Akzo Nobel India Limited (NSE: AKZOINDIA) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Rajiv L. Jha — Company Secretary and Compliance Officer
Rajiv Rajgopal — Chairman and Managing Director
Krishna Rallapalli — Whole-Time Director and Chief Financial Officer
Analysts:
Unidentified Participant
Manoj Menon — Analyst
Lakshminarayanan Ganapathi — Analyst
Santosh Keshri — Analyst
Presentation:
Unidentified Participant
[Starts Abruptly] Chairman and Managing Director; Mr R. Krishna, CFO and Whole-Time Director; and Mr Rajiv Elja, Company Secretary and Compliance Officer.
Now I hand over the call to Mr Rajiv to take through the initial statements. Then we will hand it over to Mr Rajiv Raj Gupal for his initial comments on the quarterly as well as annual performance, then we will have question-and-answer session. Thanks, and over to you, Mr Rajiv Ja.
Rajiv L. Jha — Company Secretary and Compliance Officer
Yeah, okay. So a very good morning to all participants in our Q4 and annual investor call. And as per our process, we are starting with that safe-harbor statement and I’m just reading out to you. 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.
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 and the annual report that we will be dispatching very soon for financial year ’25.
Also, the company has been making the required disclosures of clarification from time-to-time to BSE and NSE pertaining to and, which is our parent and promote entity, media religion portfolio review with initial focus on South Asia and the management would not be responding to any general and/or a specific query in this regard in investors call. However, the investors are public at large would be kept informed of any updates in this regard as per listing regulations.
So with this, I’m handing it over to Mr Rajiv.
Rajiv Rajgopal — Chairman and Managing Director
Thank you. Thank you, Rajiv. Good morning to all investors on the call and thank you to the ICICI Securities team for setting this up. I’m not going to run-through the deck. I think that’s a parse old-style. We’ve loaded the deck on our portal and on the — on the stock exchanges for all of you to have a look.
From my perspective, if you look at the last quarter, we’ve had industry-leading growth of 5%. The good news as far as decorative paints is concerned is that we moved towards a revenue which was flattish led by premium and urban towns. So it’s slightly different from what the industry has seen. We’ve seen good growth coming back-in premium and also in our urban towns.
Our challenge was really in the mass economy, you know, butty categories where really to — we saw a huge amount of price erosion discounting and we chose that we will not actively play in the last quarter. We’ve just decided to be sensible and we’ve seen that some of the volumes that we lost in March came back-in April and at a YTD level back-in these categories. So really just want to reassure the investors that, look, there is no specific change in strategy or anything.
Our strategy remains to drive market-share gain and do it in a relatively profitable manner without diluting EBIT margins usually. On our coatings business, we’ve seen double-digit growth. We continue to see very strong growth and that’s because we are seeing rounded performance, whether it’s marine and productive or our industrial coatings, which is at a shop come back through some excellent execution by the team and our power coating business.
Our automotive and specialty coating business has had a little weaker demand partly from the retail side of the business. Yeah, but I think that’s also — there is an uptick, particularly on the premium side, which is where we’ve been really focused. Yeah. Overall, I would say when you look at the performances from a — from a real — the brand-management — brand distribution, I think we are making significant progress.
We have also incurred some costs in the last quarter, starting from the prior quarter actually, where we made serious investments on reshaping the way we work with investments in digital. Yeah, what we are trying to do is to enhance consumer experience, customer experience and also make sure that we have a way of working that not just enables us for enhancement of leads or customer experience, but also drive productivity in a meaningful manner.
With this, let me quickly hand it over to Krishna to give you an overview of the financials and the performance, Krishna.
Krishna Rallapalli — Whole-Time Director and Chief Financial Officer
So thanks. Thanks, Rajiv. And as the deck has already uploaded, has given the whole view in terms of how we shaped up our business in the last quarter. Happy to report that we have — we have stuck a balance between the growth and the profitability. We largely protected our profitability despite of incurring the growth project costs, which has been mentioned by Rajiv previously.
And our focus remains in terms of ensuring that we do invest in the business, which will have a significant presence for the long-term sustainable growth trajectory of this company. And we are committed to deliver the super native performance in terms of the operating working capital by turning the cash efficiently, which is also — which is also reflected in the results which we shared.
With that, I would — I will hand it over back to and Rajiv, Rajiv, back to you.
