Berger Paints India Ltd (BERGEPAINT) Q4 FY23 Earnings Concall Transcript

Berger Paints India Ltd (NSE:BERGEPAINT) Q4 FY23 Earnings Concall dated May. 15, 2023.

Corporate Participants:

Sujyoti Mukherjee — Vice President – Finance & Accounts

Abhijit Roy — Managing Director & Chief Executive Officer

Analysts:

Nitin Gupta — Emkay Global Financial Services — Analyst

Abneesh Roy — Nuvama Institutional Equities — Analyst

Avi Mehta — Macquarie — Analyst

Percy Panthaki — IIFL — Analyst

Tejas Shah — Avendus Spark — Analyst

Shirish Pardeshi — Centrum Broking — Analyst

Jay Doshi — Kotak Securities — Analyst

Harsh Shah — InCred Capital — Analyst

Mihir P. Shah — Nomura — Analyst

Deepak Parmar — Private Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, welcome to the Q4 and FY ’23 Results Conference Call of Berger Paints India Limited hosted by Emkay Global Financial Services. [Operator Instructions]

I would now like to hand the conference over to Mr. Nitin Gupta of Emkay Global Financial Services. Thank you, and over to you, sir.

Nitin Gupta — Emkay Global Financial Services — Analyst

Thank you, Govind. Good evening, everyone. I would like to welcome the management and thank them for giving this opportunity. We have with us today Mr. Abhijit Roy, Managing Director and CEO; Mr. Kaushik Ghosh, Vice President and CFO; and Mr. Sujyoti Mukherjee, Vice President, Finance and Accounts.

I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.

Sujyoti Mukherjee — Vice President – Finance & Accounts

Thank you, Nitin. Good evening, ladies and gentlemen. A warm welcome to Berger Paints India Limited earnings call for Q4 FY ’23, as well as for the financial year ’23. As always, we have with us today Mr. Abhijit Roy, our MD and CEO; and Mr. Kaushik Ghosh, Vice President and CFO. We’re really encouraged by your participation. And I would like to inform you that the management presentation on the performance has been uploaded in our website, as well as in the stock exchanges.

