quarter. I'd like to begin by restating our vision and mission.

Our purpose is to create environments for a healthy and beautiful future. Our vision is we design solutions that protect, inspire, and touch lives every day.

Our ESG commitment, which is we are water positive, emission reduction, and green energy. Coming to our brand, for over a century now, Nerolac has established itself as a trusted heritage brand synonymous with excellence, innovation, and leadership in the paint industry.

Our enduring success is anchored in strong research and development capabilities and strategic global technology partnerships. This is particularly evident in our industrial coatings business, where we deliver advanced high-performance solutions across a wide range of applications.

In an increasingly competitive marketplace, Nerolac continues to enjoy strong brand recall and consumer trust, consistently maintaining its position as the second most recognized paint brand in India in terms of top-of-mind awareness. One of Nerolac's most iconic brand assets is its timeless jingle, which has transcended generations and has remained deeply embedded in consumer memory for over three decades.

This enduring cultural connect continues to strengthen our brand identity and foster lasting emotional resonance with consumers. Nerolac remains focused on shaping the future through breakthrough product innovation and technological advancement.

Our portfolio of sustainable solutions reflects a steadfast commitment to responsibility, progress, and customer trust, ensuring that we not only address the needs of today, but also contribute to a better tomorrow. Emotional connect builds long-term equity, and Nerolac continues to nurture this bond through meaningful consumer engagement and a consistent brand experience.

Looking ahead, our technological expertise will play an increasing significant role in strengthening our decorative paints business. By leveraging innovation, we are well positioned to introduce category-defining products that cater to a growing demand for premium and differentiated products.

A notable example is our Paint+ range, an exclusive portfolio of pioneering solutions that has created new benchmarks in the decorative paints category, delivering distinctive value and superior experience to the Indian consumers. We have introduced our employee value proposition this year, and it is where our passion takes color, reflecting our belief that the passion of our workforce is central to everything we do.

Through this proposition, we aim to foster a positive environment that encourages growth, ownership, continuous learning, and open communication across the organization. Now coming to the business environment that we saw in the first quarter.

In the first quarter, we saw six significant things: there was a significant oil price increase, the rupee depreciated sharply, there was the geopolitical challenge because of the West Asia crisis, we saw good demand in automotives and continued focus on infrastructure, and of course, there was a delayed offset of monsoon. Now speaking about our decorative strategy, which is built on six pillars: new products, project business, construction chemicals, waterproofing and wood finish, branding and media spend, influencer program, and network expansion and focus geography.

We are driving this six-pronged decorative strategy through strategic digital technologies like CRM, scheme management, integrated business planning, and distributor management software. Now coming to the decorative highlights, let's first focus on the retail side.

Here, services is aiding the primary business with mid-single-digit percentage contribution to the decorative business. Our Paint+ is present now in more than 250+ cities.

AID, our Architect and Interior Designer program, is present in 45+ cities, and our Pragati program for painters now covers 65,000 painters in terms of participation in Quarter 1. Coming to our project and institutional business, where we recorded a double-digit growth, our geographical reach is today at 80+ cities.

We have a strong pipeline of project sites, and we have a complete range of products called Super Series for the projects business. In the network expansion, we added 1,700 dealers in this quarter, and our distribution network continues to expand in low presence towns.

Coming to construction chemicals, here we recorded a double-digit growth. We are exploring and executing international collaborations for launching technology-backed solutions, and our focus market and focus product approach is continuing to yield good results.

In the premium wood finish segment, we recorded high-single-digit growth. Our focus here is on weighted contractor's engagement to drive primary growth, and also the same focus market and focus product approach to drive growth.

Coming to our offline channel for retail, today we are at 186 stores in terms of NextGen Shoppe. We are at 275 stores in our shop-in-shop model, and we are at 385 stores in our Nerolac Paint+ zones.

These are adding significant value to us. Coming to our product portfolio, we have a complete range of products in all the three segments of economy, premium, and super-premium.

In interiors, we have Impression series in super-premium and the Beauty series in premium. In exterior emulsions, we have Excel Everlast 20, a new product, Excel Everlast super-premium, Mica Marble and Anti Peel premium, and Suraksha economy.