Rajiv Rajgopal — Chairman and Managing Director
Yeah. So that said, I think we’ve loaded the debt. I think the are running slide-by-slide. I think all of you know the numbers and we’ve seen the highlights, you’ve had enough time, I guess to also munch it. So I think it’s best that we brace for the questions. And I hand it back over to Manoj and Anirud and to all of you to open the Q&A.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. To ask a question, please click on the Q&A tab on the panel and click on please hand button. The operator will announce your name when it is your turn to ask a question. Please accept the prompt on your screen and unmute your microphone while proceeding with your question. You may also type-in your text questions. We will now wait for a moment while the question queue assembles.
The first audio question is from the line of from Mehta Investment Intermedience. Please go-ahead., I have unmuted your line. Please proceed please unmute yourself and speak Ladies And gentlemen, the participant is not answering. We will move on to the next question, which is from the line of Pratik Soni from GoDigit Life Insurance Limited and the question is I’m sorry, sir, he was unable to hear you for some reason. So that is what he said. We’ll move on to the next question which is from Darshit Vora from Assity Mehta Investment Intermediaries and the question is GF was impacted due to mix which segment has this impact come into because you have also mentioned that you have stayed out-of-the mass plans?
Rajiv Rajgopal
Yeah. So look, I think there are two types of mixes in our case. Obviously, when our coatings verticals does better than paints, obviously, that’s a slight margin shift, right, because decorative is one of the higher-margin profile businesses that we have. So that’s one. Two, you know the carryforward of the pricing of last year was almost negated.
There were two price drops that happened and as a result and because of the competitive intensity, obviously, the market discount has marginally gone up. So I think these are the two factors. Krishna, you want to add something?
Krishna Rallapalli
I think Rajit. I think this is largely driven by the B2B and B2C product mix. And we hold at our efficiencies in terms of the raw-material sourcing and which is also largely protected. Of course, the ForEx volatility continued, which has some amount of impact in terms of the margin development.
Rajiv Rajgopal
Yeah. Thank you. We’ll take the next question.
Operator
Thank you, sir. We’ll take the next question from Manoj Menon from ICICI Securities. Please go-ahead. Manuj, please, yeah Manuj, please unmute yourself.
Manoj Menon
Oh, yeah. Hi, sorry, I think there are some connection issues from at my end. I’m audible, right, Rajiv and team?
Rajiv Rajgopal
Yes.
Manoj Menon
Okay. Rajeev, so just wanted to but just pick your perspective on one particular aspect of industry growth. If you take a step-back and go, let’s say, 12, 15, 18 months back, you know, there was a consensus narrative, honestly, not our view. We had honestly very different view actually at an industry level. There is a consensus narrative or expectation that let’s say the — given the expected heightened competitive intensity of Pirla entering at that point in time, it was assumed that the market will be largely fine and voice. Will actually get impacted. And I do why the next one. So we’ll come back-in a minute or two. Yeah. Thank you.
Rajiv Rajgopal
Okay, let’s proceed with the next question till Manod gets his line right.
Operator
Thank you, sir. Ladies and gentlemen, I would remind all the participants that you may please click on the Q&A tab to ask a question. We’ll take the next question from Lakshmi Narayanan from Investments. Please go-ahead.
Lakshminarayanan Ganapathi
Yeah. Thank you. You can hear me right.
Rajiv Rajgopal
Lakshmi, good morning. I can hear you.
Lakshminarayanan Ganapathi
Yeah. Sir, two questions. First is that when I just look at like-to-like, so in a sense that there has been some divestment of certain businesses, which has already been announced. So if you just remove it from our top-line and bottom-line for both last year and this year, what has been the growth of the going concern, which is the divestment part, right? So that is first question. FY ’24, what is the revenue and FY ’25 like-to-like? What has been the growth both on the top-line and in terms of an of it?
Rajiv Rajgopal
Yeah. Krishna is answering that, for you. Yeah, Krish.
Krishna Rallapalli
Good morning, Rajmi. I think the of the assets held per sale accounting has not triggered anything in the P&L portion and it’s only reflected in the balance sheet where we classified the fixed assets in the — into the current assets. So the P&L — the appears of the 5% growth is on a like-to-like basis. Thank you.
Lakshminarayanan Ganapathi
Got it. I have one next question. So if I look at — I think Manoj was also mentioning the same thing. So when we look-back a year or maybe 18 months back, there is a kind of a narrative that the competitor — competition will find it difficult to come in and therefore it will be — we have seen competition from various players, Williams have come, the perio had come, so it’s not going to be an issue. But now I see that it is being documented across the presentation that competitive intensity is making inroads and therefore top-line is having problem bottle is not having a problem.