I would now like to hand over this call to Mr. Abhijit Roy for his comments on the performance. Over to Mr. Roy. Thank you, Sujyoti; and a very warm welcome to all of you to this earnings call. We will begin first by looking at what we have done for the year. The Company recorded a strong performance for the year. Our consolidated topline crossed INR10,000 crores in this particular year in ’22-’23. India operations topline almost at INR10,000 crores as well. Company gained market share in 2022-’23. The standalone turnover growth was 22.3%, highest in the industry. And consolidated turnover growth was 20.6%. A double-digit operating profit growth at 13.8% in the standalone and 11.7% on the consolidated business. Company added around 8,000-plus retail touch points in financial year ’23 and installed about 5,200 Colorbank machines. The Protective Coatings business itself crossed INR1,000 crore. We are the market-leader and continue to remain a market-leader in this segment. The non-auto industrial business also recorded market leadership, it’s topline of above INR1,450 crore. All industrial business lines showed improved profitability at operating margin level. Company successfully setup its biggest manufacturing facility in Sandila, Uttar Pradesh if 33,000 metric tonne capacity with an investment of INR1,037 crore. We have had consistent growth over the years. If you look at this year’s growth as well, volume sales growth versus ’22 and ’23, in ’23, we had a volume sales growth of 15.5%. The decorative volume growth is in the range of 17.6%. Three years compounded growth rate of the Company per se is 16.6%. Value sales growth this year 22.3%, three-year compounded growth rate 18.5%. This comes on the backdrop of a robust 28.6% last year as well. Over the years, if you look at the standalone performance this year, we had, as I said, the value growth of 22.3%, operating profit growth of 13.8%, PBIT 13.4%, PBT 9.7% and PAT 10.5%. The financial results are there in a similar — all the figures which are available. In terms of PBDIT, growth 13.8%, PBDIT to sales it is at 14.2% for the year. Growth rate, consolidated 20.6% revenue growth PBDIT 11.7% and PAT 3.3%, brought down basically because of the Sandila investment. The depreciation and the interest cost has gone up substantially, reducing the PBT and PAT. If we look at some of the other issues in general capacity that we have 95,000 metric tonne, biggest plant went on commercial production in February 2023, with 33,000 metric tonne capacity, which will manufacture products across all categories. Presently, the capacity utilization is hovering in the range of around 40% to 50%. Some capacity additions in existing plants, but no further greenfield project is envisaged for financial year ’23-’24. The new plant at Panagarh in West Bengal to be commissioned around March ’25 to produce industrial paints and construction chemical. Looking at the quarter four performance now, the volume sales growth was at 11.1% overall for the Company and for decorative it was slightly in excess of 14.5%. In case of value sales growth, we registered 13.6%. Three years compounded volume growth at 19.4% and three years compounded value growth is at 23.1%. Decorative business, as I mentioned, both double-digit volume and value growth both in excess of 14%. Construction chemicals segment also recorded a robust growth for the quarter. Several new products were launched in the quarter. In the industrial segment, we had a flattish volume or negative volume for some of these like Powder Coating, but the value growth for all the industrial divisions were in excess of double-digit, primarily driven by price increases. Innovations for success and new product launches, we introduced Anti Dustt Cool. And there were three products in the wood coatings range Imperia Trends, Imperia BBZ and Imperia DuraCoat. Some of these are very interesting finishes, which you can possibly see if are looking at the presentation, interesting finishes, a metallic finishes, filament finish, hammer tone finish. So these are different types of finishes, which are there for decorative finishes for wood coating. Similarly, a product which got introduced called DuraCoat, again, an epoxy-based product. Very popular for hobbyist and small interior decorators as well. Tables, etc, which can be created with different types of designs, some of which are shown in the photograph there. Media campaign continued. We in fact spent a little bit extra money in both in digital media and television as well. In this period, in the quarter four of this year compared to quarter four of last year. So the spend percentage in advertising went up a little bit. In ’21-’22 Q4, we had cut-back on the advertisement spend and this year we actually increased it. So therefore, the growth in advertisement spend has been much beyond the sales growth in this quarter. Industrial business, automotive, general industrial and protective, as I mentioned, all had double-digit value growth, but volume growth were negligible, primarily because they were led by price increase led growth. Powder Coating continued to have a negative growth rate both in volume and value term. As far as gross margin is concerned, as we had mentioned last time, we have seen restoration of the gross margin on top of drop in raw material prices. This bounce-back from 33.8% of quarter three to 39.6%, as you can see in the graph. So we are expecting that we will be able to maintain the gross margins at these levels, which is a healthy gross margin to be at and we have been consistently been in this range of 38% to 40%, and that’s where we would like to be in the future as well. As far as PBDIT is concerned, it did not go up to that extent, it actually moved up from 12.9% to 15.6%. We could have been higher at about probably around 16.6% to 17% range, which is where we would expect to be in quarter one. This quarter, we had some one-off expenses and that’s where we got impacted a bit. There were three issues, one was overhead and pre-operating expenses in account of Sandila project, which got completed in the month of February we started, but we had recruited from the month of November and that expense came in — much of it all the workers officers managers and that added up to an overhead expense, which was in excess of what the normal expenses. The second part of it was we had done some Andhra Pradesh school project, which was a big project, which we had done the year before. And in that 90% of the payment we received, 10% of the payment it comes delayed normally, because lots of formalities to be filled up before that payment is released. That was taking time and we have provided for it therefore. And if we had not done these two one-off expenses and this is an expense which we will — we are very sure that we will get back either this quarter or the next quarter, but we wanted to be doubly safe and therefore, we have provided for it. Had we not done it, our — there would have possibly been about 1% higher, which would have given us a growth rate in the range of 16%, 17%, which would have been a healthier growth rate. Operating margin excluding other income, however showed an improvement sequentially of 270 basis points. We expect gross margin to hold, as I mentioned, at the same level going forward. Operating margins are expected to improve in quarter one of financial year ’24 itself. PAT has been lower over corresponding quarter last year on account of higher depreciation and finance cost on the Sandila project, which will be normalized in the coming quarters. The net debt situation, which had risen to about INR1,000 crores in September ’23 has come down to INR610 crores at the end of March. And we would expect that we will have — net — we’ll become net cash positive by the end of financial year ’24. Company presently has the shortest receivable collection base in the industry at around 37, 38 days. And if you look at the decorative, again, it will be probably the lowest in the industry at about 23 days. Standalone growth for quarter four I have discussed already, but just to reiterate, 13.6% in terms of income growth PBDIT growth 9% and then PBT and PAT at minus 3.2%, primarily because of the depreciation and interest cost of the Sandila plant. Financial result over the years, income from operations, it’s been fluctuating from quarter one of financial year ’22 due to COVID issues, 96%, 26%, 21.2%, 7.3% then again bounced back to 53.7%, 22.52% and then now 13.6%. Consolidated results on similar account, the consolidated result if you observe is lower than that of in terms of profit and also in sales growth rate, and PAT and PBT are especially lower. The PBDIT lowering is due to primarily Bolix and Nepal operations, which went negative in this quarter. Therefore, you’ll see a lowering from 9% to 6.4%. In case of PAT and PBT, we had a fire in our Berger Becker plant in the month of March. We have to provide for this our portion of it, which is about INR28 crores to INR29 crores. As a result of that and we’ve taken this provision, though we have applied for the insurance and we are reasonably certain that we should get it in quarter one or quarter two, but since it will take some time, we have provided for this and as and when it comes back, it will be restored back into our accounts. So therefore, this is the reason why you see an extraordinary drop in PAT and the primarily because of the fire incident and the provisions made thereof. Income from operations growth then for consolidated on similar lines as that of standalone, the performance of our consolidated Company subsidiary STP Limited showed robust topline and profitability growth aided by gross margin and reduction in overheads. This is the construction chemical company, which we had acquired sometime back and did very well in quarter four and also right through the year. SBL, which is Saboo Coatings Limited, had a marginal degrowth in topline for the year, but showed improvement in profitability. The Company’s overseas subsidiaries BJN-Nepal had a degrowth in topline and profitability on account of steep inflation and cash crunch in the economy, whereby Company decided to hold back on extended credit. The outstandings were going up and we decided not to extend it anymore and therefore you cut-back on the sales a little bit and suffered because of that. Company’s overseas subsidiary Bolix, Poland, also had a degrowth in topline and profitability on account of Ukraine war and inflationary environment. UK operations were also impacted by high inflation. It’s coming back, but we have to say it’s too early to call as far as Bolix is concerned. Company’s joint-venture, Berger Nippon Paint Automotive Coatings had a very strong quarter of topline and profitability growth aided by the growth in the automotive sector. Company’s joint venture, Berger Becker Coatings financial performance was negatively impacted on account of the fire and the loss in one of the factories in this quarter, an amount of about INR28 odd crores was provided for the same claims are being processed. Strategizing for growth, we will expect to continue to grow at a good healthy pace network expansion. We are already having 40,000 retailers. We plan to add 8,000 retail touch points in the year ’23-’24 as well. In terms of product innovation, we have done several product innovations in the recent past, some more are there in the pipeline, which will come in this year in ’23-’24. The focus in advertising will be on the digital side of advertising, though, our advertising spends will increase considerably this year both on television and on the digital media once again. Influencer outreach, Company has about 1.3 lakh contractors and painters with regular offtake of Company’s products. We plan to scale-up significantly in this area. Cost restructuring working with R&D to find more cost-effective alternative formula and efficient formula. The improvement in manufacturing efficiencies through automation and overhead reduction will carry on as we have been doing in the past. All this, we will do and keen focus on the ESG part of it, Environment Social and Governance at fixed we have even in the recent plant in Lucknow it’s probably one of the greenest plant around; complete solar power generation, excellent water recycling and wastewater reduction. So we have taken lots of measures across various factories in order to become far better in terms of our environmental footprint. Similarly, in terms of social issues and governance. The Company expects to continue its double-digit growth in decorative business in the coming quarters as the demand outlook remains would in view of lower inflation and prediction of normal monsoon. I think so far, April has begun very well and we expect that May and June should also be good. Industrial sales outlook remains strong on the back of upturn in automotive and infrastructure sector. Raw material prices other than any exchange rate fluctuation appears benign as of now. We therefore, expect that our gross margin will hold. Profitability expected to improve in quarter one of financial year ’24 on the back of improvement in operating margin, the one-off expenses that we incurred won’t be there. And therefore, we expect a good solid improvement as far as EBITDA is concerned. And Company is confident to have a strong performance in its 100th year of operation. Thank you. And we can field the questions now.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Yeah. Thanks and — you have shown good improvement in the volume growth trajectory. My question, sir, essentially on the cost aspect. So first is on the Andhra government delaying the receivables. So, would you be fully confident of this and if you could quantify how big is the amount? And in the past, have you seen such delays in other state government disables also? And does this change your aggression in any way to the state government?