In the waterproof range, we have No Heat, No Damp, and Soldier [Range?] Raksha.

In the tile adhesive range, we have Platinum+, Platinum, and Diamond+, and we have in the other range other Perma ranges. In the premium wood finish range, we have Wonderwood Gloria, and in the popular wood finish range, we have clear acrylic lacquers, 1K PU, and NC sanding sealer.

Coming to some of the new products that we have launched: Excel Everlast 20, India's first exterior paint with 20-year warranty, engineered with bulletproof nanosilica technology for super durability, crack bridging up to 2, and weather resistance. The second product is Excel Total Floor Coat, which is a superior premium water-based exterior emulsion that protects and beautifies floor tiles and cement surfaces with rich sheen, antifungal properties, and superior abrasion resistance.

We have the third product, which is Perma No Damp NXT, which is a high-strength fiber-reinforced elastomeric liquid-applied waterproofing coating. It is formulated with resilient acrylic copolymers and reinforcing fibers.

Upon curing, it forms a thick, seamless, durable membrane that offers ultimate waterproofing. In terms of media campaign, we ran two major campaigns: Excel Everlast, where the reach and engagement covered 550 million+ impressions across key geographies, 52 million views on YouTube, 30 million views on Reels, 110 million views on social media, 2 million clicks, and 1.2 million+ views on YouTube Shorts.

In terms of No Heat, in terms of reach and engagement, we had 210 million impressions in key geographies experiencing extreme heat, 20+ million views on Meta, 15 million views on YouTube, and 2.5 lakh clicks. Coming to advertising and digital marketing, we had 160 out-of-home hoardings across 27 cities.

Nerolac remains committed to strengthening its brand through sustained investments across television, digital, and integrated media platforms, enhancing consumer engagement and reinforcing its position as an innovative and trusted leader in the paints industry. A key highlight has been the Out of the World campaign, which celebrates Nerolac's spirit of innovation and showcases pioneering solutions that go beyond conventional paint offerings.

The campaign underscores the brand's focus on delivering differentiated products that address evolving consumer needs and elevate the paint experience. Complimenting this, the No Heat campaign, that has effectively highlighted the benefits of Nerolac's heat-reflective coating solutions, demonstrating how advanced technology can help create cooler and more energy-efficient living spaces.

Together, these initiatives strengthen Nerolac's relevance, deepens consumer connect, and reinforces its image as a forward-looking and consumer-centric brand. Now coming to the industrial update.

In automotives, we have access to the latest global technology through our tie-up with Japan and other countries. Our focus is on innovation, creating new and enhancing existing technologies, water-based, high-solids, and low-bake technologies, and introducing paints with superior and unique properties: highly durable, superior finish, corrosion resistance, and workability.

In new business, we have increased our presence in identified accounts and a thrust on electrical vehicles. In new segments, we continue to gain market share in seam sealer and underbody black, alloy wheels, pre-treatment, and booth chemicals, which is a new area we have entered.

In terms of business performance, auto segment witnessed strong growth with a focus on innovation and creating new technologies to increase the total addressable market. Coming to performance coating in the general industrial and the high-performance coating area, our growth strategy in these areas is centered around premiumization, new technologies, and dealer network expansion.

Under premiumization, we are driving growth across high-value segments, including infrastructure, bridges, railways, construction, appliances, and electricals. Through new technologies, we continue to expand our portfolio with fluoropolymer coatings, anti-carbonation systems, high-solid coatings, direct-to-metal solutions, low-bake systems, and water-based technologies.

To strengthen market coverage, we are focused on dealer expansion and increasing our presence in untapped geographies. In terms of business performance, performance coating liquid segment also witnessed very strong growth, and this was led in areas such as construction equipment, drum and barrels, and the coil coating segment.

Coming to powder coatings, our powder coating business is again focused on premiumization, new technology development, and maintaining the high market share that we enjoy. Under premiumization, we are expanding our presence in rebar, construction, alloy wheels, super-durable coatings, pipe coatings, and heat-resistance coatings.

Through new technologies, we are driving innovation in low-bake, fast-cure systems, bonded metallic powders, anti-dirt pickup solutions, and thermoplastic coatings. To maintain our leadership position, we continue to focus on network expansion and securing new customer approvals.