There is a narrative that has actually happened. Just wanted to hear your voice is breaking what is the reality? What is the what is the noise? Yeah, my question is that what is the reality and what is the noise in this particular thing of competition and where it is more visible? Is it rural, urban, is it a low-end, high-end? So your thoughts are you.
Rajiv Rajgopal
Okay, got it, got it. So look, I think the — look, look, the narrative is not written by us. We are very focused on what we need to do and perhaps that’s why our performances have been what they are. Our focus is to continue and I’ve been maintaining this over the last four quarters, five quarters when you talk of competitive intensity that our focus is to continue to drive market-share. Again, without diluting hugely the profitability. And I think we are pretty much on our objectives of what we said, Lakshmi. You will agree to that, I’m sure.
The second. On the specific question of the new entrants, etc., look, I think the larger comment was made that in this category in paints and it’s not us, some of the — where people really understand paints as a business even amongst the newcomers have said, it’s not — you know, it’s not capacity that drives a new business. Frankly, it is brand distribution and it’s a classical FMCG sort of model in the paints part of the business, which is slightly different than in the coatings part of the business.
I stick to that, yeah. I think, look, you know, what you’ve seen in the market in terms of erosion of market-share is what I’ve worked now in three different industries in telecom, in FMCG, where we’ve seen these type of intensity — huge attacks by a price warrior or by a new entrant, right? In this game, I think that you have to give credit that you’re trying to build a brand and trying to — and while doing it, going at pricing which is way below what the industry operates, 15% even in certain markets, 20% is unheard of, right?
I think — and I think that there will be obviously a point of time when this will all start seek seeming to come back. So in the short-run, there has been an impact. Obviously, when a lead player adds upwards of INR2,000 crore and a couple of these players have done well. Let’s give credit to people who have done what they’ve done.
Yeah. I think the reality is, obviously, what we’ve done in terms of strategy is not — has to be further sharpened to make sure that we are able to actively participate. So what we’ve seen is a short-term erosion of volumes, I would say. But if you look at it from a long-term perspective and even decorative, the fact is we are bouncing back. Ultimately, the brand strength has to be very strong.
If you go and do a market, we’ve just done a brand equity study just a few months ago. Clearly, you know, the top brands are coming out, still very strongly in the minds of the consumer. So it’s not easy to displace, right? And I think we’ve been very focused on decorative on our coatings vertical and we’ve not digressed in terms of what we need to. And as a result, we’ve been very disciplined in terms of execution in the market.
And to me, that’s why I think we’ve been performing what we have. Even if we were to go off-track, I would tell you that the performances will fall and that’s our job as leaders and as a management team to make sure our teams are completely following the script and really executing to what we asked for.
Yeah. So, that’s the answer. So the industry, if you ask me, the reason why some of the other — some of the players are — I think Manoj also tried to allude to it, so we couldn’t hear him clearly. I assume the question he was asking is the narrative was that the players who are growing seem to be different from what the narrative is. I think that’s because each player has got a strategy. We are looking at customers, consumers, we are trying to see how we can create a meaningful differentiation and do it in a sustained manner.
This is not about 1/4. You look at the full-year performance, Lakshmi. I think by far amongst all the listed players so-far we released the results, our numbers are way ahead compared to rest of the industry. And that tells you that what we are building is a long sustainable growth business. We are not doing short-terms. Hopefully answers your question.
Lakshminarayanan Ganapathi
No, yeah. I mean Exceptional growth in the times with 5% growth. Just one last question from my side. In the last six months, did you see any kind of an attrition numbers in your sales and marketing and BSM level people — has the attrition gone up or down, especially in the last six, six months.
Rajiv Rajgopal
No, the attritions haven’t really gone up. I think the industry numbers are now more or less firming. Our challenge has not been in the attrition, but I’ll also be honest in saying our challenge has been that in the recruitments we’ve had, we’ve had a bit of dropouts. So it’s in filling the positions, but that’s also getting addressed.
Lakshminarayanan Ganapathi
Got it, got it. And in terms of your distribution reach, what has been an increase in the last one year in terms of either machines or absolute shelf spaces/retail counters. What has been our expansion and Raji for this one.