Abhijit Roy — Managing Director & Chief Executive Officer

So, Abneesh, yes, we are very confident of this amount that we should be getting it. Basically, we have a system whereby it is automated. And this amount goes to a — through a portal, which is called CFMS in their terms. And once it reaches there, it gets disbursed. So of the total quantum, which was there, in excess of INR300 crores, we have received 90% of it and 10% was what was left. Out of that, what they had indicated was this is the last portion which is there, for which there is a process, there that we have to get certifications from the Head Masters and the Assistant Engineers of each of the schools, there are 12,000 of them. We have so far collected about 8,000, so we are — we have to collect this balance 4,000, which is taking some time, because it is disbursed and to contact both of these guys and it takes some time. Once we get it, once submit this, we are 100% confident that the payment will come through. So no worries as far as this is concerned.

As far as other state government, yes, we keep doing projects elsewhere. And so far, there has been no such defaults from anywhere in the country.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Sir, understood. My second question is on the advertising spends which you said has gone up significantly this quarter on Y-o-Y basis. And next quarter and for the next full-year also FY ’24 you do expect ad spends to go up, which I understand given the gross margin expansion. If I see the market leader’s Q4 results also, their other expenses has gone up. So if I compare your ad expense versus pre-COVID as a percentage of sales, if you could give clarity there. I understand Y-o-Y because of the COVID etc, wave three, Y-o-Y it has gone up, but versus pre-COVID, where do we stand in terms of ad spend as a percentage of sale?

Abhijit Roy — Managing Director & Chief Executive Officer

So, Y-o-Y, as you are rightly saying, it’s because we had cut back little bit and now we are going back to normal spend levels, but pre-COVID we are marginally ahead of that. We are spending a little bit extra, especially on the digital media, there has been a substantial increase in spends there. The TV hasn’t gone up so much. For the digital, there has been a massive increase.

Abneesh Roy — Nuvama Institutional Equities — Analyst

And digital increase, and is it due to any particular reason or is there just cost optimization versus the TV media and also other paint companies are saying lot of activity happening from their side onsite. So is that also a meaningful expense from your side?

Abhijit Roy — Managing Director & Chief Executive Officer

So, on the architecture side, we haven’t gone in such an extent, but digital media we are going primarily because we see the audience quite a lot shifting in that direction. And we have started targeting, because it also helps us to — because we don’t want to scatter our money uselessly into places where it may not be so useful for us. So certain states where we want to do activities on certain brands, which are not that strong all India, we would prefer to go digitally there. There are certainly brands like that where we want to advertise digitally and that’s where the spend is going up. Corresponding little bit of reduction might be happening on the television. Overall therefore, compared to pre-COVID period there has been an increase, but marginal increase on television and a much more substantial increase on digital.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Sure, sir. That’s all from my side. Thank you.

Abhijit Roy — Managing Director & Chief Executive Officer

Thank you, Abneesh.

Operator

Thank you. The next question is from the line of Avi Mehta from Macquarie. Please go ahead.

Avi Mehta — Macquarie — Analyst

Hi, sir. Sir, I just wanted to clarify the amount that is left from Andhra Pradesh school project is INR30 crores or what is the amount? Sorry, I missed that one in the earlier —

Abhijit Roy — Managing Director & Chief Executive Officer

Total amount that is due is approximately INR30 crores; of which, we took a hit of about INR20 crores, INR21 crores this quarter, primarily because they have crossed one year period. Some of it in phases. So we have done some schools, which were very much earlier. So that which crossed one year we have taken that complete projects for that.

Avi Mehta — Macquarie — Analyst

Okay. Perfect. That’s very clear, sir. And sir, the second bit when I look at the EBITDA margin what you’ve kind of indicated, would it be fair to say that the 16.5% or 16.6% to 17%, given input costs are also remaining benign, and we should expect or we can expect such performance for the year as well, obviously, assuming that input costs remain at benign? Is that a fair way to look at this or if you could help me understand that, sir.

