Asian Paints Ltd (ASIANPAINT) Q3 FY22 Earnings Concall Transcript

Asian Paints Limited  (NSE: ASIANPAINT) Q3 FY22 Earnings Concall dated Jan. 20, 2022

Corporate Participants:

Amit Syngle — Managing Director and Chief Executive Officer

Analysts:

Abneesh Roy — Edelweiss Securities Ltd — Analyst

Avi Mehta — Macquarie — Analyst

Manoj Menon — ICICI Securities — Analyst

Tejas Shah — Spark Capital — Analyst

Jay Doshi — Kotak Securities — Analyst

Shirish Pardeshi — Centrum Broking Limited — Analyst

Percy Panthaki — IIFL Research — Analyst

Abhijeet Kundu — Antique — Analyst

Presentation:

Operator

Good evening, and a very warm welcome to one and all to the Asian Paints Investor Conference call for Q3 FY 2022 results. Today on the call, we have Amit Syngle, MD and CEO; Mr. RJ Jeyamurugan, CFO and Company Secretary; and Mr. Parag Rane, GM Finance.

I may now request Mr. Syngle to take you all through the presentation. Mr. Amit Syngle, over to you.

Amit Syngle — Managing Director and Chief Executive Officer

Good evening all, and welcome to the investor conference for the quarter 3 of the financial year 2022. Just to reiterate that as a brand Asian Paints is there for delivering enjoy since 1942 and as a brand we exist to beautify, preserve, transform all spaces and objects bringing happiness to the world, so you can see that practically any surface, any space in terms of what is there is something, which has transformed by the brand into place of happiness.

So when we look at the quarter 3, I’m happy to report that we’ve got a very, very strong double-digit topline trajectory, which is there, which is now continuing for the last 5 quarters in a very, very strong way. So if you look at from the point of view of overall volume growth that is the blue bar which you see is about at an 18% growth over the previous comparable quarter and if you look at value growth it is at about 27%. What we have also highlighted is the fact that the CAGRs, I think it is very important, because what we have seen is that the last 2 years have been a little bit abnormal in various parts of the year to that extent, and therefore we have looked at the CAGR over 2 years and 3 years, which you can both — see that both on the volume front, as well as on the value front, it is very, very strong and healthy, which is just indicating that the trajectory, which the business has been taking over the last 2 to 3 years has been very, very strong, and this is despite the fact that we have seen that the environment has been a little bit of uncertain, because of the COVID which has been prevailing over the last 2 years.

When we see the — the 9 monthly kind of numbers, I think the numbers are even far more healthier because we have seen a very strong Q1 and Q2 with respect to the top lines as well. And we see very clearly that from our overall volume point of view, we are at about a 40% kind of a growth on a 9-month level and a value of about 43% as compared to Q3 of last year to that extent, and therefore I think these numbers are pretty decently strong by itself in terms of what has been indicated.

Overall, as I said CAGRs if you compare, both the quarter 2 and quarter 3 — sorry the 2-year and the 3-year CAGR numbers are looking very strong in terms of the double-digit at 20.2 and 18.8 in terms of the 2-year and the 3-year for volume and for value as well, if you see the 3-year CAGR is at about 15%. So overall, the numbers seem to be very, very good from the point of view of topline and I must indicate that this is something, which has been the focus of the organization and we are committed to the fact that we would like to kind of really be aggressive in terms of topline growths as we kind of really look at going and that also looking at profitable growths.

Coming onto, just to kind of show you the trajectory, as I said, that the trajectory has been very, very strong over the last 5 quarters or so if you look at it. Overall, if you see the numbers within the blue bars which is at very strong numbers 32%, 47%, 105%, 34%, and 18%. You can see the trajectory, which is there over the previous quarters. But more importantly, if you see the 3-year CAGR, I think that is something also which is just kind of re-validating the whole scenario of the fact that we have looked at consistently growing at very, very strong double-digit growths, which are there and we can say that these growths are definitely much higher than the market in terms of what we have been able to see over the previous year and over the previous quarters to that extent. So I think that really is the story about the overall top line in terms of the way it has been kind of growing.

Key updates from the point of your business. We feel that when we look at the numbers, which have come in for quarter 2, we have gained a clear 2.7% market share gain, which is there to that extent amongst from the organized players to that extent and we feel that if you look at the volume market share gaining, it would be even higher than 2.7% in terms of what we see. We also possibly gained some share from the unorganized sector over this — in the quarter 2 when we see it overall. So, I think very strong share gains. If you look at the first half of the year where the numbers are available in terms of the published numbers.

Secondly, if I look at in terms of what’s really happening across various geographies, we have seen that quarter 3, especially if you take the metro T1 and T2 centers, they have been kind of growing at a much higher rate as compared to the T3/T4 cities which is indicative of the fact that when we didn’t have COVID kind of a scenario and the markets were relatively open, we have seen a higher growth coming from these centers in a very strong way. But I must say that even T3/T4 markets have grown at a good growth rate to that extent and much lower possibly than T1/T2, but they still have gone at a very healthy growth rate.

Our overall focus has been in terms of the Premium and the Luxury space in which we have grown in a very, very strong manner in quarter 3. It is also coming from the fact that the metro T1/T2 centers have grown much better and therefore the Premium and the Luxury space has really gone in a very, very big way to that extent. We have also had a good launch of some of our newer products coming in this space both at a Premium and a Luxury and they seem to be doing extremely well in terms of how we have spaced[Phonetic] those products going in.

Projects was another very, very strong highlight. It really grew in a manner, which is quite strong, and we looked at that it kind of really indicated, the fact that the real estate, the infra market was doing extremely well. We’ve grown across segments of builders, government, housing societies, and so on so forth, and a lot of good traction because of the waterproofing and the other add mixtures and other products which we have at the construction stage, which is going on, which is giving a very, very big traction to our overall growths in this thing. I would even say that the Projects business has outgrown the retail business in terms of the focus we’ve got in quarter 3. Overall, waterproofing is one story, which has continued for the last 7 years in a very strong manner. We have been consistent in terms of registering growths, even quarter 3 was a very, very strong, more than 50% growth coming in strongly here and this has been the feature both at Retail and Projects when we look at the overall business in India. And this is something which is really propelling the growths in a very strong way.

The other category, which is a strong category for us and largely in the Premium and the Luxury space is of Wood Finishes. Again, this is a market which is dominated by specialized products and technology led products to that extent, and that is something which we have been driving very strongly and we can say that amongst the entire organized sector we are way ahead in terms of looking off at Wood Finishes to that extent, and that is something, which has been a very strong focus in terms of driving it to the Premium and then also looking at some of the Rurban markets in a very strong way.

