ASIANPAINT — earnings call
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Prepared remarks
Moderator · Conference Operator
God evening everyone.
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We now have our first caller online with us via zoom.
Mr. Abneesh Roy (Edelweiss Securities), Request you to unmute yourself and ask your question.
Abneesh Roy
Yeah thanks, the first question is on White Teak, so looking very sharp number versus the full year.
So, is there a seasonality here and is the growth coming because of the addition of the distribution or is it because it is doing well on its own?
Amit Syngle
So, we have used multiple areas to kind of take the Whit Teak business on.
One of the company owned stores, we are increasing the company owned stores from their current number to of 10 to further stores and some numbers have already got increased.
We have also introduced White Teak in our Beautiful Homes stores which are total 31 stores now to that extent and we have now expanded the whole design and the range which we are offering in White Teak.
Some very good work which has happened in all that space, so we think this business which we are gaining getting is more because the fact that there is a larger distribution now available.
People have more access at the same Q&A 22 | P a g e time we are also focusing in terms of looking at getting more and more customers to the virtual site so that we can get more leads.
Abneesh Roy
Sure, my second question is on AP-PPG, so 19% revenue CAGR.
I don’t think the industry would be growing at this level, so if you could elaborate who are you gaining market share from, and then in which industry segment have you gained.
Amit Syngle
So there are two segments, or the three segments which we have done extremely well.
One is the segment of Powder coating where we have been able to kind of really get very very good business from the medium sized industries with in the area of fans, helmets and so on and so forth which are there to that extent and this business has been really growing at exponential growths overall in terms of what we see and we are getting a higher selling prices as well to that extent in terms of the realizations which are there.
The second business is the Protective paint business which again, we have been able to focus on the oil and gas sector and some other sectors which are there to that extent where we have got good sales coming in and the third area is the whole area of Road Markings and Flooring.
This third areas also kind of grown very strongly with us.
We feel that largely as we see, we would have gained from the organized players in this market in a very strong manner and this is something which is a strong trajectory basis superior products, good quality and good servicing.
Moderator · Conference Operator
Thank you sir, we now have our next caller online, Mr. Avi Mehta (Macquarie) who is online with us via zoom.
Sir, please unmute yourself and ask your question.
Avi Mehta
Hi Sir, thanks for the opportunity.
I just wanted to ask on the margin front, you know if you could give us a sense on your outlook on the input cost environment especially given the almost 10% odd correction that we’ve see recently in titanium dioxide prices in China and a related question would it be fair to read your outlook comments as 23 | P a g e one, Q1 being the bottom of gross margin and we steadily recovering probably in the second half to 40-42% reach?
Thank you.
Amit Syngle
So, when we see the overall environment, I think the volatility continues.
I referred in my presentation that Q4 saw 1% and that point of time we thought that was the last of the inflation which we were seeing.
To be surprised by Quarter One where we saw 6% kind of inflation coming and that also on the talk of recession happening in the world and overall prices are coming down over to that extent.
So, I think this entire area will continue to be little bit volatile as we kind of go and see forward because while at this moment we are seeing crude coming down, we are still seeing inflation in prices of rutile and prices of some of our additives and so and so forth which are there to do this thing and especially a very high rise coming with respect to our solvent based raw materials which are there to that extent.
So, as I see it, I think even in Quarter Two we are expecting some inflation to kind of continue to that extent and I don’t think so we should be able to reach that kind of a level till point of time.
While we are taking price increases, we have announced another price increase of about 0.5% in Quarter Two and we will take further calibrated price increases going forward, but I think we are not in a situation where the environment is stable and I think the inflationary kind of environment will continue, but, I think the company by focusing with respect to its initiatives on sourcing formulation and cost efficiencies would kind of really see that we are able to deliver good topline growths at the same time good PBDIT margins.
Avi Mehta
Sir, then this just the other bit on continuing with that theme that you expect volatile input cost, would you see signs, are you concerned about decorative demand weakness creeping in because of this inflationary scenario or is the near term commentary still remaining especially July for example to be bullish, that’s all from my 24 | P a g e side.
And last before I mean if I don’t get a chance sir, I wish you get well soon, I could see the hand, that’s all.