Abhijit Roy — Managing Director & Chief Executive Officer

So, I can predict for you for the first quarter, because that’s more closer and we have got one month, which has already gone past. And so, therefore we can with a reasonable degree of certainty, comment on that. If the prices [Speech Overlap] if all other conditions remain similar, then yes, of course, we are looking at that type of a EBITDA range, which is there. However, if we see some activities happening which are beyond the normal, then obviously things might change. But, yes, if everything remains same, that is where the range will be.

Avi Mehta — Macquarie — Analyst

And those activities will largely be input costs related, right sir? That’s how I should —

Abhijit Roy — Managing Director & Chief Executive Officer

Yes, yes. Primarily that, unless of course also towards the end of the year, we expect competition to come in, in form of some of the players who have declared that from the fourth quarter they will jump in. So at that point of time, it might be some sort of a skirmish in the market for a short while. So there, we don’t know what will be the situation. But otherwise, yes, this is where we will be.

Avi Mehta — Macquarie — Analyst

Perfect, sir. And sir, on this — answered the spend remaining ahead of pre-COVID. That was ad spend to sales, right? I just wanted to clarify that point.

Abhijit Roy — Managing Director & Chief Executive Officer

Yes. Both in terms of absolute and in ad spend to sales as well.

Avi Mehta — Macquarie — Analyst

And last bit, sir, if you could give us a sense of the construction chemicals business and how do you see the growth in this category, if you could give some understanding of how large is it for us right now and whether it’s only in the subsidiaries? How do you — or whether it comes in standalone? Sorry, it’s mix of too many questions, but I just wanted to understand this construction chemicals business better, sir.

Abhijit Roy — Managing Director & Chief Executive Officer

Right. So as far as Berger is concerned, within Berger itself, this is growing very well at a very robust pace. And it is now becoming more and more significant. We expect this construction chemical to be around the range of 8% to 10% of the decorative business in the next two years. That’s for sure it looks like the way it is growing at present. In addition to that — pardon me.

Avi Mehta — Macquarie — Analyst

Sorry, sorry. Go ahead, sir.

Abhijit Roy — Managing Director & Chief Executive Officer

Yeah. So, and in addition to this, we have, of course, our subsidiary company, which is STP, which is also a chemical space, which also is growing quite fast. So overall, it should be around the 10% range comfortably in the next 1.5 to 2 years.

Avi Mehta — Macquarie — Analyst

Sir, sorry, just on that bit, currently what is the sale in, sir, because that will give us a sense on the growth that we are expecting.

Abhijit Roy — Managing Director & Chief Executive Officer

So currently, both put together we will be somewhere around INR1,000 crores.

Avi Mehta — Macquarie — Analyst

Okay. Okay. Perfect, sir. I have some questions more, I’ll come back in the queue. Thank you very much, sir.

Operator

Thank you. We have the next question from the line of Percy Panthaki from IIFL. Please go ahead.

Percy Panthaki — IIFL — Analyst

Hi, sir. With some amount of decline in crude and crude-related input costs, how are you looking at sort of the pricing scenario in the next few months? And when I say pricing, I’m talking about consumer pricing and plus any extra activity in the trade via discounts, rebating, etc, etc?

Abhijit Roy — Managing Director & Chief Executive Officer

No, so crude has come down, it’s true and the prices of raw materials have become benign as we can see from the gross margin expansions also, it is quite evident. However, it’s a competitive industry and typically if there is competition, you tend to fight it more fiercely in the market. And the prices do settle to a level which is sensible. I think there will be some amount of rebating which is going to go up a little bit possibly, but not significantly, because this is the level where we were pre-COVID and it’s not something which is substantially different from where we were pre-COVID.

Percy Panthaki — IIFL — Analyst

Right, sir. And you also spoke in your initial comments that gross margins, I mean, sustainable basis, you would like to maintain it around the 38% to 40% mark. If you can also give a similar idea as to your EBITDA margins please.

Abhijit Roy — Managing Director & Chief Executive Officer

So, EBITDA margin has been — if that is the range, normally we operate at 16% to 17% range of EBITDA, and that’s where we can be going forward as well.