In terms of business performance in powder, we witnessed robust growth. Strong growth was witnessed in auto ancillaries, ACs, and electrical segments, and focus products like metallic powders witnessed healthy growth.

Across both the liquid and powder coatings, our focus remains on premiumization, technology-led innovation, and market expansion, enabling us to deliver sustainable growth while strengthening our leadership across these key industrial segments. In auto refinish, our focus in premiumization is on increasing the sale of premium PU products.

In new technology, we are focused on to promote high-solid paint systems and waterborne coatings. Under network expansion, we are increasing the count of body shops and securing new approvals to further strengthen our market presence.

In terms of business performance in auto refinish, our growth was flat. In the premium PU, we have notable body shop wins.

The conversion from solid-borne to waterborne systems is transitioning as per plan. Among the new products that we have introduced in industrial, our focus has been on enhancing finishes and functionality, offering versatile applications, and prioritizing environmental sustainability.

In industrial coatings, driving innovation through sustainability, performance, and versatility through strong R&D capabilities and global technology partnerships, we are developing next-generation coatings across automotive, performance liquid, and powder coating segments. In automotive, under environment sustainability, we expanded the adoption of tin-free CD technology with higher solid contents across key customer accounts.

We introduced premium clear coat solutions delivering matte and silky smooth finishes, enhanced aesthetics for premium two-wheelers applications, and dual-tone finish compatibility. We also developed highly durable topcoat systems for commercial vehicle applications and which delivers industry-leading performance with up to 1,200 QUV resistance hours.

In performance coating liquid, under environment sustainability, we increased the focus on water-based coating technologies, enabling low-VOC applications. In finishes and functionality, we developed advanced anti-carbonation coating systems, specially designed for metro rail infrastructure and other link road structures.

Among versatile applications, we developed high-scratch-resistance coatings for coil coatings for facade and appliance applications. In powder coatings, under environment sustainability, we continued the transition from conventional liquid coatings to powder coating technologies supporting low VOC.

In finishes and functionality, our powder primer systems we developed which are compatible with liquid topcoats and successfully commercialized for alloy wheel applications. We introduced specialized heat-resistant powder coatings designed for direct flame and high-temperature environments, including furnaces and fire pits.

Across all industrial coating businesses, our innovation efforts remain focused on delivering sustainable technologies, enhanced functionality, and application-specific solutions. These advancements not only strengthen our market leadership, but also help consumers and customers improve performance, efficiency, and environment compliance while creating long-term value.

We have given our diverse range of products in the performance coating segments, whether it is powder coating, general industrial, or high-performance coating. Among the accolades that we won this quarter, in manufacturing, we won the Golden Peacock Award for energy efficiency at Hosur plant.

In decorative, we won an ABBY 2026 award: 1 Grand Prix, 1 Gold, 6 Silver, and 3 Bronze. In terms of capacity expansion, we are now expanding our capacity for automotive, powder coating, and resin at Saykha, Bawal, and Hosur with a total capex outlay of ₹601 crores, with a total capacity addition of 66,000 kl per year and a resin capacity of close to 10,000 metric ton per year.

In ESG, KNPL has been awarded a bronze medal in EcoVadis in 2026 for the third consecutive year. The result places KNPL among the top 18% of companies assessed by EcoVadis.

We are recognized in the strong category by CRISIL ESG Ratings 2026, and we are rated top and ranked 16 out of 548 companies in chemical industry and have received a low-risk rating indicating lower risk in the CDP cycle. Coming to our financials, on a standalone basis, our net revenue growth for the quarter was 10.2%, our PBDIT has grown by 7.7%, and our PBT has grown by 5.1%.

On a consolidated basis, our net revenue has grown by 9.8%, PBDIT by 8.3%, and PBT by 5.8%. Among the risks, geopolitical conflicts are leading to supply chain disruptions, one of the key risks, and arising out of that, high commodity prices due to the crude oil prices and raw material availability uncertainty, and import cost surge due to rupee depreciation.

In terms of outlook, as per RBI, sustained demand will continue for infrastructure and construction sectors, continuous monitoring of the market situation in view of the continued geopolitical disturbance, automotive demand continues to be buoyant, driven by new launches and inventory buildup for the festive period, and consumer sentiment may get impacted due to the inflationary environment. With this, I come to the end of the investor presentation.