Thank you very much sir!
Amit Syngle
No, thank you for the concern.
Over all what we see very clearly is that you know the consumer demand is definitely is a concern which is there in our mind; but you know what we have seen in Quarter One that after taking almost about an increase of anywhere between 25% to about 28% you know, consumer demand we have been able to really kind of see that the demand is there, the marriage season is quite big for us and that is something which seems to be continuing.
There seems to be obviously a pent-up demand for the last two years of Covid whatever you say in the market, Overall, the housing sector is kind of I would say booming overall.
There are lot of real estate market is going the construction market is also up in terms of this thing, government spending on infra is up.
Given all this what we are seeing we are also trying to balance our price increases as we said and we are taking very measured increases to that extent, so we don’t upset the consumer demand going forward.
So, I think you’re pretty hopeful that in this balancing act as a kind of go forward, while the environment will remain inflationary, we will try to pass minimum kind of increases as far as the customer is concerned and would focus clearly on consumer demand being there in the market because we would really like to drive the top end of the market in a big way.
Avi Mehta
Thank you very much!
Moderator · Conference Operator
Thank you sir, we would request everyone to limit your questions to 2 max.
We now have our next caller online, Mr. Mihir Shah (Nomura), via teleconferencing.
Request you to unmute yourself and ask your question please.
Mihir Shah
Thank you for taking my question and congrats on a strong set of results.
Sir I just wanted to check with you is there any one-off in sales or any case of inventory fill- up at the dealer end, as in you know when 4Q was there, they didn’t have purchased as 25 | P a g e much, so they had to purchase more than normal in the 1st Quarter, so that’s one.
And a supplementary to that is, if you see the KL volumes told in this Quarter, is it a sustainable one for the remaining part of year?
Because historically you know we have seen 1Q sales in normal years to be one of the lower versus the other Quarters.
So, assuming if you have done this, you know very large part of KL sales in this quarter, you know you should do much more than what you have done this Quarter in the remaining part of the year, so that’s my first question.
Amit Syngle
Okay, so as we see it you know going forward, we see that you know the kind of sales which we have been able to get even in terms of the volume level overall I think has been quite good.
There is no excess stocking in the market which we see very clearly because at Asian Paints I think we believe that you know the turnover of inventory at the retailers end is very important and we should not be really looking at very high inventory levels at the retailers and I think that is why possibly, we focus on servicing so much so I think it is very clear that there is no increase of inventory at the retailers end which is kind of gone ahead and typically what happens is that July and August are the months of stocking which really happens depending on what time is the Diwali to that extent and therefore I think it is devoid of any kind of inventory dumping which are there to that extent.
Overall, what we see is that Quarter One if you look at from a CAGR perspective, I think is about a 20% volume growth from 2019-20 which is there and I think going forward, other Quarters we are also looking at saying that we can maintain a double digit kind of CAGRs over the normal year which is there, is what is the kind of approach we will have it will all depend in terms of how consumers demand pans out and how possibly the B2B business also kind of really grows overall.
So, to that extent I think you know overall if everything goes well, it should be a good growth across the Quarters as we see forward.
Mihir Shah
Thank you sir, my second question is on margin how should one think about margins?
Can one say the margins have bottomed in the 1st Quarter, you know I 26 | P a g e understand the you know single digit inflation that you see, but the price increase should ideally make up for that, so that’s you know one and margin should improve from 1st Quarter onwards and secondly, on current margin structure that we have, its quite far from the long period average of about 43 odd percent.
I am talking about gross margins, so do you see margins going back to those levels or this would be a new normalized margin band that the company is working with?
Amit Syngle
So overall as far as gross margins is concerned the entire index totally depends on the inflation going forward okay.
So, I think we’re calibrating a price increases accordingly to that extent and we are taking price increases only if it becomes a very clear indicator to us that we need to kind of take a price increase to kind of push up the margins to that extent.
I feel that the overall gross margin range for some time might be in the band of about 38-40, as I see it I don’t see it kind of really going up to 40-43 levels immediately to that extent.