So that’s the story in terms of some of the key highlights, which we wanted to detail. We have done very strong work with respect to wallpapers and there is a launch, which we have done this year was Sabhyasachi. I wanted to just say that this is done extremely well and it is doing quite good at the metro T1/T2 cities level in terms of how we see. We’ve also done an alliance with GM Syntex which has a brand called Pure and in this, we have been able to sell as part of our Decor story, a very, very strong range of fabric and furnishings across the country. We have now more than 600 retailers who are selling this entire fabric range and as part of our decor initiative, we have been able to sell this in a very strong manner. And this is also forming a part of our high-end Beautiful Home stores which are there. So this is an imperative which is gaining now very, very strong momentum in terms of going forward.

Some of the new products which have kind of come in where we have seen a very, very strong impetus is the Royale Glitz, which I spoke off in the — in the Luxury space, which has come in, in terms of, if I look at from the point of view of SmartCare and flooring zones we have Epoxy Apcoflor which we have launched. In wood, we have the Ingenio and the Aquador, which has come into that extent. In the Premium space, we have the ALL Protek Fire Retardant paint, which we have got a patent for and And in the Adhesive space, we have launched the Trugrip Suprema but one of the great products, which we have launched now is, which is getting very good momentum is the Apex Ultima Allura, which is basically exterior [Technical Issues] and some really kind of mesmerizing kind of finishes in terms of what we have launched goes both for interior and exterior to that extent, and we think this is a winner of a thing, which is kind of getting a very strong response from the market in a big way.

Other things in terms of the update, we have been really focusing in a very strong manner at the network expansion and this is something, which has been going in a big way over several years now but I think we have — very — made a very strong progress in the last quarter and the overall year to that extent, we have added 45,000 new retail points almost over the last 7 quarters to that extent. Our entire color world expansion into newer towns, suburbs, smart cities have been very, very strong. We have retailing setup called the Color Ideas where we make the customer experience decor and look at in terms of a guided journey into Surface Decor and therefore we have about 28 new color ideas, which we have opened and the total numbers have really gone above 150 shops across the country.

We have now about 29 Beautiful Home stores which are functional. We have spoken about the stores earlier and giving you a glimpse in terms of this is a store, which has got decor under one roof, so this is all part of our whole home decor strategy, which you’ll see. So as we have said earlier, a very, very big focus which we have maintained is our transition from a share of surface within the home to a share of space. So we are not only about the 4 walls, we are now between the 4 walls also in the home and we think it is a very, very strong strategy, which basically is also giving us a leverage on the core coating space in a very big way. How we see this is that because it is the same customer, so in the customer life cycle today, we are looking at the coatings customer going to a decor space and a decor customer coming to a coating space, and therefore the interplay between these 2 strategies is very, very strong and therefore we think it is a very strong strategy in terms of getting into the whole business off for home decor in a very big way because it is complementing our existing business going forward in a very big way as part of this, as you see, we have got this Beautiful Home stores which are we call as the one-stop decor shops and which we are looking at everything which goes into the home right from kitchen, bath, furnishing, lighting, furniture, fabrics and everything.

As I said that, what I showed you the entire fabric and finishing business is something which is doing very well as part of the decade and we have also looked at the whole range of Nilaya and Royale play in terms of going forward. So I think this is something, which has done extremely well for us and the whole decor strategy is something which is strong. As we see in future, this home decor strategy overall should be kind of looking at contributing to 8% to 10% of the overall business. So we are very serious about this business going forward and you will see a lot of action happening in the home decor space as we look at our future going ahead.

Coming on to the other big differentiator, which we have today, we have today a very strong services kind of a setup, which is there. I would kind of say that globally in the industry, which is of the coatings industry, there is no other company who has such a big service footprint as we have today what we have created. We have the service which is what we call is the Safe Painting Service, which is now spread across a huge number of towns in India, and it is a significant part of our entire strategy in terms of how we look at. We also have basically Beautiful Homes Service which is there, which is about the whole home decor. So I think — and in addition, we also have a service called the San Assure which is about health and hygiene in terms of homes. So if you look at the entire services framework as we kind of go from a point of view of GMV, we can say that as we kind of keep on going, this will start contributing to almost about 7% to 8% of all our turnover, so this is a very big one and we think that today, there is no other one in the industry who can really compete with us with respect to looking at giving this kind of a service, this kind of an experience, and this kind of a differential in terms of the overall business going forward.

If you look at the whole area, the inflationary trend has really impacted. If you have seen Q — when we saw Q2, I think we saw a big impact in terms of what it has done and obviously, we took a lot of price increase corrections, which were done in the month of November and December, where we took almost something like a 15% kind of price increase, which was phenomenal to that extent, but at the same time, even this price increase happening, we have been maintaining a very strong volume growth and a value growth, which has happened. Still, if you look at it in quarter 3, while the overall margins, the gross margins have improved sequentially if you see from quarter 2 from 35.7% to 37.5%. I think the true potential in terms of this price increases what we have taken would come in Q4 and in Q4, obviously, the margins will become very, very healthy. I would only like to point out that some of the gross margins, which we have seen in the early quarter 1 and so on and so forth are something which were on the basis in terms of what we saw the year in terms of where the pricing — where the inflationary trend was not there and therefore the gross margins are very, very high at that point of time.

The inflation has overall gradually taken a short in terms of this margins coming down, but we are hopeful now that Q4 we should see even a healthier kind of our overall gross margin even over Q3 as we kind of go forward. I think one of the big things in terms of where there were a lot of queries in terms of saying that are we really pursuing profitable growth in a very strong manner. I think the price increases which have been taken have been able to mitigate the effect of the inflation in a very strong manner. And we see very clearly that sequentially if you see, we have been able to move from 14.2% PBDIT margin to about 19.6% which is I think a very, very strong jump which is there to that extent, and I think this is something which is clearly reflective of our overall intention and promising that we are looking at a certain band of PBDIT in terms of going forward and we will continue to kind of pursue profitable growth in terms of going at the same time, we will be aggressive in terms of our top-line strategy going forward to that extent.

