Akzo Nobel India Limited (NSE: AKZOINDIA) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Rajiv L. Jha — Company Secretary & Compliance Officer
Rajiv Rajgopal — Chairman and Managing Director
Rohit Totla — Wholetime Director
Analysts:
Jayvansh Mehta — Analyst
Aniruddha Joshi — Analyst
Lakshmi Narayanan — Analyst
Santosh Kesari — Analyst
Presentation:
Operator
You are now rejoining the main conference. Conference over to Mr Aniruddha Zoshi from ICICI Securities. Thank you, and over to you.Thanks, yes,. On behalf of CICI Securities, we welcome you all to Q3 FY ’25 and nine months results webinar of Nobel India. We have with us today senior management represented by Mr Rajiv Raj Gupal, Chairman and Managing Director; Mr R. Krishna, CEO and Board Director; Mr Rajiv, Company Secretary and Pliance Officer. Now I hand over the call to Mr Rajiv Ja for initial regulatory comments and then we will have to comment the management on the quarterly performance. Post that, we will open the question-and-answer session. Thanks, and over to you, Mr Rajesh.
Rajiv L. Jha — Company Secretary & Compliance Officer
Okay. So good evening, everyone to this Q3 investor call of India. And before we start, we are having with us Mr Dohit, the Whole-Time Director who is representing the management team. Let me as for our process, let me start with a safe Harbor statement which is this presentation contains statements which address such key issues as growth strategy, future financial results, market positions, product development, products in the pipeline and product approvals. Such statements should be carefully considered and it should be understood that many factors could cause forecast and actual results to differ from these statements.
These factors include, but are not limited to price fluctuations, currency fluctuations, developments in raw-material and personnel costs, pensions, physical and environmental risks, legal issues and legislative, fiscal and other regulatory measures as well as significant market disruptions. Started — stated competitive positions are based on management estimates supported by information provided by specialized external agencies for a more comprehensive discussion of the risk factors affecting our business, please see our latest annual report. Also, the company has been making the required disclosures for clarification from time-to-time to BSE and NSE pertaining to, which is our parent promoter entity, media religion portfolio review with initial focus on Deco Southeasia and the management would not be responding to any general and/or a specific query in this regard on this investors call.
However, the investors or public at large would be kept informed of any updates in this regard as per the listing regulations. So I’m handing over the floor to Mr Rajiv.
Rajiv Rajgopal — Chairman and Managing Director
Thank you, Rajiv. Anirud, can you hear me? Am I audible?
Operator
Yes, sir. Please go-ahead.
Rajiv Rajgopal — Chairman and Managing Director
Thank you. Thank you. I hope — so good evening to all the members who joined all our investors. First and foremost, thank you for joining us on a late Friday evening. What I thought our entire investor deck is already been uploaded in the afternoon on the website. So I’m — between me, Krishna, Krishna, we are not going to be — there’s an echo, yeah. So we are not going to be repeating or sort of running through the deck, but I’ll give you quickly some highlights and we’ll move straight into The Q&A. We also will, I’m sure over the next few weeks, month have an opportunity to interact with many of you for various reasons. So what I thought is it’s better we quickly keep this to largely the performance of the quarter. And if there are, of course, there will be open questions, I’m happy to answer them. Yeah. First and foremost, as the top-line for the quarter ended, as all of you or have read, we’ve done an income of INR1056 crores, which is about 2%. We believe that this is a strong performance given the sort of performances that the market and the industry would see otherwise. In the paints business, we’ve had a very low — almost touch base low-single digit growth in value. In volume, we registered growth. In the coatings business, we’ve had a high single-digit growth in value and we also had a mid-single-digit growth in volume. So overall, volume is a very positive story. It’s after many quarters that we are seeing a bit of a surge. Remember that one of the challenges we’ve had in this quarter is that from a mix perspective, particularly in segments like putty in decorative paints, we’ve not very aggressively participated given the prevailing market conditions and the discounts that are operating in that segment. Yeah. So that’s the first part. On the coatings vertical, all I would like to say is we’ve had very strong performances in the marine and protective and our Powder coatings business. Our automotive and vehicle refinish obviously had a few challenges, more from a quarter point-of-view, but fundamentally the business is strong with very sharp margins. And we also had a bit of a challenge on the coil coating part of our industrial coating business, primarily because we’ve had large supplies to export markets where we had to take a bit of a correction, primarily because of certain economic challenges in a couple of those countries. So that’s all-in all as far as revenue is concerned on the profit, as you’ve seen, at an EBIT level, we were flat and at a profit level, we were down 5%. One reason for that, of course, if you really look at it very closely is also the income primarily given the fact that we had given a special dividend during November last year as all of you know, is celebrating 70 years in India. And as a result, we as a management team with the approval of the Board, decided to do it. So when you look at the income that is normally generated from the funds, the fixed funds, you can see a slight drop, which is the reason why there is a slight decline in PAT. But otherwise, we believe that the company is in great shape. We believe that despite pretty adverse market conditions in our paints business, we’ve been able to hold foot. We still believe that with the launches that are being done at the top-end of the portfolio and a few launches in the waterproofing segment, which was done towards the end-of-the quarter. We believe that we’ve still got a right to win. And we as a team are completely focused on making sure that the business delivery continues to be strong. Yeah. So that’s what I would like to say. Let me now open it to Q&A. And what I would do is, I would now pass it back to and to Anirud and open the floor for question-answers between me, Krishna and Rohit, we’ll do our best to sort of address some of the concerns. And Rajiv has already been kind enough to read the safe-harbor statement. So I’m sure that all of you would be understanding on the same. Yeah. Thank you. Back to you,.