I think we are sometime away from that as you kind of go forward till the time we see that the macro situation is improved and we are in a normal kind of a situation, crude comes down, raw material is kind of soften, I think we are little bit far away from that but I think currently we should kind of leave it in that band of maybe 30-40.5 kind of overall gross margin band.
Mihir Shah
Got it, thank you so much and lastly you know if I can ask on bookkeeping on capex and wish you a speedy recovery sir, that’s all from my side.
Amit Syngle
Okay, on capex what is the specific query?
Mihir Shah
So, what is the capex outlay that we have planned for this year and next year?
Amit Syngle
You want to answer that?
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Parag Rane
Yeah, so for the year we are putting a number of close to about Rs.
800 odd crores from capital outlay point of view, most of it going to our brownfield capital expansions.
Mihir Shah
Thank you Parag and wish you a speedy recovery sir, thank you so much.
Amit Syngle
Thank you.
Moderator · Conference Operator
Thank you sir we now have our next caller online, Mr. Richard Liu (JM Financial), who is online with us via zoom.
Please unmute yourself and ask your question sir.
Richard Liu
Hi good evening, can you all hear me?
Amit Syngle
Yes, we can hear you.
Richard Liu
Thank you.
Sir…
Amit Syngle
Sorry, sorry your voice is coming.
Some echo is there in your voice can you go away from your speaker and speak possibly?
Richard Liu
Okay, is this better?
Amit Syngle
Yeah, little better, yeah.
Richard Liu
Okay, so I was asking about you know what you mentioned about in the outlook slide, that Q2 inflation estimated to be in low single digits.
Is this y-o-y or q-o-q.
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Amit Syngle
Okay, so see overall inflation which we were talking of was first of all, we said that if you see Q1 from Q4 was about a 6% kind of an increase in terms of what we saw.
In Q4 we saw about 1% increase compared to a Q3 which was there overall to that extent and overall, what we have seen is increase of almost about close to about 34% overall in terms of what you have seen as inflation from Q4 of last year.
Parag Rane
On your question about Q2, yes, we have indicated a single digit kind of inflation on Q2 over Q1 current year.
Y-o-y would still be in the region of about 25 odd percent, because we had a steep inflation coming in Q3 of last year.
Richard Liu
Parag, if I look at the headline numbers for TiO2 and Crude…
Parag Rane
Richard, I think we are losing you in between, but I would still try to answer it.
So, while we are saying that TiO2 and other things have softened to an extent, but in our sort of raw material basket what we are seeing is including TiO2 and while crude has dropped a bit of the solvent category has moved up quite significantly, we saw that kind of inflation hitting us even in Q1 of current year.
So really the linkage between crude prices the headline crude prices coming off and some of our consumption prices not showing that kind of a trend, I think that still exists.
So, we sort of live with that as we go forward.
Richard Liu
No Parag, I am talking the other way round, I am saying that the headline inflation is actually more than…
Amit Syngle
No, overall see there is always you know the lag in terms of the overall prices in terms of what we see so currently in terms of whatever softening which you have seen which is there possibly that is indicative of some kind of a lower inflation as we have seen in Q1 over Q4 to that extent.
So, I think, what we are saying definitely is that yes there is softening in terms of the overall level, but the inflation is still there to that extent 29 | P a g e in terms of what we are calculating.
So, I don’t think so you should go by the general overall parameters which we are seen in terms of, what we are saying that there is a 6% inflation and rutile being a very strong contributor in terms of the overall raw material, you could link that a large part of inflation is also coming from rutile.
Richard Liu
If I go by the fact that you know we are talking about mid-single digit inflation and your incremental price increase is about 0.5%.
Amit Syngle
About 2 % in Quarter 1.
Richard Liu
No, in July.
Amit Syngle
Okay.
Richard Liu
Right, so we are talking about a 6%, a low single digit raw material inflation.
Are you saying your gross margins in Q2 will be lower than Q1?
Amit Syngle
So, see the Quarter 2 is still not over in terms of what is going on so we are still kind of monitoring the situation so when we say that we are expecting a lower digit inflation number, we still don’t know whether it is going to be at about 1%, 1.5% or 2% kind of a zone.
We are estimating all that and there could be depending on what is the kind of inflation, what is the kind of other efficiencies we are getting, we might take more calibrated price increases as we go forward.