Over to you for the questions.

Thanks for the opportunity. I have two questions.

First is on the decorative, you have given the six-pronged strategy. I wanted to understand versus market, if you could give us if your volume growth is now growing in line with the market, because market leader's volume growth was around 9% and revenue growth was 16%.

If you could tell us how you have done in Q1. On the new player, are you seeing now competition across all three segments?

If you could tell us if there is some reduction in competition or it remains on the higher side. That is my first question.

Thank you, Abneesh. About this decorative volume growth, no, it is not, obviously, lesser than what competition has shown.

That is with the reason that we are clearly prioritizing our premium mix and we are not participating greatly into low-margin, high-volume items where it is not adding to a strategic expansion of the market. We are very focused on the markets and making choices in terms of which market we can gain traction using these levers and not unnecessarily pitching into these products.

That is first. I think we are happy with underline performance of our markets and the way our strategy is getting developed, and we have seen improvements in all the parameters of decorative, whether it is our business development team's efforts, whether it is our Paint as a Service, projects distribution, and also about our overall new dealer opening and return of our dealers that were concerned.

I think underline performance on all the growth drivers, I think, is positive, and I'm sure in the I think quarters to come, I think this should come to full fruition and we should see the good result as far as overall volume value development is concerned. On the second part on competition, competition intensity continues to remain intact.

We are not seeing much letdown there, and I think that is what we anticipate will continue, because I think now as market starting getting developed and we have reached overall equilibrium so to say in terms of new competition intrenching very well across the market and they also form the base. Now it's the time where whether it will decide how much extraction from this particular network is coming, and that is why, I guess, for this year at least, that intensity will remain and people will test water in terms of this new set equilibrium, and then time will tell us whether one succeed and one failed and what will happen next year.

Thank you. One follow-up.

If I see market leader, it has seen good margin expansion, and you said you are focusing more on premium products, but in your case, margins are almost stable YoY. Why the focus on premium, that is not visible on margins?

Is that because you are investing more in terms of the A&P, the influencer program, the dealer expansion? If you could elaborate why the margin expansion is not visible.

Yeah.

Abneesh, for us, the portfolio consists both industrial and decorative. I think while decorative did fairly well, I think it is industrial which is lagging in terms of price increase.

In industrial, it always follows and it takes about a quarter or two to really get the full impact of price increase. That is still under discussion, and I'm sure the way discussions are happening, I'm sure this will come through as far as Quarter 2 is concerned, and you should see some positive impact, subject to geopolitical situation not worsening and which it happens every other week we see situation changing.

If I believe in a steady state, I think you should see improvement going forward. Yeah.

Sir,

the last question. You said competition is high, but you also said that market has come to an equilibrium.

If you could elaborate what do you mean by both these statements, because it seems competition is quite high, but market share now seems to be stable. If you could tell us in terms of freebies which the new player was giving in terms of say 10% extra grammage, etc., in your markets, is there any reduction by the new player?

When I say equilibrium means this competition has formed this base now, which is sufficient and which I guess having increased the distribution network, having reached every corner of the country, now possibly they have the base. Now the challenge is more than numeric reach, I think it will be more extraction from the counter, which is exactly what we have been doing, and our network addition is to be to the extent of 5% to 10% every year.

I think that is where I call it a steady state. Now in the steady state, obviously, if your value proposition is enough for dealer to give you more business or consumer having good traction in terms of buying, then obviously your intensity can be slightly lower.

This seems to be not happening, one has to really push hard in terms of really getting that more from the counter. That's why I said that new entrant still maintains high competitive intensity.

Third, on coming to freebies, I think it is general trend. It is not specific to my focus towns.

I think there has been some letup we saw in terms of economy, but it's mixed. Somewhere we see that is happening, some markets we see that it is still continuing.

Frankly, I don't know whether it is because of stock they have or it's a regional strategy, I think is yet to be figured out, but it is a mixed in terms of the offering free products in the market.

Sure, thanks. Very useful.

Thank you. That's all from me.

Thanks, Abneesh.