Coming to key business updates. First of all, global, the international business has been affected a lot in quarter 3 as well. We have seen a lot of disruptions, one earlier because of COVID happening all across to that extent. But I think what we’ve seen is that some of the markets like Africa has been affected very well, both Egypt and Ethiopia. Ethiopia, there is a strike, which is going on. And Egypt was also hurt in a very strong manner. In addition, we had forex problems happening in Lanka and so on and so forth. So I think it was quite a mixed bag in terms of what we see. Still what we see is that we have been kind of able to kind of grow the overall revenue, which is there. However, I think Africa was something which was definitely down in terms of what you can see right on the screen. However, I think the larger impact game with respect to the overall inflation really kind of tailing on the profits and we have taken certain price increases across various regions. But obviously, they were not very in — the inflation and numbers were far higher and we try to maximize it so that we are not able — affecting the consumer in a very, very strong way. So overall, the margins, if you see the profitability has been affected in largely all the regions apart from South Pacific. But the larger impact, obviously has been in terms of if you see, Africa, Middle East, and Asia as well to that extent. So, but I think what we are confident is that overall — the overall revenue has been something which is very strong. And if you see on a 9-monthly level, we are still growing at about overall percentage of good growth across the regions to that extent apart from Africa. So overall we think that top planning, we will be able to grow and I think as we go forward, having taken the price increases, I think the situation going forward will be much better as far as profit is concerned.

We look at the industrial business, the 2 joint ventures, we have the PPG-AP. Now, here again, there were obviously challenges, especially in the automotive sector where we all know that there was a negative build which was happening. There was a chip shortage which was there and the entire automotive industry has been affected. But overall when we see in terms of revenues, we have still kind of done fairly well in terms of, if you look at quarter 3 which we have grown by about 38%. Obviously, there was a bit of a depressed base last year. In terms of what we looked at here and in the other business, if you look at the AP-PPG business, which is the general Industrial business, it has been very, very strong. The growths have been to the tune of about almost 64% what you can see on a 9-month level and on a Q3 level about 33%. So overall, if you will see that the general Industrial business has done much better the automotive business which is coming under the JV1 in Q3 grew at only about 5% compared to the 9 months number which you can see there.

Again, like other businesses, I think inflation impacted the — the profitability here. If you see both on quarters both the businesses were down with respect to the profits in terms of what we see, although at a 9-month level, we still see that PPG-AP is at about 1% and the other general industrial business is at a good growth of about 14%. So that’s the net upshot with respect to the industrial business as we go.

Coming next to our entire business, which is about home decor which is what we call the Kitchen and the Bath business. Both businesses have done exceedingly well. And today, both businesses have been able to cross the INR100 crores mark in a quarter to that extent and Kitchen crossed it last quarter as well in this quarter as well and Bath crossed this for the first time in this quarter. So I think overall, the top line has been very, very strong as you can see, Kitchen grew in Q3 at about 37% and Bath grew by about 42%. The 9-month growths have been also very strong from the point of view of top line, we can see 67% and 63%. The heartening part here is that we’ve got now I think the businesses picking well from the point of view of achieving not only breakeven but starting to deliver some profits as well. So Kitchen was at breakeven in terms of the overall PBT at the Q3 level and when we look at Q3 in Bath business, we have actually got profit there in terms of what we should have delivered, which is very strong. So I think that it is a very good indication that both the businesses now are on a good fitting, growing the top line and even now the bottom line is something, which has started to do well.

In summary, when we look at the entire stand-alone financials to that extent, the story is very clear that there is a clear double-digit revenue growth, which is happening which is 28% by value in terms of coming. We spoke about 18% by volume to that extent. Overall, if you look at the contributions have improved to that extent. However, at Q3 level, if we see the PBDIT is about down by 11% and PAT is down by about 14% to that extent. On a 9-monthly kind of a scenario, we see that the revenue growth is very, very healthy at about a 43% growth, gross contribution is also — has also grown. The PBDIT figure is about 1% negative and PAT is just about at about 0.1% profits to that extent. So, overall what we see is that the impact of the inflation has been taken care of by the price increases in quarter 3 to some extent, which is there. And obviously, the full impact will come in quarter 4. But I think the story has been very clear that given the fact that we’ve improved the PBDIT as well, we have been still very, very strong with respect to growing the topline numbers in a strong manner in quarter 3 as far as the standalone results are concered.

If you look at the consolidated numbers, again, the revenue here overall is at a 26% in quarter 3. The gross contribution is just about — up by about 2% overall to that extent. The PBDIT is about 14% negative and the PAT is negative by about 18%, so we can see the effect of some of the other businesses like global and all telling in terms of putting the profits a little bit down as compared to the standalone business in terms of what we see. At the 9-month level, again the revenues top line very stronger at 41% to that extent. Overall, margins have still grown. PBDIT is about 5% and PAT is another 5% down to that extent. So overall, that’s the story in terms of what we see, obviously, I think the standalone business has done much better as compared to some global business to that extent, and that is something which is a story the consolidated numbers are saying, but overall on a 9-monthly level also the top line numbers are very, very strong and we are hopeful that as we kind of go forward the profitability numbers will also improve.

Finally, I think there is a question which all of you have in mind in terms of what are we looking forward to. Obviously, I think with the 3rd wave coming very strongly and the Omicron being there and so on and so forth, there are all kinds of consumer sentiments, which have got dented to that extent. There are also state level restrictions, which are kind of coming, which has kind of really had impact in terms of some of the demand conditions definitely there. What we obviously see is that the current situation might continue for some time, but I think overall what we have seen in the past also that it is only that we see a deferment of the demand, which kind of takes place. The demand doesn’t go off to that extent and therefore what we see is that possibly as we kind of enter February and then the month of March, I think those are going to be very, very strong because there’ll be a pent-up demand to kind of support and also what we see is that, as I said the real estate and infra market is up to that extent, so even projects is something which is supposed to kind of do well as we kind of enter these kind of months in quarter 4 as we go forward.

Overall, from a point of view of raw materials, we believe that the inflationary trend will continue further, although the kind of rate of increase which is there would be moderate in Q4 to that extent, but we’ve just seen that the crude prices have gone up, and so on and so forth. So I think the inflationary trend will continue to be there for some time and we will look at in terms of how do we really tackle it in terms of going forward, whether there is increase — more price increases needed or what we need to kind of do, we will basically evaluate as we kind of go forward in the quarter 4.

Overall, in the international portfolio, as I said, we are looking at really seeing that if we can take some more increases, which are there looking at saying that how some of these markets really have kind of evolved because the external market has been disturbed and we are expecting that some of these things will ease out the forex conditions will improve to that extent in certain markets like Egypt and Lanka. So overall, I think our estimate is that Q4 should be definitely better than Q3 in terms of going forward. So that’s the overall outlook in terms of looking at it. Thank you so much for listening. Thank you.

Questions and Answers:

Operator

Thank you, sir. We will begin with the Q&A session now. [Operator Instructions] Now we have the first question from the telecalling platform itself and that is Mr. Abneesh Roy. Sir, please state your name and company name and ask your question.