Rajiv Rajgopal
When you look at competition, they look at gross adds. They don’t look at net-adds and so I’ll stick to the gross adds, otherwise you will wonder why my numbers are what they are. So from a gross perspective, we continue to add 3,000 plus machines. Look, Lakshmi, our definitions are a little more stringent because I look at productivity, I look at what we call the tinting machine productivity. And what I’ve seen is an uptick of 2%. Let me explain this to you. See, earlier, if you take a five-year average, if we were growing at 6%, yeah, only 1% came from existing stores and about 5% came from new stores or new outlets, okay.
What we are trying to do is trying to reshape it. And why do we need to reshape it? Because in the intensified competition, it’s very important that your own stores you first protect before you start now investing in the new. Otherwise, you will start having lapsed dealers over a period of time and that both in terms of money you spend on distribution or discount, everything will go away. So there’s been a slight tactical change we’ve done in some of the key markets, which is what I think we are benefiting.
Secondly, over a period of time, never played in parts of the portfolio. Even today, our numbers are without construction chemicals. We have not yet started our construction. We are ready to launch, but we’ve not entered it. The moment we enter it, you can imagine what you’re seeing already what other players are talking of in terms of growth. And the reason I didn’t want to do it is we are doing a lot of testing because I want to make sure that in the products we play, we are significantly superior to our competitors and not just iffy.
So that’s why we are taking time. We are ready, we could have launched, but we want to make sure that both and we also want to make sure it’s margin-accretive, not dilutive as we move forward. So it’s structurally growing the business in the right manner. As we do that, we will start — you will start seeing further uptick in our performances as we move forward. In the decorative part. In coatings, we are doing well. I think the key is to make sure that we continue to grow well.
Our performances in Marine and protective, whether it’s in our — in our marine business or in our productive business has been strong. The order book is still reasonably strong in our coatings business. So yeah, we will have a couple of bumps because there was a lot of projects that started last year, which ends in May, June, but that notwithstanding — timing notwithstanding, I think structurally, we are poised to continue to grow double-digit.
Operator
Thank you, sir, for that answer. I request all the participants to check their networks before asking the questions to the management and who are unable to hear them. Thank you. We’ll take the next audio question from Jeet Shah, an Individual investor. Please go-ahead.
Unidentified Participant
Good afternoon, Rajiv, sir. So my question is with respect to the new 11 experienced stores, which we have opened during the quarter. So by which time we are expecting revenues coming from those new stores and what is really idea behind those stores? Because as far as I understand, our business would be driving from in from interior decorators as well. So what is the idea behind those stores? And by which time we can expect the revenue would be swimming from those stores?
Rajiv Rajgopal
Hello, Jeet, can you hear us?
Unidentified Participant
Yes, sir. I’m able to hear you.
Rajiv Rajgopal
Yeah, but I couldn’t hear the last part. So you said you opened 11 experiential stores.
Unidentified Participant
Okay. So by which time we are expecting revenue to be streaming from those stores? And what is really the idea behind those stores because majority of business, I assume would be driving from the interior consultants like a typical consumer would hire interior consultant to get those paints. So what is really the idea behind those stores?
Rajiv Rajgopal
I think you’ve answered the question in a way. Thank you for that. I think the purpose of the experiential stores is, look, Deluxe is best-in-class quality international and has color expertise. These are the core values of what Deluxe brings on the table. So what better way to enhance customer experience than have experiential stores? To be honest, this is something that we’ve lifted from some of our overseas markets, primarily in Latin-America and the United Kingdom, where we brought this experiential stores, our teams have over the years gone there and seen what they do.
The idea is also as we build our architect organization to make sure that consumers can walk-in and have a preference which is significantly superior in look, feel, etc. 11 is a small number. So really honestly for me to say the revenue will come out of it is not is not. Our idea is that over a period of time, we want to open hundreds of these stores and we are not doing — the entire capex is not on us. It’s a shared model with the dealers with whom we’ve got great relationships.
And the idea is to partake in it together to grow this business, yeah. So that’s the simple model, that’s the idea and the idea is to enhance customer experiences in-markets where we really think that this can help the brand and to make sure that we are able to strategically get to the next level of the architects, interior designers. So that’s really the answer, Jeet. Thank you. Could we have the next question?
Operator
Thank you, sir. We’ll take the next text question from Mahi and from Assity Mehta Investment. And the question is, can you give a sense of what are the EBITDA margins for the different segments within industrial so-far auto, power, MPY and ICO. Also, can you give a sense of the revenue?