Questions and Answers:
Operator
Thank you, sir. Thank you. We will now begin the question-and-answer session. To ask an interactive question, please click on the raise hand icon tab available on the toolbar or you may click on Q&A icon to raise hand. The operator will announce your name when it is your turn to ask a question. You may also post your text questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from Jayvansh Mehta from Care PMS. Please go-ahead.
Jayvansh Mehta
Yeah. Good evening, sir, and thank you for the opportunity. Sir, my first question was basically in the latest budget we saw that there has been a consumption boost. So how do we see the impact of that on the industry going-forward?
Rajiv Rajgopal
No, I think first and foremost, we really thank the government. I think the consumption boot is a boost is a very welcome move. I think, frankly, it’s something that in the industry, all the CEOs during the IPA had also were all together and we had made a specific request to the Commerce Minister, Goyal, when he addressed the entire gathering live. We had made a request in terms of two sectors. One is MSME and second was the stacks, particularly for the middle-class and we are delighted to see that both have been addressed. We believe that this is going to give you tailwind. First and foremost, the tax is effective from April.
So to expect that the results of this quarter would start seeing a difference when the money is only going to come in April is something that we have to recognize. Secondly, in my belief that it will take about a month or two for people to digest that they are seeing a delta income in their hands, right? And once that starts kicking-in, in a month or two and remember that we are moving in the month of May and June to the holiday season, right? So you would start first seeing to me the key consumption sectors which are essential pickup.
Remember, paints is discretionary. So we lag a bit in terms of it. But I believe that starting from the second-half, we should start really seeing an uptick, which is what we had already plugged in. And we believe that the second-half this year with other things being equal, we’ll see a very sharp rise. This sector, if you look at the paints and coatings business over the last few quarters, when you look at the industry growth, including the growth of the new players, we believe that the GDP multiple, which used to hover around 1.5 to 2 had come down all the way to about a 0.6 to 0.8, you may argue even 0.9 or 1, right?
We believe that this is slowly going to catch-up. The catch-up is going to be a little slow because the monies are kicking-in now. Remember that there are two-parts. There is a central government disbursement and a state government disbursement. We also have a few state elections and as and when the state elections get complete by the end of second-half, we should start seeing a sharp uptake. So to answer your question, welcome move, sharp uptake. We believe that we will be particularly on the real-estate and infrastructure segments, seeing a sharp boost. And as a result, we are very confident that this is what is going to drive back double-digit volume growth towards the second-half for the Paints and coatings businesses.
Jayvansh Mehta
Okay, sir. Thank you,. That was a very detailed answer. Thank you for that. And sir, my second question was on the line that we saw a decrease in the employee benefit expense in the latest quarter on a sequential basis as well as on the Y-o-Y basis. So would there be any explanation to that?,
Rajiv Rajgopal
Would you like to? Yeah and, what we normally do is that we do get the renew of the employee provisions and get the actual valuations done in the December quarter, so that we the cost lines there, which has resulted in the reduction in the costs. The underlying employment cost of isolating the actual valuation impact on the reversals is intact and that’s a long and short-term for the question.