Abneesh Roy — Edelweiss Securities Ltd — Analyst

Thanks. This is Abnessh Roy from Edelweiss. Congrats on extremely strong volume growth and good margin discovery. My first question is on volume growth. So consumer behavior post-Diwali, did you see a preponement of demand because your price hikes are coming in December and maybe even November because it happens a bit gradually. So that was quite well known in the media. Consumers also would have picked up dealers and [Indecipherable]. Did you get [Technical Issues] benefit of that?

Second is [Indecipherable] rural slowdown pretty prominently. We have seen very high inflation in diesel prices, fertilizer prices, plus we have seen a very sharp COVID Wave 2 in the 0:35:05 [Indecipherable]. So, would there be some lag effect on being correcting if my numbers are not suggesting that. I think the rural growth at some stage getting at a lower level?

Amit Syngle — Managing Director and Chief Executive Officer

Okay. Overall, see what we feel is that the festive season this time was very, very strong and we feel that the consumer demand, which came in was very positive at that point of time. So overall when we look at October in the entire quarter was at the maximum volume growth to that extent and therefore October was a very healthy month and so was November to that extent. In fact, we feel that the overall volume growths would have been higher if in the second fortnight we would not have been hit by the 3rd wave of COVID kind of starting to that extent. What we feel is that largely to some extent since we have seen that it was an early Diwali to that extent, and that is why also we saw that a larger demand came in October in a very, very strong way, which basically kind of helped us in terms of achieving the overall volume growths, which we are speaking off to that extent.

The second thing, which is there, is that we have seen that the effect of COVID very, very strongly in quarter 2, what we had seen was that it was the T3/T4 cities which were performing extremely well and they had given a very high growth number overall to that extent because there was still a little bit of a impact in terms of what was happening off the COVID in terms of T1, T2 and the metro and the larger cities to that extent. In quarter 3, we saw the reverse since the environment was much more open to that extent. The spending in the metro T1/T2 has really exceeded the kind of demand, which was coming from the T3/T4 cities to that extent. We feel that one — we did not see that the T3/T4 cities were way off the demand to that extent. So the demand was still pretty healthy, not lower than T1/T2 to that extent, and we still feel that the story as the other companies and the industries are feeling for us. I think the T3/T4 has been very, very strong and we have looked at a large part of network opening looking at getting into upgradation products and a lot of work, which we have done to kind of spruce of the demand in terms of the T3/T4 cities to that extent.

So, overall what we see is that the story of T3/T4 cities should be quite relevant. The overall rainfall has been pretty okay to that extent. And I think there is still a strong story, which is there as far as the T3/T4 cities are concerned.

Abneesh Roy — Edelweiss Securities Ltd — Analyst

That’s helpful. One follow-up there. In the international market, more price [Indecipherable] have been much much and [Indecipherable] 18% price hike that was taken in [Technical Issues]?

Amit Syngle — Managing Director and Chief Executive Officer

I couldn’t get the second part of your question.

Abneesh Roy — Edelweiss Securities Ltd — Analyst

18% price hike[Phonetic] is the highest in the world?

Amit Syngle — Managing Director and Chief Executive Officer

Okay. So, I see — yes — in the international markets see the inflation has been upwards of about close to about 28-29 kind of a percentage. What we have been able to take overall increases is in the zone of about 15% to 18% in various markets to that extent. And we have not been taken increases as we have done in the Indian market, which has grown to almost something like about 22% to 23% in terms of the overall increases which is there. I would say that, yes, this kind of price inflation, which we have taken, I think it is for the first time in the history of Asian Paints we would have taken this kind of increases to that extent, and it would be definitely something, which has been one of the stronger price increases we have taken in the past.

Abneesh Roy — Edelweiss Securities Ltd — Analyst

My second and last question is on waterproofing. What kind of price hikes have you taken there and have you compared [Technical Issues]? How to compare [Indecipherable] currently and longer term, could you look to dominate at number one the way you dominate sales?

Amit Syngle — Managing Director and Chief Executive Officer

Actually what we see is that overall waterproofing, I think the pricing has been comparable to what we have taken the increases across all other projects. There is nothing, which is special about waterproofing to that extent. It’s in the same league as what we have taken for emulsions and other products to that extent. Going forward, see waterproofing is an integral part of our strategy and we feel that it comes as a natural thing from a consumer’s point of view because the consumer earlier used to really blame the top court because of the fact that he sees any problem there. And therefore, we saw that waterproofing was a very big potential in terms of putting in place. Overall, as we see it, we have been growing, as I said at a very, very strong rate over the last 7 years, and we see that the overall potential in terms of the overall waterproofing market is extremely high and therefore we really do not compare in terms of how we are doing with respect to some of the other players in the market, but what we know very clearly is that with the kind of range which we have, the kinds of products which we have, and the kind of resources, which we have put behind, I think we are growing much faster than the market than any other player Indian or multinational.

Abneesh Roy — Edelweiss Securities Ltd — Analyst

Sure. That’s helpful.

Operator

Thank you, sir. Requesting everybody to keep your questions to 2 questions only in the interest of time. Our next question is from Mr. Avi Mehta who has joined us on Zoom. Sir, please unmute yourself, state your name and company name, and ask your question.

Avi Mehta — Macquarie — Analyst

Hi, sir. This is Avi here from Macquarie. I just had 2 questions. Barring the short-term impact of this wave, would it be fair to expect that the sharp price increases taken would result in volume declining because 3Q possibly didn’t see the full impact of that 50% price hike?

Amit Syngle — Managing Director and Chief Executive Officer

I don’t think so that would happen because we have seen a leap of almost about a 10% increase, which we did it in November and we still we saw very healthy growths, which we were able to achieve in November. And if I look at the second price increase, which we implemented even the first fortnight of December was very, very good from the point of view of overall demand to that extent. It is only that in the second fortnight we got hit with the 3rd wave coming in. As I see it, the elasticity of paint from the point of your pricing is pretty good. The only to some extent where it kind of stocks making in impact is at the economy end to that extent where it can start hurting you a little to that extent going forward. However, we must remember that when you look at there is a cost of painting 60% to 70% cost is of labor and the material cost is only about 30% to 40% to that extent. And therefore, even if there is a large increase in fact gets nullified from the point of view of an overall increase, which you see in terms of prices to that extent when it translates into a per square feet price on a certain surface. So what we see going forward that largely I don’t think so that we could kind of get impacted especially the luxury premium space would be very strong to kind of happen. There could be a little bit of an impact at the economy end. But by and large, I think the volume growth should be healthy.

Avi Mehta — Macquarie — Analyst

Okay. Perfect, sir. Now, I just wanted to check on the price increases. What kind of crude price inflation is built into the price hikes to contribute? Would it be fair to say crude price still $80 to $85 because that’s what the level was or already passed on, but further inflation would necessitate more price hikes?