Hi team. Thanks a lot.

Just two questions. First, if you could kind of give us the value growth in decorative, how is it?

Is it in the mid-single-digit, is it in the double-digit levels, or in the high-single-digit? Kind of give us some clarity over there.

Also, what do you see it has remained healthy, how is the momentum? The similar thing on industrial, which segment as well.

If you could kind of start with that, please.

Yeah. In decorative, it is high-single-digit is our growth, and as I said, we cautiously planned that way.

That is one. Abhi, what is the second part?

I missed.

Industrial, it would be then double-digit. We have moved to double digits over there,

and this is

high single digit, that is how it would be, sir, right?

That's right. That's right, correct.

Then.

What happens, Abhi, quarter by quarter, mix also keeps changing. Because Quarter 1 is heavy on decorative, then Quarter 2 is different, Quarter 3 is different.

That mix keeps changing. That's why I think our consolidate numbers also look different in each quarter.

The mix also had an impact, right, logically, sir, because your industrial is growing more and hence, that's how it will also have an impact on the margin profile. Is that understanding correct?

That's right. One more thing, Abhi,

is

industrial margin obviously has improved over the years, and now because of this price settlement that is happening and which is taking time, that's why you might see 1.3 odd percent reduction in gross contribution, but I'm sure as price development will happen and cost price pass-through will happen, I'm sure you will see the improvement there also. Okay.

The margin guidance is retained. I just wanted to reconfirm that part, that was the only bit for FY '27.

Indicator is starting

Looks like. I think our endeavor is to really maintain that, yes.

Sir. Okay.

The second, the last bit was on the capex, sir. If you could kind of just give us a sense on what does this mean from an annual capex outlay perspective, this ₹600 crores.

Is this going to be more front-ended and hence overall capex, what we should kind of build in? That was the only bit.

Last, sir, if I may, with your permission, if you could just spend some time explaining this employee engagement program details, if you could kind of help us understand what has been done, how much are we outlaying on this? Those were the two points.

That's all from my side. Thank you very much, sir.

Yeah. On capex front, our normal capex is about ₹150 to ₹200 crore, and this capex outlay ₹600 crore will be over two about two years, two-plus years.

That is how it will be spread out. I don't see any significant impact on the annual capex that will happen.

That is on first part. Second part, you talked about employee, right?

Employee

Yes, engagement. You said employee engagement, there has been increase in employee engagement programs.

Was this existing employees you were essentially doing ESOPs or if you could just explain what was that meant Jason highlighted in the start?

Okay. That is employee value proposition.

That is more to do why people should join Nerolac per se. Because I believe in current this talent race, it is really becoming difficult.

One is to retain and attract talent, and I think this is also part of a global HR program where every group level, we are doing this activity. Hence, this is one initiative from our side really to drive this complete change in the process the way we interact, hire-to-retire kind of a life journey of an employee, what can be done.

It is from that angle, and I'm sure with that, with our higher engagement score, I'm sure we'll able to sustain and improve it further as far as engagement is concerned. That was a part.

Got it, sir. Sorry, sir.

Sir, just this ₹200 crores plus another ₹600 divided by 2.5, 2, 2.5 years, is how I should build the annual capex, is that what

the

understanding?

Correct. You're right, correct.

Sir. Thank you very much.

Thank you, Abhi.

My first question was on the decorative and industrial coating side. How do you see for the remainder FY '27 demand looking like, which is the primary contributor to the incremental volume growth at this stage?

Disha,

as I mentioned earlier, in terms of decorative and industrial, both, I think the way we saw this market development since November, I think it has been continuously improving, and we see that trend going forward continuing. It's very difficult to put numbers and figures, but I think you will see through this result this quarter, I'm sure you will see quite positive figures coming back, and I'm sure that trend we hope it continues.

In addition, our Diwali this time is in month of November, hopefully our Quarter 3 where October will be fully available for us to really deploy material and have that full painting cycle. We believe, all in all, I think there has to be slightly better season going forward is what our belief is.

Industrial, as I said, I'm sure market will continue to expand, but in addition to that, the way we are driving new segments and higher penetration through premium products and technology-driven solutions, I'm sure we hope to maintain good growth levels in industrial as well.