Yeah., that hopefully answered your question?
Jayvansh Mehta
Yeah thank you, sir. And sir, just a last question on — like can you just share on the thought process behind the restructuring that we are doing, obviously, not only specifics and all, but just a thought process that what that we have while doing the restructuring of the entity that we are currently going under.
Operator
Yeah. But Jayvan, can you mute one moment, sir. Jayvansh, can you please self-mute? There’s background noise on your line.
Jayvansh Mehta
Yeah. Sir, please go-ahead. Sorry for that.
Rajiv Rajgopal
Yeah. So look, I don’t know what you — if you’re talking about the strategic review, when you say restructuring?
Jayvansh Mehta
No, sir, like the plans that we have that the industrial coating business and the R&D will be under the parent entity going-forward. So on the.
Rajiv Rajgopal
Okay. Okay. Look, to be honest, these are very initial thoughts, these are not final. In the spirit of true disclosure, when the parent got in touch with us and said they wanted to carve-out the powder coating business and the R&D business, the thought was to keep the two distinct businesses liquid coatings and basically what the globe believes that they can continue — if they continuously they own, they can — they can see a higher value-add, which is in the powder coating business where there’s a lot of R&D development which is done centrally and the global, what we call the International Research center. What the International Research Center in Bangalore does, it does the color development for the automotive and specialty coatings.
Remember that we also sponsor McLaren Mercedes F1 and a lot of the color testing because these are very difficult conditions in which we have to paint a car is all done throughout — used Bangalore lab is used as the test-bed. So which is the reason why they have carved-out. But again, you know to answer this question, this — this is a request which has come from the globe and we’ve been upfront as you know, in the spirit of true governance to immediately notify, first to bring it to the Board, inform the Board and the Board has then asked to notify to the stock exchanges which we’ve done.
This doesn’t mean that this — this is the first step and obviously, this is undergoing various evaluations and we’ll come back to you as and when we believe that we are in a position to do it. . And the thought is very simple, the powder coatings business globally, we are number-one with a huge market-share over the lead over the number two-player and that could be possibly the thought process behind it at International Result Center, I’ve explained to you.
Jayvansh Mehta
Okay. Thank you, sir. Thank you. That’s all from my side and all the best.
Rajiv Rajgopal
Thank you, Jay. Thank you.
Operator
Thank you. We’ll take our next question from Anirud Dazoshi from ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yes, sir. Sir, yeah. So sir, two, three questions. One, we are doing extremely well B2B side and we have seen good favorable in infra-power, mining, marine as well as real-estate sector. So what are the key things that we have started doing differently or superior, which is leading to the higher momentum in paints as well as coatings. So that is one question. Question number two is, regarding Promise Freedom, the new let X paint we have introduced. So indicatively, how big is the market and what is the strategy over here? So whether it is, first of all, a pan-India launch or it’s a trial launch at this stage or any — it is launched any region specifically? So big is the product etc.? That is the second question.
And in third question now have gained market-share for 12 straight quarter in a row. So is the distributor model is really working or in a way what is driving the market-share in the decorative side of the market as well? Yeah. That’s it from my questions.
Rajiv Rajgopal
Thank you, Aniru. Thank you. I’ll do the first part and I’ll invite Rohit’s thoughts on the second and third, but I’ll obviously then end the answer once Rohit gives his thoughts. Yeah. So on the B2B business, look, I think on the pain side, the B2B business has been growing now for almost two years. We had a bit of a blip in-between primarily when the elections happen because remember that a lot of the real-estate investments. So we’ve got basically in the B2B business repainting, we’ve got building and building, you know and construction. We’ve got commercial properties and government, right?
And one of the largest drivers of the business, which was both government and commercial properties took a lot little bit of a dip in the last six months that started slowly, obviously inching back. And the real-estate, as all of you see and you’re seeing the numbers of all the players, we cater to the marquee builders. We’re very fortunate that we’ve got a fantastic relationship with some of the key marquee builders and they’ve been doing well and hence our share of the business has gone up. Similarly, on the coating side, our B2B in both — if you look at, you talked of Marine, we are delighted that we got an opportunity to paint the three ships, Surat and the other two recently.