Amit Syngle — Managing Director and Chief Executive Officer

See it is not directly correlated with just the crude prices because a lot of products which raw material is going to paint or derivatives, which are there. So it’s not a direct correlation that if the crude price goes up by $2 then there will be a correlation in terms of the price hike we need to kind of take overall. So I think overall we had taken a median in terms of about $80 to $82 kind of a range in terms of the crude prices going forward and we think that it would really depend on certain crude derivatives in terms of how the price would translate in terms of those zones. As we see right now, the inflationary percentages might not be very, very high as we kind of look at the quarter 4 to that extent, but we will have to kind of wait and watch in case the obviously I think the inflation goes very, very high, we will have a big call in terms of what to kind of do but there is no direct correlation, which you can put to crude prices in terms of their and what increases we need to kind of take.

Avi Mehta — Macquarie — Analyst

Perfect, sir. Very clear. And we should thank you and wish you good luck for the future.

Amit Syngle — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you, sir. Our next question is from Mr. Manoj Menon who has joined us on Zoom. Sir, please unmute your mic, state your name and company name and ask your question.

Manoj Menon — ICICI Securities — Analyst

Hello, Mr. — hello, hello, hello Amit, Mr. Jeyamurugan, Parag, and Arun. This is Manoj Menon from ICICI Securities which is ISEC. The first thing I just wanted to understand of if it is possible for you to help us. Is that in the overall volume revenue growth which Asian Paints disclose every quarter, would it be able to help us understand what is actually paints and what is the, let’s say, the non-paints contribution, let’s say, over the last last 3, 5 years, et cetera. So let’s say, for example, the reason I’m asking because when I compare and as an analyst Asian Paints performance with the other paint companies, it does appear that Asian has done a far, far better execution for other strategies there is an execution when it comes to non-things portfolio. So it will be very helpful you could quantify let’s say what is the non-paint contribution of your overall portfolio today?

Amit Syngle — Managing Director and Chief Executive Officer

So overall, if you look at from a point of view of non-paints kind of a sale, today we account for everything which is happening in terms of whether it is waterproofing, putty or whatever that’s part of the paint sales as well to that extent. It’s only the — the area, which is the Kitchen the Bath business and the other areas of home decor which we see are basically part of the non-paints which kind of really qualify under that category to that extent, and that part is not a very, very big part of the overall business, you’ve just seen that I spoke off Kitchen and Bath business crossing about INR100 crores in each of the quarters to that extent, which is there, plus the fact that today, there are other home decor areas like furniture, furnishing, fabrics in terms of what we deal with. So if you look at from a point of view of an overall percentage to the overall Coatings business, the non-paint would not form a very major part of it. So the larger performance, you can take it is largely on the paint performance what you see.

Manoj Menon — ICICI Securities — Analyst

Amit, I truly appreciate that comment, but maybe I’m happy to kind of connect one on one on this, but is it even actually fair to call waterproofing as part of paints actually because paints supposed to be delivering a different functionality, let’s say, versus the waterproofing where the consumer understanding that it is meant for the rules but whereas let’s say waterproofing, which meant for the wall is like obviously should — should classify a different classification. What I’m trying to understand is that I think you’ve done a pretty good job in terms of — but it appears that you are very reluctant to acknowledge the good work, which you’ve done actually, in terms of the non-paints diversification.

Amit Syngle — Managing Director and Chief Executive Officer

No, no. We will take that of doing good work all across and not look at only 1 category in terms of going good work there but principally I disagree with you because, see if you look at, and that’s what I emphasize the point that waterproofing is an integral part of painting just like you put a primer and a putty today, waterproofing is put to kind of take care of any seepage which happens on the wall or any damp walls, which are there to that extent. So I think the way we are pitching to all the — our retailers to painters to contractors is the fact that today you cannot see waterproofing separate to painting to that extent, and that I think has been the larger story, which we have been taking unless waterproofing is going on a very, very specific specialized purpose of saying you’re looking at a swimming pool, where you are looking at applying waterproofing there to that extent for special delivery to that extent, but in our business, the larger zone, which we are looking at is that how it is integrated with paint going forward. And as I said, that is why we don’t want to really compare with any other company in terms of what is there because they might be talking of waterproofing as a totally separate business in terms of how they see it. In our business, it is very well integrated into the midstream line.

Manoj Menon — ICICI Securities — Analyst

Understood. That I think probably the achievement of which paint companies like you and some of your peers would have managed in the last 2, 3 years. I get that.

Sir, the second question here is when I take a step back and think about the assumption 15 to 18 months back versus let’s say what realistically transparent actually happened in the market. When I go back we April, May, June of 2020, the assumption or the expectation was that consumers are very worried and kind of wouldn’t really want our painters to come into your home because you’re worried about COVID et cetera versus the reality was that it appears that yours is one of those industries where we’ve actually got benefitted from, let’s say, whether it is the consumer easily is spending more time at home with kind of completely turned out on this side from versus expectation? Second aspect is also that possibly rental people move to villages and kind of, let’s say, you had more rental apartments available in urban areas or vice versa et cetera. Just trying to understand that in your opinion just for a minute you leave the [Indecipherable] the Head of Marketing Manager, in your scientific observation what we have seen in the last 18 months, is there any significant noise in the last 18 months of performance at an industry level, including you as a market leader?

Amit Syngle — Managing Director and Chief Executive Officer

No. As I see it, overall, as I said earlier that there are 2 larger components of painting. One is the repainting segment which is there. The other is the new construction segment which is there to that extent. What we saw very clearly in the year one was that the repainting which is there only got deferred when there was COVID to that extent, and therefore we always kept on referring to a pent-up demand, which kept on happening whenever the market really opened for us to that extent. So the repainting market in nutshell never got affected to that extent, it only got deferred to another quarter or to another 2 quarters to that extent in terms of what is there.

The fresh construction is where it got impacted far more strongly for the industry as a whole because it is not very easy that if you have started the construction of a building that you can stop and kind of started very easily because there is labor, there is other infrastructure which kind of comes into place to that extent. So what I’ve seen year one, which is the last year, the construction business got affected in a very big way and that is why some of the projects areas got affected in a very, very strong manner to that extent, which is there, but coming into this year, we have seen impetus in terms of both the businesses apart from the month of May, which kind of created that COVID crisis, which was there. We saw definitely the pent-up demand happening in June, July, and August to that extent, which is there. And also we have seen a very strong demand coming from the real estate construction infra business this year, which has basically accelerated the projects in the institutional business.