Got it, sir. Sir, my next question was on the dealer network side.

How is the productivity per dealer evolved? Are any recent dealers reaching the targeted sales level within the expected time frame?

Yeah. We have not measured in terms of timeline like that, but I'm sure productivity definitely has gone up per dealer because of our focus on premium products.

I think that is certainly up as far as productivity is concerned. The second, in terms of time, I don't think we have that matrix in terms of when he reach that particular size or scale.

Very difficult to say that.

Got it, sir. Just one last question on the medium-term strategy side.

The decorative paints industry is really competitive with significant investments from both incumbents and new entrants, right? Have you observed any changes in the pricing discipline or dealer incentives or competitive behavior during the Quarter 1 compared with the previous years?

No,

no change at all. I think intensity continues in the market as it was possibly in last year or even Quarter 4 exit also it is same.

Both on the painter applicator or on scheme front, it is same.

Got it. Thank you so much, sir.

That's it from my side.

Yeah. Thanks for the disclosure.

You have highlighted the growth rates in projects separately, construction chemical, waterproofing, as well as premium wood finishes. If I can ask you more about what will be the growth in, let's say, value for money decorative paints as well as the premium decorative paints.

Also, how are the price hikes in industrial coatings per se? Because generally we have seen the price hikes in industrial coatings lag at least one to two quarters the price hikes in decorative paints.

Any view on the industrial price hike, that is question number two. Lastly, the capacity expansion is happening, but the way the market leader is also investing in backward integration, any strategy like that along with the capex that Kansai is doing, or whether in a way backward integration will not be looked at at this stage?

These are the three things. Thank you.

Okay. Economy and super-premium was the first question.

I think economy grew mid-single-digit, whereas super-premium grew double-digit, is what I can say as far as overall product portfolio is concerned. In terms of industrial price hike, I think it is very difficult to put that number, because it's all at customer level.

If I have to put a number to it, I think it will be about 5% all you can say. That's what the number we have got so far.

There are a lot of discussions happening, which will obviously be adding further in Quarter 2. Other thing to note is also when we ask for price increase, it is always with effective date.

Obviously our ask is from 1st April, it depends on what our negotiation levels are and how much leverage we get. I think all in all, we are pretty satisfied with progress so far, and I think we hope to get more as far as Quarter 2 is concerned.

That is on industrial part. Third part was on capacity.

Our capacity increase is definitely considering backward integration. If you note there is a resin which is mentioned.

That resin is nothing but backward integration for automotive paint. In fact, I think we are the only one in India who manufacture full range of resins intermediate that are required for automotives, right from CED to metallic to topcoats to clear coats.

I think that is always our endeavor. However, we are not getting into backward integration of a raw material.

That is not yet on the card. In future, I don't know whether if we find it worthwhile, definitely we'll have to discuss that.

Another advantage which we have is, I think as a Kansai Group, we have operation in more than 30-odd countries, where we have many assets which produce variety of products, right from high-end intermediates to economy kind of intermediates. I think as per the need, we can always source depending on that kind of item if required.

As a group, I think we are well equipped to handle a lot of backward integration, which possibly we may not have. That can be always sourced from the group.

Okay. Sure, sir.

Just one last question. It seems that now Kansai is investing more.

With the aggressive strategy, it seems. Is there any target that you can share on market share, let's say in 3 years or 4 years, 5 years, that the company is looking at?

Is there any additional spend in terms of ad spend or trade spends, etc., which you can quantify? Yeah.

Thanks.

Right, Aniruddha. Our capacity expansion obviously been happening in automotive and industrial side and powder coating, where obviously we are leaders.

In industrial also, I think we are in a very strong position growing higher than the market. There, obviously, we would like to be number one as far as industrial, even non-auto business is concerned.

That's our endeavor, and we I think in next year also, or sorry, in next 2 years, our endeavor is to reach there, that is one. On decorative front, obviously, competition intensity and I think when we elaborated our strategy, it was very clear that we would like to maintain our position, if not increase if not improve.

That is what we are really investing in, to have that market position maintained. Once, I think this dust settles and I'm sure there'll be time when Nerolac brand, which is number two brand recognized in the country, I'm sure we'll have our chance to grow further aggressively and expand the market.