Rajiv Rajgopal
No, we do not give — we do not give — we do not give EBITDA margins by businesses. I’m sorry, we don’t do that.
Krishna Rallapalli
We have a single reportable.
Rajiv Rajgopal
Yeah, we have a single reportable line, so we — what you see is what you get.
Operator
Got it. And the second, it’s a clarification. Did you mention Deco revenue growth was flat in the quarter?
Rajiv Rajgopal
Yes.
Operator
All right, sir. Thank you. We’ll take the next audio question from Santos Kesri from SKK HUIF. Please go-ahead.
Santosh Keshri
Hello, am I audible?
Rajiv Rajgopal
Yeah. Yes.
Santosh Keshri
Okay, great. Two questions from my side. One is that the volume — from the volume front, if you can give the details of the sales without the powder coating business because we understand that is that is under the discontinued business, discontinued operations in the balance sheet. So in the profit-loss account for this quarter, what is the volume growth for other than powder coating business?
Rajiv Rajgopal
I’m afraid we will not be able to give it because at this point of time, when we report the quarter report, the audited signed-off numbers include powder until the point of time that AxoNobel NV completes us the elements of what the powder coating separation is, which is why we’ve taken two months extension, we would not be in a position to give you segment-wise numbers. We will at appropriate time do it. We — your company is one of the best-in governance. So you can rest be assured, we will inform the stock exchanges and not come to individual investors, but do it in a manner which is completely clean and above bought.
Santosh Keshri
Okay. Understand that, Rajiv. And second is, yeah. Second question is about the capex, like in the last — if I exclude the discontinued operations assets that is classified as held-for-sale, that is INR329 crore. And the fixed assets that’s there — the tangible figure asset is INR395 crore compared to the last year’s INR436 crore. So what is the addition to the fig in the continued business part for the year?
Krishna Rallapalli
So we have a couple of growth projects which are running in terms of capacity augmentation for some of the — some of the coating businesses and then it is also the mixing machine placements too and hence the numerator reach and the distribution breadth.
Rajiv Rajgopal
Yeah. So we will in a couple of weeks or a month — in a month make a massive announcement. We are going to change the way the paint market operates. I’m not in a position to share that today, but you will hear an announcement come in the next month or so, which the team will make in terms of why we genuinely think we are now the unique and one of the best-in-class you know paints in the industry.
Yeah. So there’s work happening and some of the investments, as Krishna has said is in-line with it. We are happy to take your question in the next call because by then we would have informed all of you and the market and the stock exchanges of what we are unleashing.
Santosh Keshri
Okay. Great, Rajeev. In fact, I have been your consumer for a long-time when we got our building painted in Mumbai, so we discovered that dual expenditure of the best-in business and the chemicals that it’s been used is not bad for health, unlike the other paint companies, which were some people pointed out that they were carcinogenic and other elements inside. So since then, I have been tracking the and it’s been more than eight Years. Then I was Secretary of my building. Now I have out of MC, but I’m still invested in your company. So I discovered my company through pending what that happened. Okay, great. Thank you so much.
Rajiv Rajgopal
Thank you so much. Thank you so much.
Operator
Thank you, sir. We’ll take the next question from Tave from Financial Services LLP. And the question is how market regional growth is in different segments, say, urban and rural. Also next two, three years, what is the management’s view about growth in urban and rural market? And the second question is, okay, you may answer this and I’ll ask you the second question.
Rajiv Rajgopal
Yeah. So look, I think as I mentioned, urban growth are much faster. It’s there in the deck. Urban’s growth and premium grew significantly ahead. The reason is we took a bit of a pause in Mars and economy, particularly from mid-Feb to-end of March because discounting was going a little berserk. And as you can see, that’s the reason we’ve been able to hold our margins relatively better than it. We’ve come back-in April without doing too much and we’ve been able to on a YTD basis get back to on a year-to-month basis at the end of April, get back to growth.
So for me, I think it’s also of making sure that we are able to sustainably grow our business. So really, hopefully that answers your question. In terms of rural, look, upticks are there, but I think structurally my — I said it in the last investor call, I expected post monsoons around before Diwali, what we call season typically starting August is when you’ll really get to see the pull of the rural economy, you’re seeing all the players, different players have different results.
But if you pull the FMCG together, you will still see that the rural uptick has been related — of course, there are one or two outliers, but relatively when you combine a bunch, you’ll still see that rural is still relatively muted. I think it will start improving because inflationary inflation has come down to 3.6 as headline. We believe that, look, I do think that there’s going to be a lot of other positive factors driving the economy and consumption.