Manoj Menon — ICICI Securities — Analyst

I’m sorry, I’m sorry, sir. Just to push the envelope on this actually. Basically what I’m trying to understand is, in the last 18 months, let’s say since March 2020 or rather 21 months since March 2020, did the industry benefit from any one-off noise about, let’s say, if people in when moving to rural, which means we have more let’s say apartments available in urban for rental or let’s say if XYZ went to went from urban to rural, you said that okay now let me paint might rural home as well. So one thing to understand is that are there any, in your opinion, as if you are Marketing Manager that look, are there any noise one-off in the last 18 months of demand trends, which you have seen?

Amit Syngle — Managing Director and Chief Executive Officer

Okay. Quickly just to tell you that, see, I don’t think so that has got really too much impact overall because in fact with lot of metro homes going down the rental homes basically repainting came down to some extent. On the other side, the second homes market kind of increased because a lot of people were purchasing second homes and so on and so forth to that extent. At the same time, a lot of people started focusing on their homes, which they were staying into that extent because they stayed in the home for a very long time. They started basically printing more in the home and the frequency of possibly the painting cycles increased to that extent. So I would say it was overall just a shift of the demand to that extent I didn’t see that that anything which has really contributed in terms of the industry increasing a lot just because of any of these demographic changes taking place.

Manoj Menon — ICICI Securities — Analyst

Understood, sir. So just to paraphrase —

Operator

Really sorry, Manoj. I’m really sorry to interrupt you. We have many questions in queue. So we will have to move to the next one. Really sorry for that.

Manoj Menon — ICICI Securities — Analyst

Sort of a clarification, I’ll come back. Thank you, sir. Thank you.

Operator

Sure. Thank you. The next question is from Mr. Tejas Shah. He’s joined us on the Zoon platform itself. Sir, please state your name and company name and ask your question.

Tejas Shah — Spark Capital — Analyst

Hi, thanks for the opportunity. This is Tejas Shah from Spark Capital. Sir, thanks for the very detailed presentation. So I’m not left with much questions on the decorative part of the goal but because this except front that you spoke about project business today and now project business is coming out of a slump but after a long and we did well in the quarter materially versus the part of the business you called out in the opening remarks. So I just wanted to understand that, how is the growth we are looking at because it goes after almost 7, 8 years, we are seeing the cycle [Indecipherable] and 6, 7 years back we vaguely used to say that the mix of fresh painting versus repainting is 25-25 and I believe in the last few years, that number would have moved in favor of repainting materially so where it stands today and how do you see it planning on in the cycle let’s say in the next 2, 3 years?

Amit Syngle — Managing Director and Chief Executive Officer

So I would say that structurally we still kind of talk of the new construction to be still around about 30% and today the repainting to be about 70% kind of a zone, because what we’ve also seen is that in the — while there is a tick up which is there both from the point of view of builders coming into this space, we also see a lot of action happening at the factories, the institutions and so on and so forth, but more importantly I think government spending has really gone up in the last 2 years to that extent. So government is a very strong space in terms of where we have seen a lot of kind of spending, which is happening from a projects institutional space. For us, that segment has also gone up because of the waterproofing coming into that extent because waterproofing becomes an integral part to start the foundation in terms of what is there and then basically gets into the whole painting cycle after that to that extent. So overall I would say that the percentages would be like 70%, 30% and my take is that going forward, I think we will see a lot of CapEx which would happen from a point of view of the budget which is coming on infrastructure going forward to that extent, and therefore I would say that the fresh construction I think as an activity we do would continue in the coming 2 years very, very strongly in terms of both government spending as well as the private lobbies coming in terms of spending on the housing segment.

Tejas Shah — Spark Capital — Analyst

Sir, just one clarification on that. So waterproofing and construction project are government projects will be part of Asian PPG, or it will be part of Asian Decor?

Amit Syngle — Managing Director and Chief Executive Officer

No. The entire projects business also is part of the Asian Paints only to that extent where Asian PPG comes in, that they look at the supply to OE businesses like the auto and so on and so forth and the general Industrial business basically would — basically give larger thing to factories for chimneys for maintenance and so on and so forth to that extent, which are all, basically as we call is the protective coatings in the powder coatings to that extent. But the projects business, which I just spoke of which is the builders and which is the cooperative housing societies and some of the government projects which are coming up or the hotels or the institutions all will come under the Asian Paints business.

Tejas Shah — Spark Capital — Analyst

Sure. That [Indecipherable]. Second question is, so last a few quarters, the most exciting part of your presentation has been the vision that you have shared on from share of loyal to share of space. Now, if you can share some operational insights on the Decor business, how does customer discover us, what’s the material sourcing arrangement and how the fulfillment happens on the whole line of business?

Amit Syngle — Managing Director and Chief Executive Officer

Okay. So there are 2-3 things. One is obviously the physical brick and mortor model in terms of what we follow. So we have standalone Kitchen and Bath stores which are there across the country, which we are able to kind of push the home decor items through those stores to that extent. We have started with this whole vision of something called the beautifulhomes.com, which is a central engine where the customer comes in looking at inspirations of home decor and so on and so forth. We are able to kind of then generate a lot of digital leads which kind of come in from there, where people are seeking the home decor in a very big way. And then, we kind of direct them to 2 areas, one is we have got the Beautiful Homes service, which provides basically them fully experienced sitting at home redecorating their homes or renovating their homes. In addition, we have now 29 Beautiful Home stores which are there which is decor under one roof, so we will guide a lot of those people who are coming onto our central engine beautifulhomes.com in terms of going into those stores and really kind of getting their home decor requirements from there. In addition, these stores will get basically walk-ins, which are happening because they are related, they are in the high retail street market to that extent so on and so forth. So I think the whole model which works in is from the point of view is that there is the digital engine which is energizing the people on inspiration and visits and then there is a brick and mortar model, which basically makes people experience things, see the physicality of it experience it and then kind of take those things home.

Tejas Shah — Spark Capital — Analyst

That’s really helpful, sir. Thanks and all the best.

Operator

Thank you, sir. Our next question is from Mr. Jay Doshi. He’s joined us on Zoom. Sir, please state your name and company name and ask your question.

Jay Doshi — Kotak Securities — Analyst

Hi, this is Jay Doshi from Kotak Securities. Thanks for the opportunity. I have a couple of questions. The first one, sir, you’ve indicated significant progress on network expansion and called out 45,000 outlets being added over the past 7 quarters. Can you provide some more insights in terms of quality of these retail outlets that you added? What is the tinting machine penetration in these outlets or over the last 7 quarters, how many tinting machines have you seaded, and where is your overall network count today in terms of head count?