Richard Liu
Okay, okay and second is White Teak turnover of Rs.
20 crores that is included of consolidated results of this Quarter?
Amit Syngle
That includes what?
Sorry?
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Richard Liu
The White Teak sales of Rs.
20 crores, that’s a part of the consolidated sales
Parag Rane
No Richard.
So, in White Teak we have a 49% stake Richard, so from a top line perspective it doesn’t really get consolidated, but the profit gets consolidated in our overall profits.
Richard Liu
I think that’s a part of the associates…
Parag Rane
Correct, correct.
Richard Liu
Okay, got it.
Thank you very much, I wish you all the best.
Amit Syngle
Thank You.
Moderator · Conference Operator
Thank you sir, we now have Ms. Latika Chopra (JP Morgan) who is online with us through zoom.
Please unmute yourself and ask your question.
Latika Chopra
Thank you so much for the opportunity my first question was on the B2B business you know, this has been growing quite strongly for you.
So, if you could share, you know, what is the sales of B2B revenues in your standalone decorative business and is there a very big difference in the 4-year CAGR that you shared between B2C and B2B that was the first question; and the second question was again just trying to understand the strong demand better.
Any thoughts on you know it seems your market share gains have probably accelerated in the last few Quarters.
How much of this will you attribute to distribution expansion you know in semi urban, rural areas? any thoughts there? thank you.
Amit Syngle
So, first of all, if you look at the entire B2B business.
Today I think the business varies from anywhere between 15-20% of the total business in terms of what we 31 | P a g e do in terms of the contribution which kind of comes in and today the business is something which is very well distributed across the country and it comes from various segments, so whether it is the builder or the construction segment which is largely there or it comes from the cooperative housing societies or it is from the direct sales to factories and government and so on so forth to that extent.
So overall this business has been growing overall fairly well for us to that extent and largely I think here the key point has been the quality of our products, the prepositions what we are able to offer to the various segments and also along with us the entire waterproofing business, we have been able to really give a very very strong preposition to the market in terms of looking at the overall project sales doing extremely well for us overall.
So that’s I think the key reason in terms of why the overall project has been growing at a very strong chip. sorry, what was the second question?
Latika Chopra
Yeah sorry, okay my second question was basically on some flavor on the distribution reach increase.
Amit Syngle
Yeah, okay.
So what we see is that overall there has been good performance due to a virtue of not many reasons one reason what I would say is that overall the brand has done quite well.
We have been spending huge amount of money on the marketing in terms of for furthering the corporate trend and also looking at in terms of various strong prepositions which kind of come in and I think, today we have a decent spend with respect to even the digital in terms of what we are doing in terms of getting the new age customer in a very strong manner.
As far as distribution goes, we have been expanding the network very aggressively for years to that extent and I think we have just looked at putting a little bit more aggression on that in the last about 2-3 years to that extent and overall we feel that, that is an inherent part of our overall strategy in terms of looking at saying that we could kind of reach to every part of the growing country the way India is to that extent.
So, I would say that we can’t figure out only one factor that it is just because of distribution that today we are doing better, but I think it is a combination of 32 | P a g e factors in terms of looking at better products, innovative products, good marketing, good servicing and the extension of our retailers across the country.
Latika Chopra
Thank you, thank you so much.
Moderator · Conference Operator
Thank you we now have Mr. Shrenik Bachhawat (LIC Mutual Fund) through zoom.
Request you to unmute yourself and ask your question please.
Shrenik Bachhawat
Hi sir, thanks for the opportunity.
My first question is, I would like to understand if there is any major change in the product mix in this Quarter versus the last 2-3 Quarters for us?
Amit Syngle
So, overall, the product mix was much better as we saw it and we had a good quantity of overall emulsions which sold better in terms of mix and these emulsions were both from the economy segment as well as from the premium and the luxury segment in terms of what we were able to do.
We also sold good quality of premium and luxury products as far as our overall waterproofing and wood finishes business go.
So overall, I would say the product mix was much better.
Shrenik Bachhawat
And sir, is there any specific geography which has been doing very good for us recently and if we take for a longer-term perspective for the next 5 to 10 years, what do we take as a volume CAGR target for our company?