That is what I would, in short term, I think that is what we would like to really say about this growth strategies.

Sure. Sir, about any incremental costs that the company is looking to incur, any impact on, let's say, margins or even in Q1 if there was any?

No.

Aniruddha, as I mentioned, our ad spend actually we increased in the Quarter 1, and given our mix, actually we could sustain our margins. I think it is suffice to say that our investment will be commensurate with the mix that we are trying to drive in the market.

I'm sure it has to be very productive investment. It's just because I think for Nerolac, awareness is not a concern.

I think our awareness is 95-plus. I think people know Nerolac brand, people know everything.

I think it's availability, distribution reach, and then obviously getting conversion, I think, is our priority and for which we are investing in the market. Digital is our main spend, where we are actually targeting these towns now, and we saw very good success when we target the market rather than just being on the television and trying to sprinkle everything everywhere.

I think that's our approach. The net net ad spend has increased, and it is in line with our overall mix improvement that we saw.

Hence, the impact on the margin is not significant at all. Yeah.

Sure, sir. Very helpful.

Many, many thanks.

Thank you, Aniruddha.

Hi, sir. Good evening.

Thank you for taking my question, and congrats on a decent set of numbers. Sir, first question is on, the quarter margins.

Seems like in 1Q, we did not see any impact on the gross margins as you would have some low-cost price inventory. How should one think about second quarter margins, which will see both an impact because of a seasonally weaker quarter and also you will start consuming the high-cost inventory, and the full impact of that will come in 2Q?

How should one think about the margins in 2Q specifically? That's question number one.

Yeah.

There was some inventory which was there with us, both on RM and FG front, in Q1. Q2, obviously, there will be high-cost inventory, but coupled with that, the full impact of price increase of Deco as well as industrial will come in.

We are quite hopeful that we'll able to manage this overall inflation that was there. Needless to say, it is challenging, but obviously with our internal sourcing efficiency, value engineering, and formula optimization, obviously we'll try to overcome that.

The second thing is also the inflation which was there in month of June at peak, we saw some downward trend also and the slight deflation that has happened. I think that augurs well in terms of offsetting if there is any shortfall in the price increase we see, I think it will be helpful for us to really manage that overall cost inflation.

I think in net net, I believe, while it is challenging, but obviously our endeavor and our internal alignment and initiatives are to maintain our margins compared to last year same quarter.

Understood. For the quarter also, you have a outlook of maintaining margins.

That's actually wonderful. Sir, if you can just talk about what is the level of pricing growth in this quarter on an overall consolidated level, and what is the kind of pricing growth that is likely to go through in 2Q again on a consol level, which includes both Deco and industrial, given industrial price increases will come with a lag?

We can get some understanding on the level of pricing that we can expect. Yeah.

I think in Quarter 2, I believe, Deco we should see additional 3-odd percent which will flow through, which did not last quarter. Industrial, I guess, it will be another maybe 3% to 5% is what's I can put.

That is a number which will come along.

For this quarter, what was the pricing for this quarter on which I can take a 3%

About 5%. About 5%.

On a consol level?

Yeah.

Understood. Got it.

Got it, sir. Thank you and wishing you all the very best.

Thank you, Mihir.

Hi, sir. Percy Panthaki here.

Am I audible?

Hello?

I just wanted to understand in terms of the decorative business, is there no price hike this quarter? Because you mentioned that volume is in line with industry, which is a high single digit.

Then in response to another question, you mentioned that sales growth in Deco is also high single digit. If both are high single digit, does that mean that this quarter actually no price increases have gone through or if they have gone through, they have been nullified by some other aspect which I'm not aware of?

Yeah. Earlier I did not talk about volume growth in decorative, I talked about value growth, which was slightly lower than the competition, which is what single digit is.

Our volume growth is obviously lower. It is the low single digit.

Okay. Got it.

What is the reason that the volume growth is on a lower side, because this time Asian Paints said that the mix effect has actually been positive, it is the volume which is a genuine volume growth and not through low value-added products?

Yeah. That is right for them.

For us, our mix is obviously not in line with what possibly industry is. That's and we are correcting that, hence we are sacrificing some of the volumes and trying to overindex on the premium market, which is basically emulsion.