Amit Syngle — Managing Director and Chief Executive Officer

See overall if you look at you know when I — when we speak of this 45,000 retail touch points, we speak of the overall ingress which we are making with respect to one putting our tinting machines there to that extent. We are also now working with respect to certain distributors in terms of reaching out to smaller players where we want to increase our reach in terms of smaller towns and so on and so forth, which is there as a model in terms of what we are taking to that extent and therefore it involves all kinds of retailers coming onto the picture. There could be retailers who are dealing in electricals. There could be retailers who are kind of dealing in cement and steel and so on and so forth. So it kind of includes the whole plethora of people who come on to the Board to that extent. In terms of overall tinting machines, I think the ingress has been very, very strong in terms of what is there because literally now it has become like an hygiene there because where a retailer cannot operate without the tinting machine not being there with him to that extent and therefore what we see is that — that’s not overall zone, which we are looking where possibly we speak of today retail touchpoints, which are almost about more than about 1.4 lakh overall to that extent, but not necessarily every one of these would be our direct retailer to that extent and nor everyone would have tinting machine in terms of which is there to that extent. But overall, that’s the kind of touchpoints which we are talking in terms of going forward and gradually what we see is that as these retailers mature, they will eventually take a tinting machine and go forward to that extent. So that gives you an indication in terms of how the numbers kind of look for future.

Jay Doshi — Kotak Securities — Analyst

But have you seen, just a follow-up. Have you seen — have you increased your tinting machine penetration or ceiling per year or per quarter significantly versus the previous run rate?

Amit Syngle — Managing Director and Chief Executive Officer

So we see that that is the overall focus which we have been maintaining for the last 4, 5 years. Yes. If you compare from what we have done, possibly a decade back the run rate would have kind of gone up to that extent, but that is I think a part of our strategy that we kind of keep on looking at putting more and more machines, as I said in newer towns, suburbs, newer cities and so on and so forth as we kind of go forward.

Jay Doshi — Kotak Securities — Analyst

Sure. And the second quick question is you called out that you are targeting 7% to 8% revenues from services and 8% to 10% from home decor. So what is the timeframe that you were referring to? And in this is revenue typically for a paint project, services is 2/3rd of the sales, so what does this mean in terms of revenue accounting, does it mean that when you indicate 7% to 8% of your revenue should be services. Does it mean 3% or 4% of your projects or overall business will be through our services?

Amit Syngle — Managing Director and Chief Executive Officer

So what it is that first of all, I think we are saying that by definitely in the next 2 to 3 years, we will kind of get into this number percentage contributions in terms of what we are speaking off. So specifically, I think by March of 2025, we are definitely looking at this kind of contributions coming. In case of services, what happens we talk of the GMV which is the Gross Merchandise Value overall, so therefore to that extent, it is a combination of the material plus labor in terms of what really kind of plays in. Whereas in from the point of view of decor also it kind of varies that in some cases, it would be only the material, which would be there in some cases it will be a question of labor plus material coming into the play to that extent. But what we are definitely seeing is that that is the — if we look at the overall GMV, they will start contributing to those kind of percentages in terms of the overall business.

Jay Doshi — Kotak Securities — Analyst

Just so that I’ve understood correctly 17% to 18% of your revenues will come from home decor services in the next March 2025 and that number would be less than 3%, 4% today?

Amit Syngle — Managing Director and Chief Executive Officer

So today, you cannot take it as 17% straight away because as said that is the gross merchandise value, which is there. So if you look at from the point of view, you will have to break it up from the point of your material plus labor to that extent. So there will be percentage possibly lower than that in terms of what we are talking that is point one to that extent. And secondly today, yes today that number definitely is in the region of about 5% to 6%.

Jay Doshi — Kotak Securities — Analyst

Understood. Thank you. That is very helpful.

Operator

Thank you, sir. Moving on to the next question. We have Mr. Shirish Pardeshi who has joined us on Zoom. Sir, please state your name and company name and ask your question.

Shirish Pardeshi — Centrum Broking Limited — Analyst

Hi, good evening, Amit. Good evening, Mr. Murugan and team. Thanks for the opportunity here. I really appreciate the comments what you have passed on before. I think the volume growth momentum is very, very strong. Just one quick question, I think not per se the rural but the fantastic work what you have been harping on saying that Tier 2/Tier 3 market and now we are exploring the distributor led model, what is it that the merit it can go up to and this is a — this is a continuous journey, which I can understand but obviously there is some level in your understanding that you have been trying a new format. But what is the merit at this kind of growth, how long it will continue? I mean demand conditions are very good, but the channels and formats, which you are using will have some limitations at some point of time?

Amit Syngle — Managing Director and Chief Executive Officer

I would not agree to that because I see that we are a consumption market in India, we are also a growing market to that extent I think the GDP projections which are there are not the projections that are coming down substantially as compared to what we look at the western markets to that extent. I would say that if the GDP is remaining in the healthy zone of anywhere between 6% to 8% kind of a zone for our country going forward, I don’t see that growths would be a problem to kind of come in. What we also significantly see is that today when you go into T3/T4 cities, I think the consumption is kind of going up the decor, levels are going up to that extent, the purchasing capacity is going up to that extent and therefore what we see is that the potential which kind of some of the rural geographies kind of give you is very, very strong and therefore we think that the expansion process will continue today as the towns get populated more and more you kind of look at 2 or 3 outlets coming in. When they get populated more and they expand the outlets go to 10 or so to that extent in terms of that place. So what we see is it’s a continuous process and I don’t see that there is any stoppage to this if I look at from the point of view or even from the point of view of next 20 years or so.

Shirish Pardeshi — Centrum Broking Limited — Analyst

Thank you, Amit. My next and last question is on obviously the margin. You did mention that this kind of price increases has never happened in the history of paint industry or any of the industry, but just suspicion that if the way inflation is looking at and you — yourself said that the derivative — crude derivatives will have a lag. And if I assume that hypothetically the inflation is still hitting on, would you have a confidence today saying that in the way you want to protect the margin for that, you will still exercise or the management is of the view that we will still be able to pass on some more price increases to the trade or whatever has happened is the cap?

Amit Syngle — Managing Director and Chief Executive Officer

See I think it is always a very, very dynamic situation in terms of what you play out to. Now if you look at it in the last 6 months, we did not take such a heavy increase because we were trying to balance the whole area of consumer demand, the consumer sentiments because we were going through a far more stronger COVID period where anyway the demand conditions were not looking very good to that extent. I think we would always kind of balance the fact that when we kind of go ahead and if there is inflation, what is the part which you can observe, what is the part you can pass on. I think these are dynamic questions we take a call as we kind of go ahead. We would like to respect the consumer sentiment and look at in terms of not upsetting that. At the same time, we would not like to kind of take and say that the profitable growth component kind of goes out of the story to that extent. So I would say that we would take a very, very balanced opinion in terms of going forward in terms of balancing demand versus the price pass on which we kind of do as you go ahead.