Similarly, we — as you know, we done INS and based on the work that we’ve done, we’ve got a lot more from the Indian Navy. We also do a little bit on coastal, not just the Navy side in terms of drydocks and that business has seen a bit of an upsurge. We’ve also on the protective side, we’ve obviously enhanced the team has done a brilliant job not just on the on the relationship management, but also on certain products, which have come in on which are slightly improved versions of on marine, on lining and on fireproofing, right? So these are some of the things that the team has done and they obviously have cracked a lot of accounts, including certain high-growth areas like data centers, etc., which I alluded to in the last quarter.
Yeah. So all-in all, I would say that, look, the overall — and it’s something that you’re seeing across consistently across when you look at the building material players, the B2B part of the business still is fairly robust. It’s seen a good support. And obviously, we had a little bit of headwind during the election time, general election and months till the Maharashtra elections were over, but now we believe that the key markets are slowly coming back and we have got every reason to believe going-forward. And if I were to look at, for example, January is an indicator, we could start, right? So I believe that B2B business are doing well.
On the B2C side, just before I hand it over to Rohit, of course, we’ve had a bit of challenges, but we’ve made terrific progress on distribution. As you all of you know, we’ve got now — we are the only player apps which has launched the distributor model way back into 2013 and ’14 and we’ve got about 160-odd distributors with almost about 90% of them being with more than 10 years with us. It’s a deep relationship that we built. Rohit and team have then taken forward the — to hub-and-spoke where we decided to go into the next set of towns. And now I invite Rohit to walk you through why we are gaining getting share gain in the decorative side on retail and also the latest latex paint launch. Rohit, over to you. Thanks. Anirud, you can hear him?
Aniruddha Joshi
Yeah. You can hear.
Operator
Not very clear, sir.
Rohit Totla
So your voice is you can hear me now.
Operator
A little better.
Rohit Totla
Okay, you can hear me now.
Operator
Yes, please go-ahead, sir.
Rohit Totla
Okay. So let me start with your question on the latex, which is freedom. Basically, it was again a test of concept, which we typically started doing that in Uttar Pradesh and Rajasthan. And your question number two and three answers are the same because our distribution is expanding and we are moving into lower POP accounts as well as into — we are increasing our reach. Typically Dulas was considered as a premium player, but we are now offering across the spectrum all the products and with the best-in-class quality.
And this is where to really ride-on our distribution way of, what we have launched is this concept. We are testing this concept as of now in last two months in Rajasthan and Uttar Pradesh. And depending on the outcome, we will expand pan-India. On the retail side of the business, what we are doing, a lot of activity on digitization and automation to give a better customer service and a plurry of products launches across the categories, including the waterproofing and the innovation of our product portfolio, which is typically helping us in reestablishing our presence and reinforcing our quality promises in the market.
Rajiv Rajgopal
Yeah. So just to add to Rohit and Anirud, just to summarize, two things. Let explained, obviously, we are not the first-in the industry, but we believe that we’ve got a proposition using the brand freedom to really explore the market. We are testing it for three months. We are looking at it because the market adoption for some of the other industry players was not very sharp. So we’ve sharpened it a bit with a bit of R&D work on it and we are testing to see what is the adoption. Initial early stages show it’s doing reasonably okay, but obviously, we’ve got a very ambitious plan, so let’s see how it progresses and we’ll keep you updated.
Distribution, as Rohit said, look, the idea was that our challenge when I came in 2013 to now. And if I look at even from 2009 when acquired ICI, there were a lot of fixes that we had to do. We had to first get the quality modue back and it took us a long while because of the challenges or during the transition from ICI to AXO and really the focus was really how can the market tell us and not we tell the market that we are the best-in-class. If you look at it, the needle really changed in the last three years post COVID in particular. And when we launched the Promise assurance program, right, where we said we are willing to give a guaranteed money back offer on this coverage quality and consistency.
And with that, we started seeing a sharp uptick across our premium brands because obviously, it gave a vote of confidence on the brand. We plan — you will see a very short 2.0 happening in the next few months on this particular program. And to build that, we had to launch the entire assortment, which is what Rohit and the team have been working very hard along with the marketing team, right? And we believe that, look, our challenge was that we never had the assortment, so which is the reason why we entered segments like and mass. Our purpose of playing in mass is to make sure that we get the rightful share gain in premium. 15%, 16%, 16% market-share in premium is not enough.