Percy Panthaki — IIFL — Analyst

This is on a consol basis, right?

Abhijit Roy — Managing Director & Chief Executive Officer

That is right.

Percy Panthaki — IIFL — Analyst

Okay, sir. That’s all from me. Thanks and all the best.

Operator

Thank you. The next question is from the line of Tejas Shah from Avendus Spark. Please go ahead.

Tejas Shah — Avendus Spark — Analyst

Hi, sir. Thanks for the opportunity. Sir, you spoke about adding somewhere around 8,000 dealers on the base of 40,000, so that’s a very healthy 20% addition. So historically, how does this translate into growth, a 20% addition on distribution footprint will translate into 5%, 10%, 15%, how does it actually impact the growth in the year where you’re expanding?

Abhijit Roy — Managing Director & Chief Executive Officer

Typically, this will probably result in 5% to 6% of increase over additional increase over whatever normal increase we would have got otherwise. If we have normally grown at 7%, 8%, this will give us 5% additional which is about 13%-odd.

Tejas Shah — Avendus Spark — Analyst

Sure. Sure. And sir, if you can give some insights on are we specifically targeting any geography where we’re under-indexed in terms of our presence and we are disproportionately adding dealers there or there is a normal course of expansion that we have been doing for last many years?

Abhijit Roy — Managing Director & Chief Executive Officer

So normally we have been growing at about 5,000 — 4,000 to 5,000 outlets. Last year, ’22-’23, we grew slightly faster. We grew 7,000 outlets, of which 5,000-plus were machines. And this year, again, we want to grow slightly ahead of that from 7,000 to 8,000 outlets. And therefore, the increased — and then if you have seen last year also in terms of value phase work, we were the highest in the industry and this would help us this year as well in growing at a faster pace than the industry in general.

Tejas Shah — Avendus Spark — Analyst

Sure. And sir, last question if I may, on your margins guidance. Sir, your own commentary on the existing competitive scenario and then at the end of the year you also highlighted there is a competition which is coming. Your guidance on going back to 14% to 16% kind of EBITDA margin, do you think that the upper end at a slightly aggressive or you believe that with raw material benefit coming through, you can actually revert back to those levels?

Abhijit Roy — Managing Director & Chief Executive Officer

I didn’t get it. Can you repeat the question please?

Tejas Shah — Avendus Spark — Analyst

So, 14% to 16%, right, consolidated margins?

Abhijit Roy — Managing Director & Chief Executive Officer

16%, I said, it will be in the range of 16% to 17%, that’s where we should be.

Tejas Shah — Avendus Spark — Analyst

Okay. So, sir, that’s a healthy expansion on where we are exiting this year. So, looking at you qualified this year to be slightly competitive than the past years, so just wanted to know how confident are we able to, because I’m assuming that a large part of this benefit or expansion will be gross margin-led. So looking at our stepped-up investment on A&P commitment and then competitive landscape also, how confident are we to actually kind of revert back to those levels of margins?

Abhijit Roy — Managing Director & Chief Executive Officer

It’s a combination of two, three factors. One, of course, is that there was this one-off expenses which were there this year, which will not be there next year. The second is that we are doing a lot of exercise on our overhead front, which we expect that will yield very positive result, and we should be able to reduce our overhead percentage to sales in at least by 0.5% is what we are looking at. This is something which is a work-in-progress, but we are reasonably confident that we should be able to deliver on that front. And then lastly, it is true that there will be an expansion in the margin in the gross margin, which will happen. But the competitive spirit that we are looking at, it’s not necessary that always that price will start falling and therefore it will drag down by EBITDA, that’s not what we have seen so far in the industry, and we expect that that trend will continue in the future as well.

Tejas Shah — Avendus Spark — Analyst

Very clear, sir. Thanks and all the best.

Operator

Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.

Shirish Pardeshi — Centrum Broking — Analyst

Yeah. Hi, sir. Good evening. Thanks for the question. I have three questions. You just touched upon on the competition. Would you be able to give us some color how the competition is behaving at this time? Because, what we gather from the trade is that they are expecting a very strong either improvement in terms of their profitability on the account of either dropping the prices or from the point of increasing the discounts, because the competition is really heightening at the trade. So, I’m more interested in looking at what’s your comment on that.