Amit Syngle
So overall, if you look at from a geographical variation when you are growing at almost 50-60%, I think all geographies has grown very well for us.
I can only say that specifically if I look at the geographies of West and South in Quarter One, they have kind of done possible incrementally much better in terms of what we were kind of see overall.
As far as the overall, you know today any organization would like to pursue, we would obviously like to pursue very healthy volume growth going forward because that is a 33 | P a g e strong indicator of how the organization is going forward and we are definitely looking at saying that one of the areas we want to kind of continue to kind of keep on looking at double digit volume growth.
Shrenik Bachhawat
Thank You so much sir.
Moderator · Conference Operator
Thank you, we now have Mr Tejash Shah (Spark Capital) through zoom.
Request you to unmute yourself and ask your question please.
Tejash Shah
Hi, thanks for the opportunity and congrats on very good set of numbers.
Sir couple of questions on first of this extension of an earlier question on dealer additions.
So, 5000 dealer addition in a Quarter is a very robust number.
Just wanted to get some sense on profile of these dealers, are they part of the industry, and we are gaining market share against existing brands in the dealership networks or are they virgin dealers getting into the industry from some other larger basket of home building or other adjacent industries?
Amit Syngle
So overall, you know, when as Asian Paints we look at the entire distribution network, we look at all kind of retailers because today we are dealing with the retailers who are into hardware, we are dealing who are into electricals.
We deal with people who are in cement and steel.
We deal with the people who are in PVC pipes and so and so forth or are in other building material stores to that extent or even our plywood dealers and so and so forth because today it is very difficult to define that you know a retailer will deal in only one category.
Normally what we are seeing is that retailers tend to kind of get into multiple categories, if they are in the whole area of building to that extent and therefore what we keep on exploring is that actually opening retailers more from the point of view of reach to the consumers.
So, we look at clear clusters which are coming up where possibly our reach to be better this could be in the existing cities, it could be in the suburbs, it would be in the newer towns be in some of the upcountry low population 34 | P a g e towns to that extent and I think the overall range is pretty wide in terms of what we look at.
The idea is very clear that as Asian Paints we should be able to give him a profitable kind of venture which kind of really leverages his whole business and kind of really drives us towards growth.
So, I think we look at all type of retailers in terms of a choice of extending the distribution.
Tejash Shah
Sir, second question pertains to our ‘share of wall’ to ‘share of space’ vision.
Now historically lifestyle categories brand, successful brands have not been created without either controlling the retail experience which is retail network or controlling the back end – which is manufacturing.
So as of now, our model seems to be devoid or rather not committing capital to either end so as we need to plan for next 5-10 years how are we thinking about this this evolution in our business model.
Amit Syngle
Actually, contrary to what you are saying, we are focusing on both the ends.
We have all the businesses we have gotten to our own manufacturing be it kitchen, be it bath, be it, lighting, be it in terms of now windows and doors, or it is in terms of furnishing to that extent and therefore it is all coming from in-house in terms of what we are making, either it is in terms of acquisition or it is in terms of some alignment which we have done kind of a thing so we are able to control quality, we are able to control design and therefore that is a very strong strength which we have acquired and at the front-end, I think today no other player gives a kind of inspiration and experience as we give to the consumers because we operate through about 31 Beautiful Homes stores which are there today across the country.
These are state of the art stores and comparable to any international store which you will find in Singapore, Paris or London to that extent.
It is totally digital which has a digital journey which kind of comes in, visualization is excellent it is based on 3D and 4D models which are there, and we also offer an execution service which is like a BHS which is there to that extent.
So, I think we are offering the customer right from very strong product, which is manufactured in-house, designed by us to an 35 | P a g e experience which is really exemplary which works out so I think we are working on everything in terms of what possibly is right in the category.
Tejash Shah
Thanks, and all the best.
Moderator · Conference Operator
Thank you sir, we would now request all participants to introduce ourselves with your name and your company name before asking questions.
We now have a next caller Mr. Alok Shah (Ambit Capital) who is with us via teleconferencing.
Alok Shah
Yeah, thank you and Sir congrats on the good performance.