We want to get — we are ambitious. We want to drive a dialect more. But to do that, you have to now be present in the smaller towns where premium is consumed, right? And obviously, when we guys travel, we see a lot of premium consumption in smaller towns. So the idea was to build a portfolio, do it. And that’s the logic with which we have launched some of these categories, including smart Choice, which has done brilliantly for us and really changed the game. And to answer your question, yes, I mean, the fruit of that labor is the fact that we’ve been able to clock market-share gain. We have done an external survey and the external survey has also come back to us quite recently validating the market-share gains.
I want to be also with all humilities say that this is not happening across India. There are about seven states which are leading it. There are few other states where we still need to drive it further and that’s work-in progress and we will keep you updated as we move forward. Anirud, hopefully that’s answered your question.
Aniruddha Joshi
Yes, sir. This is very, very helpful. Many times.
Operator
Yeah. Thank you. We’ll take the next question from Lakshmi Narayanan from Tunga Investments. Please go-ahead
Lakshmi Narayanan
. Yeah, you can hear me now. Yes,. Very much.
Yeah. So my question is related to — now there has been for the last 90 days or so, there has been enough media as well as company communications saying that your business would be restructured, right? Now my question is that how — and how is the employee model and the distribution model? You know, because it puts in-kind of uncertainty and how as a company you are actually handling it. Are you able to in new distributors? Go-ahead.
Rajiv Rajgopal
Yeah, please go-ahead. I just want to sort of. So first and foremost, look, I think I would like to state and I think we’ve put a clarification as and when required when we really think it’s material. Look, market rumors will continue. I mean that’s the role with all my humble existing learnings of the last few years and complete respect, I have great respect to all my media colleagues you know this is a part of life. We have been very upfront work employees and we’ve said that these rumors will come.
The fact that we’ve had six husbands, I mean, if you want to look at an analogy in the last few quarters, I was in the market in Calcutta in three months ago when one-name of one player came, then three weeks ago, I was in a different market, another player. So dealers also understand when you tell them that look, you’re telling us so many names, you guys decided to come back, they all laugh. So look, I’ll tell you, Lakshmi, what we are doing, okay. We have a regular weekly — monthly at least twice or twice catch-up with all employees.
My spirit is to tell the employees that you will be the first to know. And if any material conversation happens, we follow protocols, right? So I’ve requested our parent that if there is material information, given my role as Chairman and Managing Director, anything that’s told to me has to be informed to the Board, stock exchanges. And as soon as we put on the stock exchanges, we inform me immediately similarly at the same time, have called with the employees with maybe a five, 10 minute lag to make sure there is no issue there, right? And we have honest conversations.
The leadership has been traveling to most of the markets, have been traveling across to locations, speaking to employees, the functional leaders are also reaching out. I believe that there was a lot of anxiety in the first three, four weeks, but now everything has died down, right? People realize that the outcome may or may not also happen, yeah. They also realize that, look, because remember that the market cap in India has slightly fallen and finally, it’s up to the parent to decide what is the — what is the value they see, etc. And our job has been to keep the business focused and you’re seeing it in the results.
The other yardstick I look at is, look at the attrition. I mean, normally when these announcements happen, you have a lot of resignations of the top team. We’ve had zero attrition at a key talent managerial level. Yes, our attrition in the — in the front-line continues to be the same as that was there even 12 months or even 24 months preceding the announcement, right? So nothing has changed. We’ve got strong programs which are to keep all of us focused on the business.
We love this company, we love this brand. You’ve seen it on the website, is something that’s not just a logo, it’s something that’s deeply embedded in us. And I think you know if and when a material information is available, Lakshmi, we will be the first to keep you. As far as the dealers are concerned, similarly, we — fortunately this community — this — the dealer community, we — has spent 15 years, I’ve spent 12 years in the company, people know us by name. We know families of more than top 2,500, maybe 5,000 dealers by name, right? And hopefully another 8,000 with a little bit of a nudge, right? But the reality is that initially there was a lot of fear, I’m saying that what will happen. But I think over a period of time now people have realized that, look, this is a strong brand and what is the purpose of doing the strategic review?
The purpose of the strategic review, if you look at what Greg said, our Global CEO is to take AgzoNobel India to the winning position for various reasons, right? The globe believes that given the global assortment and portfolio, the ability to invest now with the sort of competition you’re seeing in India and perhaps needs a little bit of a local hand, right? And that’s what we are trying to do. Can we combine forces and that’s — there are various options which are still in discussion and thought to say, can we combine hands to try and move this brand to a winning position, right? It will take a lot of utility to also — it’s a brand that I have now managed for 10 years. I can tell you, it’s a brand that is very infectious. For consumers, 90% of our consumers who have used our brand and there’s again a study on that to prove it, have come back to use the brand, right?