And with the tax change which has got implemented in from April, I think the smaller town incomes will start going up. And for people, they first spend on essentials and then come to the discretionary since paints is in discretionary, that’s the reason I expect this to be more in August rather than in April?
Operator
Thank you, sir. The next question is how many retailer plus distribution point we reach as on 31st March 2025 and what have been the growth over last year?
Rajiv Rajgopal
Look, I think we continue to grow in the high-single-digit in terms of distribution. We’ve added, as I said, about 3,200 outlets. So it takes it to 22 plus. We look at in terms of also not just outlets, but outlets will transact to us on a periodicity unlike just looking at number of outlets added in a year, year, right, because they have to transact with them, right? So that’s what it is.
How do I see it? Look, I think we’ll continue to grow. One of the reasons we’ve started — we launched the economy segment in 2021 was to make sure that we partake in the growth in a meaningful manner and that started doing well. I think the pricing pressures are higher with the new entrants in the mass economy, texture, putty and these segments and that’s why you’re seeing some erosion of margins in the decorative side.
But overall, I think after two, three months, I think that sanity on pricing will prevail and I think then structurally we should start coming back. Now whether it’s three or six is a function of how the market dynamics continue to operate and how the new entrants decide to continuously play the play the game.
Operator
Thank you, sir. The next question is from Yash Tee, an individual investor. And the question is, what has been the volume growth in decoratives business in-quarter four?
Rajiv Rajgopal
So decorative had a very minor drop of we’ve had flat revenue. And the reason as I told you, we kept our growth on putty and in the last one. But it’s not worrying for me because again in April, we came back. So structurally, if you were to ask me, I think decorative is going to look at least getting back to a single — for the fiscal getting back to a single-digit growth in terms of revenue and the volume should be a shade above.
Operator
Thank you so much.
Rajiv Rajgopal
Because correction.
Operator
I’m sorry, sir.
Rajiv Rajgopal
Yeah. No, there were some price corrections since January to April. So hence volume will start surging a little higher than value at some point, not usually, but marginally from our perspective.
Operator
Thank you, sir. A reminder to all the participants that to ask a question, please click on the Q&A tab on the panel and click on.
Rajiv Rajgopal
You can ask the participants to remain on-mute because we can hear a lot of background.
Operator
Yes, sir. You may also type-in your questions. And I would request the participants to mute their lines when the management is speaking. Thank you. We’ll take the next text question from Gaurav Kakar and the question from and the question is, does political or national uncertainty affect? Any strategic conversations you might be having? Maybe the timelines, if not the subject matter itself.
Rajiv Rajgopal
Look, as far as the strategic review is concerned, Rajiv has said, look, all I can say is there is a timeline given by the global CEO that the transaction will be affected by the end of this quarter, by June-end, right? I do not have any misinformation as you know, because of regulations, et-cetera. I’m not directly involved, but I’m certain that if that is the way it — that’s the sort of timeline.
In terms of political uncertainties, et-cetera, look, I think the uncertainties — I think the dark clouds have moved out. I think the sun is shining bright again. So let’s hope I’ll keep my fingers crossed. We’ve been through eight months of this. And I think I’m certain that the deal will be at some point of time concluded successfully. And I’m sure that the buyer or the winning organization will see the value of this brand in the marketplace.
Operator
Thank you, sir. The next text question is from Rashmi Jarjo from Goldman Sachs. And the question is what is the projected capex for next three to five years?
Rajiv L. Jha
We don’t do any forward in the projection for the capex and financial estimate. So having said that, it will be in the normal trajectory except for a couple of areas where we need to do some kind of a capacity expansions in keeping in view of the growth trajectory of the business.
Operator
Sorry, you don’t interrupt. Sir, you — Krishna, sir, I would request you to repeat it because your audio was too low and we couldn’t hear you.
Krishna Rallapalli
Okay. So thanks. Thanks, Rashmi for asking this question. And we don’t — we don’t share the financial projections of forward-looking statements here. Having said that, the capex would be in the normal trajectory except for few areas where we need to augment our capacities and expand our capacities considering the growth trajectory of the business. This is all I can share at this moment of time. Thank you very much.