Abhijit Roy — Managing Director & Chief Executive Officer

The ground realities are slightly different. I think, in fact, the hyper-activity that we had seen about one year back is no longer there. It is much more normalized. And if this trend continues, I don’t see any reason to be worried about in terms of delivering on the EBITDA margins as well.

Shirish Pardeshi — Centrum Broking — Analyst

But do you think there is a pressure from the trade that to drop the prices?

Abhijit Roy — Managing Director & Chief Executive Officer

I haven’t seen that, because I don’t think that’s the scenario now. The trade seems to be at least in the month of April they were pretty okay. In the month of May, in the first seven, 10 days is a bit of a slowdown, but it’s picking up now again. So I don’t see that pressure coming in from the trade, which will force all of us to look at trying to get additional sales through a additional rebating.

Shirish Pardeshi — Centrum Broking — Analyst

Okay. My second question on the regional split. I guess, North has a lot of issues in terms of the offtake in the beginning, but now it’s improving, while South has done well. So in terms of your saliency, which segments or which markets has grown faster for you?

Abhijit Roy — Managing Director & Chief Executive Officer

Almost across the board, but we are relatively a weaker player in the South. So for us, it’s been East and then North and West, which has been growing. South also has grown well on a lower base for us.

Shirish Pardeshi — Centrum Broking — Analyst

Okay. And the last question on the initial slides what you’ve mentioned that this 33,000 metric tonne what we have added in the month of February and I think the present capacity of 95,000 metric tonne. And you said that it’s about 40,000, 50,000 utilization. To your understanding, when does this 40,000, 50,000 capacity utilization will happen for Sandila?

Abhijit Roy — Managing Director & Chief Executive Officer

So, Sandila is operating at 40% to 50%, you are right. And then that will take about 1.5, 2 years for it to reach to 75% to 80%, which is when for us normally the seasonal months it tends to go up to 100% utilization, normal months it is about 65%, 70%, 75%. So that’s a good figure to be at. So in 1.5 to 2 years timeframe, we should be able to reach that level of 70%, 75% at Sandila as well. Meanwhile, in the next two years after we will have to start looking at brownfield expansions in our existing plants and also a greenfield possibly in the State of Odisha, which we will start setting up from ’26 onwards.

Shirish Pardeshi — Centrum Broking — Analyst

Okay. So, just one follow-up on the account of Sandila. You said that the overheads actually picked up your cost. But is there anything one-off which is going to come in FY ’24, because of Sandila plant?

Abhijit Roy — Managing Director & Chief Executive Officer

No, nothing more to be there. We’ve taken whatever had to be taken.

Shirish Pardeshi — Centrum Broking — Analyst

Okay. Thank you, sir, and all the best.

Abhijit Roy — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. We have the next question from the line of Jay Doshi from Kotak Securities. Please go ahead.

Jay Doshi — Kotak Securities — Analyst

Yeah. Hi. Thanks for the opportunity and congratulations on a [Indecipherable]. I have two questions. The first one is just a bookkeeping question. You called out INR20 crores, INR21 crores of provisioning then on account of the Andhra Pradesh school project. And you also indicated that there was some more provisioning at subsidiary level, and some one-off cost associated with the opening of the Sandila plant. Is it possible to quantify that essentially just trying to understand what the extent of impact one-time cost as a percentage of consolidated revenues.

Abhijit Roy — Managing Director & Chief Executive Officer

Approximately it will another INR8 crores or INR9 crores in addition to this Andhra Pradesh school. So approximate value will be about INR28 crores, which is there, which is a one-off there. So you can build that in as a percentage and understand whatever it is.

Jay Doshi — Kotak Securities — Analyst

Secondly, just could you give us some color on what is your market share in the four regions, North, South, East and West, ballpark number will also be fine.

Abhijit Roy — Managing Director & Chief Executive Officer

Very difficult to say, Jay. We don’t calculate it in that way. And I can’s tell you, but I can only let you know that in the East, we are the strongest; in North also, we are well placed, relatively weaker in the West and the South. And it varies from state to state, even in these areas, for example, in UP, we might be relatively much stronger; much, much stronger than, say, in Punjab or Himachal Pradesh. So it’s a very broad term to use. And I don’t think it makes any sense. But overall, our market share hovers between 19% to 20% in all India scenario. In the East, obviously, therefore, it is much higher. North will be also slightly higher than the average and relatively weaker in the West and the South.