So the challenge is to get more-and-more people to use it are — that’s the reason we are playing in now a larger sense in the last five years on portfolio. But we are very clear that we are very disciplined in the way we execute. We do not give things free. We do not drop pricing and hence, while people are adopting different practices and I’m fine with that because we’ve seen that in different industries, we believe in this industry running things in a very mature manner. As we’ve also seen from some of the new players is very important and a critical success factor for the future. Got it. I think in terms of new recruitment and I mean taking, getting more distributors, is it business-as-usual on those two fronts? So distributors, Rohit, you would let me put it this way. Rajiv has already alluded that most of our distributors have played a long journey with us and that’s the testimony of our transparent relationship, which we share with them. Still close to 5% of our distributor, we keep on changing during the journey. And we are — because these distributors who are there for a long-time with us, they only give the references to us saying that this is the good guy and most of the time, you know the references are coming from the market rather than we going-in and actively looking out for any distributor. So that’s where the beauty of entire relationship lies.
And also same for employees, so what happened is, of course, we’ve had — so if you — let me put some numbers there. If I take a number of, say, 10 of the number of new recruits during the first two, three months because of the announcement, we had almost 50% dropouts, right, Rohit, in a very transparent manner, right? But what has happened is in the last three months that has dropped to about 10% because we are now going upfront telling people that there is a strategic review. This is a thing. We are giving the stories of people who have grown in this company. We’ve had huge amount of success stories, sales officers who’ve gone up to regional manager and even beyond ASMs have gone right up to it. So you don’t get that in many companies where people have come in, had great exposures, have been able to grow very well. And hence with complete transparency, we are now getting in lot more people coming in. Yeah. So we don’t see that. It was a challenge,, to be very honest with you in the first three, four months and we were a bit concerned on — but I think between IHR business teams and all of us, we’ve put our heads together and we believe now things will start normalizing and people realize that this is a good company, good brand. And I’m sure if and when — if you know the global parent were to pursue an option, it will also go into good hands. We are very confident of that.
Lakshmi Narayanan
Yeah, got it. Because I think if I look at the last eight or maybe even more quarters of under your leadership, the company has been very, very stable and consistent and has been really among the top performers in the industry. So the question as an investor was to ensure that there is no disturbance on the two important stakeholders other than investors, employees as well as your distributors are understood. I think thanks for the reassurance. The second is my part. Yeah, yeah. And second question is that if I look at your overall business in the last nine months and compared to the previous year nine months, what has been the growth across home dcor and decor B2B and the industrials. I understand that industrials is around 35% of the business and 10% is B2B decor and the balance is our home decor. Is these segments what has been the performance in terms of volume or value, some kind of a directional view would be helpful?
Rajiv Rajgopal
Yeah. So I’ll give you value because anyway value this year got corrected down by about 4% even despite a couple of price increases, it got negated with the discounts which are currently running in the market. So look, I think the — the B2B part of the decorative business is still high-single-digits. The retail business because of a strong performance in the first-six months, you know, is at a flat to-single, low-single digit growth, but yeah, obviously, we’ve had a tepid last quarter and maybe last four months. But if you — again, if I were to look at January, things are slowly coming back. The B2B part is double-digit. Hopefully, that answers the question. Sorry, I started mind. Yeah.
Lakshmi Narayanan
Got it. And last question, there has been a price thing that happened, I think Q3 of last year or maybe Q4 and I think there will be a — I mean, you will have a base effect playing out right from when do you expect that to happen, whether it will be happening from Q4 or Q1? o
Rajiv Rajgopal
So look, the base effect, the price drop happened in December and January and there was a slight price increase in the months of July and August. But again, January this year, there has been a slight
Operator
Slight margin price drop. Rohit, you want to just add to that?
Rohit Totla
Yeah. Last year, there were two price drops. One happened in November ’23, second happened on January ’24. April in July, we took a price increase and in last year, which is December and January of ’24 and ’25, we again took a small price drop. But what your question is, base effect will start from January. Sure. So you took a price — price drop or increase in December ’24
In December ’24 and January ’25, we took some price correction in one of our categories, especially to do with the mass-market. And that’s. So index to last November ’23 before the price correction till now, if you index to 100, what would have been an aggregate price correction? So right now, if I take-out the base effect of it, we will be positive by close to 1.2%.