Operator
Thank you, sir. Ladies and gentlemen, to ask a question, please click on the Q&A tab on the panel and click on the raise hand button. You may also type-in your text questions. The next text question is from Viraj Thave from Financial Services. And the question is FY ’25 dividend pay are is more than 100%. While it is good, in medium-term, what would be dividend payout ratio, medium-term.
Krishna Rallapalli
So we have — thanks, Diras. We have the dividend distribution policy, which clearly outlines and which is in the part of the — as part of the website and which mandates 85% of the recurring profits can be distributed as a part of the dividend. Of course, ’24-25 is the 70th year of being present in India at here being present in India. There we took the — we have distributed as a one-time special dividend in the month of November of around INR70. Thank you. Hope this answers your question. Thank you very much.
Operator
Thank you, sir.
Unidentified Participant
Yeah. So I have two, three questions from my side. So one question, we have seen we are doing well in B2B part of the business, which is also leading to-market share gain for us. So what are the key things that we are doing right, which are helping to gain market-share and do well also compared to the competition, if you can elaborate a bit more on that.
Secondly, now there is a reduction in crude oil price, which is a key raw-material. But at the same time, there is some increase in anti-dumping duty on rotile also. So net-net, how do you see the raw-material situation? And in case there is some savings of, let’s say, 50 to 150 bps, so what will be the strategy, whether to focus on margin expansion or whether to focus on invest that back to protect and gain further market-share so what will be the thinking on that process? Yeah. Thank you.
Krishna Rallapalli
So Ananda, thanks for questions. Regarding the growth trajectory, what is driving the growth in the B2B businesses is absolutely the focus and the disciplined execution of the pipeline and the teams are completely focused in terms of ensuring that the customer needs are met and through the innovative products and the services, which has been — which we have been telling over a period of time, so that at the end-of-the day, it’s Not the sale of a can of paint, rather it’s a solution and the application, which is driving that driving that growth trajectory and we could able to largely retain and grow with the customers. Coming to the subsequent question in terms of what was the second — second question,, if you can refresh.
Unidentified Participant
So there is a correction in commodity prices, but some increase in prices.
Krishna Rallapalli
So we are again consistent with our strategy in terms of that last year, if I refresh on these things, we will retain the profitability of the business and we will invest back into the business in terms of ensuring that a sustainable growth trajectory is back, which we demonstrated over a period of last one year and which will continue further. Rajiv, would you like to add?
Rajiv Rajgopal
No, I think that’s absolutely perfect, right? I think the fact is we’ve started moving towards positive trajectory in decorative. And the reason I use the word flat is because for me, a 0.1 and 0.2 is not meaningful, is not a — I don’t Call-IT is flat, right? But suffice to say that, look, I think we are moving the needle.
If you look at our retail business in decorative, it’s hugely improved, yeah, over the last 3/4 and we are slowly seeing an uptick across various. We are doing a lot of pilots as you — as I mentioned, we’re doing a lot of other experiments. You’ve seen the exponential stores what you’ve seen. As I said, Anirud, we will also be in a month telling you a game-changer at least from our perspective that the team is executing on, we’ll talk about it, right? So it’s in a sustained way to really build this business to the next level.
And for me, very clearly, the ambition is to become the number three-player in the decorative. It’s a bleeding statement at this point of time with so many new players coming in. But at the end-of-the day, I think if you look at the last three years, our records hopefully tell a story because I always believe that numbers tell a story. Yeah.
Unidentified Participant
Yeah. Sir, last question from my side, if you can share a bit more details on the experiential stores. So, kind, what kind of a boy business model? And then what will be the in a way revenue potential out of these stores also, whether we would be restricting it currently to North India only or we would have plans to expand it to West and South and Eastern markets also, plus whether it will be Tier-1 and metro strategy or we will, in a way launch in smaller parts of the India also or smaller cities of India also.
Rajiv Rajgopal
So let me start with the second part. I think we want to start in towns which are material to our business, both in terms of shared size presence. And while we are a urban town metro — seen as a metro brand, you’ll be surprised that actually our strength in some of our Tier-1 towns exceed some of the metros. For example, we are not really, really present in the metros like Hyderabad or in a meaningful manner in retail, right?
So really in places where our brand equity is strong and we are not present, we want to use the experiential store to drive a reference and why we’re doing it because as I explained earlier, the idea is that we are — the world has changed. We are now trying to make sure that the brand strength and the quality is also seen by some of our applicators, architects, interior designers given the shift that’s happening in the way people consume paints around, right?