Sir my first question is actually an extension to what Tejash had just asked, so my question is you know at the current juncture, the hardware stores, the PVC pipes, etc. So, they would potentially may not be keeping any paint brands, but in that vicinity, you would already have some dealers, etc. who would be servicing the paint or which is absolutely new geographies that Asian Paints is stepping through this channel, and second question is how is the servicing to this channel of hardware store, etc. happening in terms of the different assortments or the different SKU’s that you have.
Amit Syngle
So, I couldn’t understand the second part of your question what is the assortment of what they’re having at the hardware stores?
Alok Shah
No, so the second question was in terms of the servicing, because I understand they would not be having the tinting machine given the space constraint etc. So how is it that the servicing to those stores happening currently?
Amit Syngle
So, I must say that possibly I think you should take a round of some of the towns and cities to understand how the stores are first of all, but, I think overall when we look at from a point of view of our distribution strategy, we are very clear that we approach the whole strategy in form of a cluster.
So if there is already in existing retailer 36 | P a g e who’s there we will take care in terms of that we are not really opening someone right next to kind of compete with the retailer to that extent and therefore what we clearly said we look at is we look at extension of suburbs in the existing cities, newer towns which are kind of coming up and really look at clear clusters where possibly our customer reach might not be very good to that extent and therefore we have no problems in terms of looking at possibly a certain reach in terms of what we are able to get.
Secondly these stores are not small and in fact if you keep on going deeper into the country, the stores get bigger the stores are only small in cities like Bombay and Delhi, where the real estate is of a very strong value.
As you kind of keep on going in smaller towns you will find people able to offer you even 2000-3000 Square feet of space which is available and tinting machine doesn’t occupy much of a space to that extent and therefore we try that with most of our openings, we try to give them tinting machine so that they get a flavor of tinting and they are able to kind of supply to their customers the best of the colors which they can overall open to that extent and therefore that’s a very strong model in terms of looking at opening newer retailers with tinting machines to that extent as they kind of go forward.
Alok Shah
Got it, and sir would there be any numeric target that you can guide us with?
Maybe in terms of overall dealers, or the retail network expansion, because I think it is closer to around 1,50,000.
Any medium-term target that you can share?
Amit Syngle
So yes, we have about presence of about 1,50,000 retail points which are there and we keep on looking at saying that depending on how the country is expanding, how the demographics are panning out that we should be able to add anywhere between 5000-8000 retailing points every year.
Alok Shah
Okay, okay sure and sir the second question is on the overall dealer incentive structure, etc. Just wanted to check, you know how it has evolved.
Has there been taken 37 | P a g e place at the company’s end?
At the competition’s end?
Over the last 3-4 years or it largely remains the same?
Your thoughts on that, that’s it.
Thank you.
Amit Syngle
Sorry, what has evolved?
Alok Shah
No, the dealer incentive structure, etc.
Amit Syngle
Okay.
Incentives I think our incentives at the end of the day it is the dealers are quite proficient and clever in this.
So, I think what really matters to them is the per litre kind of a discount.
You can give the discount in 10 ways to the retailer to that extent.
It doesn’t matter overall, but I think overall the incentive structures have not changed.
At points of time in the year it kind of gets aggressive by everyone, sometimes it is a little bit more benign in terms of how it goes but overall, I think the incentive structure are remaining the same.
Alok Shah
Got it sir, thank you very much and best of luck for the next Quarters.
Amit Syngle
Thank you.
Moderator · Conference Operator
Thank you sir, we now have Mr. Shirish Pardeshi (Centrum) through zoom.
Request you to unmute yourself sir.
Shirish Pardeshi
Yeah, hi Good Evening Amit.
Thanks for the opportunity and I was completely surprised with the kind of volume growth you have shown Quarter on Quarter.
So, my first question is pertaining on the volume growth I’m not getting into deeper but if you can help me how this growth has come.
I mean I’m not getting into region wise specific but if you can, you have already touched upon the premium emulsions and even the economy has done well, but if you can break that how much it is contributed through the decorative paints side and the waterproofing side?
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Amit Syngle
So overall what we can say is that I think when we look at both retail and projects, I think both businesses have contributed very strongly to the overall volume growths.