Lakshmi Narayanan
Got it. Okay. Okay. Yeah.
Rohit Totla
Take-out the November ’23, January ’24 and all put together. Sorry, number ’23, before the correction, it was 100% and now we are 1.8% in 1.2%. Minus 1.2%. Yeah.
Lakshmi Narayanan
Got it. Got it. Thank you so much, Rajiv.
Rajiv Rajgopal
Yeah. Correct. Yeah.
Operator
Thank you. Before we take the next question, we’d like to remind participants to please click on the reason I can tap to ask a question. Next question is from the line of Santosh Kesri from SKK HUF. Please go-ahead.
Santosh Kesari
Am I audible?
Operator
Yes, please go-ahead.
Santosh Kesari
Okay. So I have a couple of questions. One is, in the commentary just now you said that we are expanding on B2C front and a lot of action is happening with the distributor, with the retail chains also. So my question is that despite all this, we are not seeing any rise in expense. So how is it that we are able to do it so cost-effectively or we can expect some cost enhancement in the next few quarters? The costs are yet to come in the profit-loss account.
Rajiv Rajgopal
The cost of distribution expansion is part of the gross-to-net in the revenue line. So which is a variables model. So hence, it will not be below the cost lines. Yeah. Hope this clarifies.
Santosh Kesari
No, sir, my question is that compared to the last year, we are not seeing any increase in the other expense line. Like for the nine months, we can see that the other expense is INR597 crore vis-a-vis INR594 crores in the last year’s nine months. Yeah. So how is it that we are able to manage without much of cost range, okay.
Rajiv Rajgopal
So there are two areas where we are absolutely focused is that our cost development is confined to the revenue and the growth initiatives and we are absolutely are critically evaluating and in the process or we are reviewing the cost base very closely wherever discretionary spend. So it’s the — it’s a the cost base to the — protecting the profitability and enhancing the growth.
Santosh Kesari
Yeah.
Rohit Totla
Also, what we’ve done, just to add to what Krishna said, we’ve looked at various things, both from a supply-chain perspective about a year and a half ago to relook at the entire supply-chain, which is one of the largest cost areas. We’ve also looked at productivity of our teams, which Rohit and team are effectively driving and put in certain stronger metrics to make sure that we are able to improve productivity. So our goal has been to say that how can less be — less is more, right, and how do we really drive it. We’ve also relooked at our structures. When I came in, remember that we had — we had — that was the first time when we really wanted to look at key account management, et-cetera, with maturity of channels. Some of these roles have got embedded within the existing structures itself. So we’ve looked at various productivity and cost-control measures, which the team has done very well. But like Krishna said, on the distributor side, it’s a variable part, it’s a part of the gross-to-net. Yeah.
Santosh Kesari
Okay, great. That’s good. And my second question is about the demand situation that you had in the last quarter, the quarter that just ended, because we are seeing a lot of commentaries from other pent companies, the demand is not good, the consumption situation is not so healthy and some have almost sounded dispondent. So what is your take on the demand situation?
Rohit Totla
So my view is, look, look, if we were — look, I think we’ve got to look at it from a long-term perspective. From a five to 10 years, we used to say that the paint growth — industry growth when I say paints, paints and coating industry growth will be about 1.2 to 1.5 times GDP. From that lens, okay. So it depends on which lens you’re looking at from. From that lens, yes, it is disappointing because even with this growth, it’s barely coming to about one-time GDP, right? So from that lens, I would say, yes, there’s still a bit of catch-up and demand has been, but let me tell you this has to — this allows us to address in all granularity.
We are seeing a very sharp uptick in our premium segments and we’ve still seen, which is a reason which is reflected in our contribution margins. We’ve seen that, look, there’s been a good uptick in our premium segment. Our challenge has been in the mass economy segments. And of course, in adjacent, particularly waterproofing, we’ve been doing very well, right? Now again, India is one — it is not one homogeneous market. It’s — it’s a country which is very different. Even within a state, it is different. So our performances of different geographies have been different. If I were to look at last year, we had some challenges in the one of our largest or highest market-share regions which was East, which got fixed other than one state, which is Monipour, which where we still have a bit of a challenge, you’d be surprised that we are very — our contribution is fairly large from the region.