Shirish Pardeshi — Centrum Broking Limited — Analyst

Just one quick follow-up.

Operator

Sorry, we have a lot of questions in the queue.

Shirish Pardeshi — Centrum Broking Limited — Analyst

Sure. Sure. Okay. Thank you. Thank you, Amit.

Amit Syngle — Managing Director and Chief Executive Officer

Thank you.

Operator

So the next question is from Percy. He has joined us on Zoom. Sir, please state your name and company name and ask your question.

Percy Panthaki — IIFL Research — Analyst

Yes. This is Percy Panthaki from IIFL Securities. Just wanted to check some information which was discussed earlier whether I got it right. So basically, you said that the repainting constitutes 30% of sales now, which was a couple of years earlier pre-pandemic [Speech Overlap].

Amit Syngle — Managing Director and Chief Executive Officer

No, no. The other way around it. Repainting is about 70% definitely.

Percy Panthaki — IIFL Research — Analyst

Correct. So repainting is 70 and pre-pandemic, it was 75, is that correct?

Amit Syngle — Managing Director and Chief Executive Officer

Very difficult to really assess that it was exactly by that percentage because no one measures it that strongly to that extent. So you could take a band that it has remained in that band over a period of time.

Percy Panthaki — IIFL Research — Analyst

Okay. I think what I’m trying to understand, Amit is you mentioned that real estate revival is one of the things, which is sort of benefiting the topline, so I just wanted to get a sense of how much that benefit would be, so let’s say if the real estate cycle had not revived and it had remained as sluggish as it was 2, 3 years ago, then this sales growth of 28% you have done that would have been how much lower, is what I’m trying to understand?

Amit Syngle — Managing Director and Chief Executive Officer

I think if you get into that kind of a microanalysis, it is very difficult to kind of put whether it would have taken 2 percentage off the volume growth or it would have 3 percentage of the value growth to that extent. I don’t think so it works like that to kind of micromanage it like this because as far as even the construction segment is concerned, the growths kind of vary. It never did to that extent. So it might basically if it is growing at possibly 30%, it might come down to 20% or 15% because some projects will keep on going, some government spending will keep on happening, some hotels will keep on coming in the environment and so on and so forth to that extent. So, I think to that extent depending on what is there you could just say that maximum, it could be 2, 3, 4 points here and there, which you could kind of really see in terms of the market can behave to that extent, but I don’t think so that it would kind of do a very big major intent — indent in terms of bringing it down by 50% or so.

Percy Panthaki — IIFL Research — Analyst

Understood. That helps. Secondly, I just wanted to understand based on your input cost scenario, you mentioned that margins in Q4 should be better because part of the price increases will filter through in Q4 only, but wouldn’t the same hold true for input cost inflation as well that Q4 versus Q3 on a sequential basis. Don’t you see input cost inflation is still being positive?

Amit Syngle — Managing Director and Chief Executive Officer

No. See if you look at the quantum of the price increases which we have taken in November and December, they are pretty substantial and we would not have realized it over the full quarter period to that extent. So what I meant was that this whole price increase of close to about 15%, the full thing would kind of take shape in quarter 4 and whereas the inflation, which we see over Q4 to Q3, would not be of that kind of dimension to that extent, and it would be possibly much milder as we kind of go and see, so therefore, I think a larger impact in terms of profitability will definitely come in Q4.

Percy Panthaki — IIFL Research — Analyst

Understood. And my last question is —

Operator

I’m sorry, sir. I’m sorry. We’ll have to move to the last question anyway. We have one participant waiting.

Percy Panthaki — IIFL Research — Analyst

Sure.

Operator

The last question, in the interest of time, is from Mr. Abhijit. He has joined us on Zoom. Sir, please state your name and company name and ask your question. Yes. Hi, this is Abhijeet Kundu from Antique. Sir, thanks for the opportunity. You said that in the last few years, you have added about 45,000 new touchpoints, which is broadly about 15,000 touchpoints. When we compare it with your previous year, I mean the — I mean the last typically, it used to be in the range of 4,000 to 5,000 per — sorry per year. Now, it has — the addition has been quite substantial. So according to how much would be the I know you can give a particular figure to that but there would be a good amount of growth coming due to the outlet addition site. One would be that and in terms of geography, which are the geographies where we have been very strong in South and West and followed by I mean it is a good amount of a presence across geographies, but South and West have been very strong over there. So all these incremental outlets that have been added, which are the geographies that have done well for you or have been major additions in your book.

Amit Syngle — Managing Director and Chief Executive Officer

Okay. See, when I speak of the number of outlets, as I said, these are the outlets, which are direct and some indirect outlets, which you are getting. And so there are outlets where you will open directly and there outlets now which we have started opening through distributors as well. So I think the combined impact of 45,000 what we spoke of is coming as a combination of both to that extent and what are the things which you were kind of referring to earlier was more in terms of the direct outlets to that extent, which were coming in. So that’s the clarification, number one.

Second, when we look at the overall, I think all geographies have done extremely well for us and we are seeing that the kind of double-digit growths, which we have seen today across the country for several quarters now, these are kind of spread across all the divisions to that extent then we would say that the. I think the impetus is coming from all the divisions across the country, geographically very well, but I think if you were to kind of pick up, we have seen that the geographies, which are thereof North and Central and East have been possibly having a far more outlets and far more these things which are coming as compared to possibly relatively South and West.

Abhijeet Kundu — Antique — Analyst

And last one. In terms of your capacity, you still have spare capacity that can be added in your last few moment. So when do you plan to add capacity there because you had assembly lined in there but we were to add appropriate capacity there?

Amit Syngle — Managing Director and Chief Executive Officer

Yes. So I think it will happen definitely. I think we will look at in the next 2, 3 years to kind of look at in terms of adding that capacity going forward and the rate at which we are growing definitely we will need that capacity.

Abhijeet Kundu — Antique — Analyst

And what would be the utilization levels currently?

Amit Syngle — Managing Director and Chief Executive Officer

It is at about 70%, 75% level.

Abhijeet Kundu — Antique — Analyst

Okay. That’s it. That’s it for me.

Operator

Thank you, sir. That was our last question. May I now request Mr. Amit Syngle to give his closing remarks?

Amit Syngle — Managing Director and Chief Executive Officer

So thank you all. I’m sure that there would have been many more questions and we could have carried on for the next hour as well, but I think it’s been a pleasure interacting with all of you and it’s great I think listening and answering to your queries. Look forward to meeting you and wish you a very, very safe next quarter. Thank you.