I would say that the projects has contributed even still higher in terms of looking at the overall business to that extent.
The other thing what we see is that the T1, T2 centers have kind of contributed to higher volume growth which is coming both from the premium and the luxury products and the wood finishes and the waterproofing zones which are there to that extent overall.
So I would say that when we kind of look at our overall growth, a large chunk of growths are obviously coming from a lot of our you know premium and luxury products which are lying in emulsions, wood finishes and waterproofing business but at the same time good growths are also coming from our economy emulsion, the upgradation emulsions which are there to that extent and they have also kind of grown extremely well overall.
So, I would say it’s a fairly balance growth in terms of what we would seeing.
Waterproofing would have grown at a slightly higher pitch overall to that extent, but I think it’s a fairly overall balance growth in terms of what we have been able to see.
Shirish Pardeshi
My second question is on the Home Décor.
By when, do you think you will start reporting the numbers because what I see in this Quarter you have taken out your reporting on Home Improvement also.
So, I think that’s a suggestion, but, I am more keen on looking at this 31 stores, what kind of revenue you are doing now and maybe you actually said that you want to have around 8 to 9% 10% contribution, but in the medium- term what is the target or if what is that and what is the run rate you can share?
Amit Syngle
I think it makes sense in terms of reporting when you reach a number which is strong as I said earlier that we are you know really kind of saying that we want to kind of look at the next 3-4 years to kind of look at almost 8-10% contribution of the Decor business going forward.
So, I think as you go through this journey we will at the right time possibly look at in terms of putting those numbers out.
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Shirish Pardeshi
Just lost bookkeeping question on the tax rate Mr. Jeyamurugan if you can help us up what should we factor in for this year and next year?
R.J. Jeyamurugan
Maximum tax rate.
Today is 25% plus surcharge it should be around 27%.
Shirish Pardeshi
Okay.
R.J. Jeyamurugan
It is the same rate, there is no change.
Shirish Pardeshi
Okay thank you.
Amit Syngle
You have some news that the rates are changing?
Shirish Pardeshi
I will come and personally tell you anyway Amit, thanks for the opportunity and best of luck and take care.
Amit Syngle
Thank you.
Moderator · Conference Operator
Thank you sir.
We now have Mr. N Sai Chandu.
Please unmute yourself and ask your question sir.
N Sai Chandu
Yeah, so congrats on this great performance that you showed this Quarter.
So, my question was on the price increases.
One is that you are saying that you are keeping a close watch on the situation and the situation is volatile and you said a mid- single digit price increases is for the forthcoming Quarter is what we are pricing in for the Quarter ahead?
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Amit Syngle
So, what we have done what I said is that in terms of inflation, we are saying that the inflation could be anywhere around 1.5% to 2% in terms of what we are saying currently we have taken almost about a 0.5% increase as on first of August and depending on our exact calculation and how the environment pans out, we will look at possibly taking more increases as we go by.
N Sai Chandu
Okay and one more question sir if you could allow me.
How many painting jobs are we doing currently on a monthly basis, let’s say when we are going to each of the houses of the customers and getting homes painted.
So how is that segment of our vertical doing currently?
Amit Syngle
So, I think that is being quite well.
We are now represented in more than 600 towns across the country which is there and overall, you know the number of houses which we do, vary from a month to month and it varies from size very strongly.
So, the numbers do not really mean anything what I think is important is the per square feet which we are kind of able to paint every month to that extent and that is something which we evaluate internally but that is a business which has been doing quite well overall to that extent and we feel that the whole Safe Painting service which we are running is one of the best services across the world.
N Sai Chandu
Okay so sir, if you could just tell me the square footage that we are painting on a ballpark basis?
Amit Syngle
Sorry that number can’t be disclosed.
N Sai Chandu
Thank you.
Moderator · Conference Operator
Thank you everyone may I now request Mr. Amit Syngle to deliver the closing remarks.
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Amit Syngle
Okay great, you know it is wonderful to have all of you with us for the investor conference for the Quarter One of Financial year 2023 and we really hope that possibly we keep the same pace in terms of our delivery as we kind of go forward and keep on giving you the good news as we march forward in this year.
Thank you so much. ###