And then what we’ve then seen is a few challenges in a couple of the Southern states where we’ve had historically high competitive pressures, but there, again, the competitive pressures seem to be weaky. So in states like Tamiladu and even more recently in Kerala, we’ve started coming back. But we also see a lot of challenges in states like particularly Telengara and, etc., where we believe that we are on the cusp of doing — we are resetting the organization. And to answer the question that you earlier asked, yes, you will see some cost going up because we are going to put some investments on people and on technology in some — technology across the country and people in some of these states to drive slightly higher-growth. So when you break it through a lens of looking at it at a granularity of geography, there are challenges and we need to address them. It’s not a one-size-fits-all strategy.
Santosh Kesari
Okay. Thank you so much.
Rohit Totla
We believe that the demand will start coming back. Look, I think I don’t want to talk too much of January because — but it’s been encouraging, but suffice to say, we’ve seen it in the past that the first month is good. Unless you see two months in a row, we can’t really comment. Yes, but I do believe that I think the bottom of the table has played out. We believe that look with now the right announcements coming in, we believe that look in the coming months, we should start seeing strong upticks.
First, move towards a mid-single — single-digit growth and then towards a double-digit growth back-in — and I think it will take about four to six months for it to completely pay-out because as I told you, the tax regime is effective from April, so you would start seeing some of the money circulation slowly coming in and first going to essentials and then to discretionary.
Santosh Kesari
Yeah. So sir, are you seeing the competitive intensity from the new players particularly?
Rajiv Rajgopal
Or competitive intensity, look, has been happening in this industry. 2013, we were four players today when we were presenting to the Board, Rohit alluded to this. So I remember distinctly this slide, then we had seven players by 2015, but now we’ve got almost 14 players in the industry. So competitive intensity will be there. Some of us have seen it in different industries than we worked many years in the past. Yeah. So it’s something that we have to live with. Look, I think it’s good because that also reaffirms the strength of what you do and enables you to put stronger actions in-place.
Santosh Kesari
That’s right. Thank you so much. I wish you.
Rajiv Rajgopal
Thank you.
Operator
Thank you. We’ll take our next question from the line of Anirud Zoshi from ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yeah. So just one question. Waterproofing, we have been doing extremely well and we have seen one more launch even in this quarter also with almost eight-year warrant again seems to be a pretty differentiated product considering it can be used on a vertical as well as horizontal also. So if you can share more details about this brand? And lastly, whether waterproofing will be in high-single-digits as far as the revenue breakup is concerned?
Rajiv Rajgopal
Yeah. That’s it. Thanks, Anirud, for the question. Yes, we are consistently doing and product innovation and execution in the market were the key highlights for our continuous development in integral waterproofing. This 2 in 1 product is again a unique offering from where why we say two-in-one because not only on the dead walls or which we say vertical walls but on a horizontal surfaces also it will work and that’s why unique and also hardly any product Product come at this price point. And that’s why we are very, very combo about this product. And the initial launch wherever we have done shown a great encouraging results about it. We are doing recently well in waterproofing segment. Volumes are growing double-digit plus. So the answer is we are growing high-double digit in waterproofing and I think the team has done an excellent job. And we’ve got plans. We will increase that portfolio in the coming few months also.
Aniruddha Joshi
Okay. Sure, sir. Understood. That’s very helpful and encouraging. This was the last question. Now I thank the entire management of for participating in this investor webinar. And I will hand over the call-back to Mr Rajiv Raj for his closing comments. Over to you, sir.
Rajiv Rajgopal
Thank you, Anirud. First and foremost, once again, thank you to all of you for taking time on a Friday evening and joining our call. We are really thankful for your support and encouragement and for all the questions that you have, please do feel free-to be connected. If any of you have any reach-out, please do reach-out for any questions to our company Secretary and Compliance Officer, Mr Rajeev Ja and we will be happy to answer your questions. As and when we have any updates on the strategic review, as you always know we’ve done. We would be the first to inform — first, our Board, the stock exchange, our employees and each one of you, right? So you can rest be assured. The idea is very simple, how do we really take Delux to a position. We believe that the brand has got the inner and strength. I have seen it with my eyes. I have great belief in the power of this brand and our endeavor is to take it to the next level. And we are sure that we will continue to do strong growth and thank you all for all your support. Please stay connected. Thank you so much. Good luck.
Operator
Thank you. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now exit the meeting. Thank you very much