That's our endeavor and that's why this picture you are seeing.

Okay. Understood.

That's all from me. Thank you.

Thank you.

Hi. Am I audible?

Yes. Hey, hi.

Thanks for taking my question. Just quickly on the ₹600 crores of capex that we are announcing.

If you look at our reported numbers also, excluding cash, our ROE, ROCEs are in between 15% to 18%. What are our expectations from this incremental capex of ₹600 crores over the next 5 to 6 years and average ROE or ROCE that we are intending to make?

Yeah. I think it will be in line with what we have currently, because growth will also be in that direction.

In terms of capacity utilization, is the current industry utilization optimal, 70%, 75% and above, and thus we need to have this addition capex, or this is for

newer set of products? No, you're right.

That is how it is. Second thing is our start-to-end, I think, in industrial is quite high, so that is why it is going to take about 2 years from now.

By then, I think we'll be reaching our capacity where we need definite addition to meet market demand.

All right. Given that our asset turns are usually around 1x, right, at consol level, would that continue even for industrials, or we do a relatively higher asset turns for industrials versus Deco today?

Similar one. That

if that's the case and if our margins expectation is 15%, we are not hoping for more than 15% ROCE even in the new capex that we're doing today? Yeah.

Right now, yes, it also depends on how market develops. Other important thing is also, there is some kind of a front-loading in this capex to the extent of some of the infrastructure we're creating.

Hence, the additional capacity which will be required, let's say, in '29, '30, if this growth volume continues, will be slightly lower than the current capex. My per kl capex for now and the future incremental capacity will be far better, and with that, I think our ROCE will be slightly on the higher end towards 18% is what our expectation is.

All right. Thank you so much for taking my question.

All the best.

Thank you.

Yeah. Hi, sir.

Am I audible?

Yes.

Yeah. Sir, thanks for the clarity on the margins.

Just one thing, I wanted to understand. You said FY '27, we should be able to maintain kind of a margins if things remain as they are.

How do we think about medium term? Basically, do you think that you would kind of maintain these kind of margins and drive the premiumization gains and invest in the brand?

How do we think from a medium-term perspective? Is that first observation is correct, that is the right stays assumption for FY '27?

Yeah.

You are right, Amit. I think if you look at our Quarter 1, how do you see this Quarter 1?

I think with industrial also sizeable portion in our portfolio, okay, it changes quarter-on-quarter, may not be 50-50, maybe it is 45 this quarter or 55 decorative, but in industrial, I think if you look at our main items like solvents and everything, we don't maintain inventory of 30 or 60 days for solvent. I think they are just barely 15-odd days, and the kind of inflation that we saw in solvents, I think is humongous, not that we got price increase next day.

Despite that, I think we could maintain our margin and actually in absolute term, we improved overall profit pool. I think that shows the capability and the price-through or the managing overheads and everything, the ability of company to really manage that.

With that, I'm very confident that this year also our endeavor is to maintain 13% to 14%. Now again, it is always come with the risk statement that if tomorrow the geopolitical situation expands the way we have some indication sometimes that some more countries have got in and something more happen, if that kind of situation happens, then obviously it's one-off and it's very difficult to control and maintain, but I think the given whatever we saw in last 3, 4 months, I think we could still manage this kind of a margin.

I think over a year scenario, I guess, we should be around our targeted stated margin level. On the mid-term, I think our endeavor is obviously go to higher end of 14%-plus kind of a thing.

That is what we stated in February or, I think, May strategic call also. That's our endeavor in mid-term, and that calls for obvious strategies of premiumization, overindex on industrial segments where you're not present, and trying to grow at a faster rate.

I think all that will deliver this kind of efforts where my fixed-cost leverage will start coming in, where my manpower deployment that has already happened on the ground, investment that have happened in the capacity, all those fixed-cost investment will be leverage. I think that's our endeavor, and that's the game we are playing, and hopefully in next 2 to 3 years, you should see we hitting that range.

Okay. Thanks a lot.

Thank you all for joining. I think it was quite interesting, quite challenging questions and interesting observations.

Thank you so much. Hope to see you in Quarter 2 investor call.

Thanks for supporting us. Thank you.