That’s the broad picture. In terms of — we are not — as of now, even in the 11 stores is not only in North, it’s in North and East and there are some towns in West and town and South where we’ve already started making inroads. Our idea is to pilot it. We are first trying to understand what are the elements of the experiential that will be differentiated, how can we build a sustainable model. These are — these are dealer-owned outlets where we partake, we invest partly invest and that’s how the model will be because really our job is also then driving the traffic and making sure our dealers who invest, our partners who invest, get the return on investment for the investments that we’ve asked them to make. So that’s the simple model on your own. Yeah.
And we will talk a lot about it in the near-future, right? You will see a announcement and hopefully that will give you some clarity. Till then I would rather hold and not take the steal the thunder from the team which is working on it?
Unidentified Participant
Sure, sir. That’s very helpful. Many times.
Operator
Thank you, sir. We’ll take the next text question from Adity Yaddar from. And the question is, could you please shed some more light on the current supply-and-demand scenario? And what is the future outlook on the same part?
Rajiv Rajgopal
Look, I think the paints industry is still seeing some early single-digit growth. It’s very clear when you look at the industry with all the players in it. The question is that the margin profile of that growth, which is coming is at a lower-profile than what we currently operate. So the trick isn’t really putting strategies to make sure that we are able to come out and partake in the incremental growth, which is really meaningful for us at this point of time because I think demand situation will start — and I’ve been consistent.
In my view, I see no reason why the second-half of the year should not be better than the first-half of the year. Given that last year, at this time, we had elections and results came in June, I personally believe that, look, the second-half should be better unless there is an external event, which again, I cannot comment on. Yeah.
So really, I think the future outlook, I would say that if you take a year from now, right, and I would not be very pessimistic, I would say within — after a year from now, I do see demand uptick. This industry had gone from 1.2 times, 1.5 times GDP to 0.5 to 0.8 times GDP. I think it will slowly come back to-1 and then it will start creeping back to 1.2. For that, players with stronger brands, investments, distribution and doing the classical marketing will be the winners of it, yeah.
And it’s a — it’s — it’s not a — it’s a battle that one has to fight in different geographies, in different states in a differential manner. It’s not like a One India sort of a model that will work everywhere. Yeah, both in terms of the way consumers consume the paint, the way in terms of consumption, the way it is happening, right? What works in Mumbai, for example, on exterior paint, very different from what is getting consumed even along the coast in Kerala, for example.
The ask and what we are seeing now is there is a differentiated way, yeah. So I think it’s about really understanding — for us, it’s simple. I would just simply articulate it’s saying about how to bring the magic into the can.
Operator
Thank you very much, sir.
Rajiv Rajgopal
I think that.
Operator
Yes, sir. The queue is clear now. We may conclude the question-and-answer session and I would like you to give the closing comments. Thank you and over to you.
Rajiv Rajgopal
Well, thank you. I would like to thank all our investors who have been very patient, a lot of you who have been supporting us, cheering us from the outside. I do understand that the single largest question to me is what’s happening on the strategic review. I have great hope that the final buyer will be a person who is going to take this business to the next level.
And as and when we know it, and as soon as we have information, we’ll first and form our stock exchanges and then obviously inform all of you. We are quite excited at what we are doing right now and really that’s the focus because this is a time to — you can easily get distracted in this sort of a time.
I think what me and my team over the last eight, nine months have been doing is to walk the talk and trying to do it in a meaningful manner. It’s not an easy battle, it’s tough. But as you’ve seen, I think finally, as they say, the runs or the score has to — and the numbers have to speak for themselves.
With that, I’ll leave it to all of you to decide. I think for a number two-player with 13.6% EBIT margin in a year with a 7%, 8% market-share, I think is quite unheard of. I don’t think you hear too many number four players in any industry, first making the sort of profits that we do, having the sort of cash flows we have. And if you look at it, the journey from 2018 to now and more specifically from ’22 to now have become really up the walk-in terms of performances. Yeah.
I think that’s what I leave all of you to judge whether you want to run a business which has higher market-share with 7% EBIT margin or 14%, 13.5% EBIT margin is your choice. I continue to remain focused with my team in delivering strong performances and making sure we take this brand and the business to the next level.
With this, thank you very much. Thank you all for your time. Good luck. Bye-bye.
Krishna Rallapalli
Thank you.
Operator
Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes today’s session. Thank you for your participation. You may now click on the exit meeting to disconnect. Thank you so much, sir. Have a great day