Jay Doshi — Kotak Securities — Analyst

Sir, in South, my understanding that we are strong in Kerala and you do have presence in AP, Telangana as well, right, in Karnataka and Tamil Nadu are the two markets, where you have a very low market share?

Abhijit Roy — Managing Director & Chief Executive Officer

Also Telangana, we are weak, very weak. So Andhra, we are strong and Kerala, we are strong, but the other three states we are relatively much much weaker. Hello?

Jay Doshi — Kotak Securities — Analyst

That’s it from my side. Thank you so much. That’s it from my side.

Operator

Thank you. The next question is from the line of Harsh Shah from InCred Capital. Please go ahead.

Harsh Shah — InCred Capital — Analyst

Yeah. Hi, sir. Thanks for taking my question. Sir, you talked about improving profitability in your industrial business. So can you quantify or just give an indication as to at what levels are the margins at, EBITDAs or PBT whatever you’re comfortable sharing sir?

Abhijit Roy — Managing Director & Chief Executive Officer

So the Industrial also different businesses have different levels. Powder Coatings which is de-growing in sales has a very high EBITDA-to-sales as of now, quite close to decorative actually. As far as the Protective Coatings is concerned, it is below decorative, but it is improving every quarter. So the last quarter, it was in good double-digit. In case of automotive and general industries, it’s again, it started at a very low-level, by the end of Q4, it was in double-digit, just about. So that is how it is.

Harsh Shah — InCred Capital — Analyst

And so, on a blended basis, would the sustainable margins for the entire industrial, including auto and non-auto piece put together, would that be in low-teens for you?

Abhijit Roy — Managing Director & Chief Executive Officer

For the industrial business, yes, it will be somewhere in between 12% to 14% blended if we assume that this quarter four results will continue. And the decorative is much higher.

Harsh Shah — InCred Capital — Analyst

Okay. Okay. Thank you so much, sir.

Operator

Thank you. We have the next question from the line of Mihir P. Shah from Nomura. Please go ahead.

Mihir P. Shah — Nomura — Analyst

Hi. Good evening, sir. Thank for taking my question. Sir, firstly, on historically between the value growth and volume growth there used to be a difference between the value and so there used to be a negative mix effect historically, but we’ve seen over a period of time that mix kind of going away. So I just wanted to check with you, is this because — so in this quarter probably is it because there is no pricing and mix has gone away or there is still some element of pricing and an element of mix which is still leading to value and volume growth to be in the similar range?

Abhijit Roy — Managing Director & Chief Executive Officer

So, this quarter, the price increase benefits that we were getting in the second quarter and to some extent, even in the third quarter has completely vanished in quarter four. So the volume value gap became negligible except for the positive mix range, if any, which was to happen. And when we sell this low-end emulsions, etc, those are also priced comparatively lower and they are growing at a reasonably good pace. As a result, sometimes the volume growth might exceed the value growth, if you are looking at those in that way. So that can explain the slightly higher volume growth than the value growth in this quarter.

Mihir P. Shah — Nomura — Analyst

Got it, sir. Sir, and so suffice to say that, I mean, of course, this can be some seasonality effect, etc, but on a steady-state basis, how should we think about the negative mix that we should see in the earlier years, can that settle down completely or either it will be a quarter-to-quarter phenomenon?

Abhijit Roy — Managing Director & Chief Executive Officer

It can be a quarter-to-quarter phenomenon, it depends on the every quarter if things, scenarios change a little bit in the paint industry. For example, in the second quarter, it will be — the mix normally tends to revert in the negative direction, because lot of sales of distemper, primers, etc happen in that quarter. Again in the third quarter and the fourth quarter, it tends to pick-up, especially in the third quarter in the October, November, December Diwali period emulsions sales go up significantly. And that to higher in emulsions and then you have value growth far in excess of volume. So it varies from quarter-to-quarter, it’s is very difficult to give you a generalized picture for the whole year.

Mihir P. Shah — Nomura — Analyst

Got it, sir. And sir, how should one think about pricing now, given raw materials are completely back. In your view, do you think that there can be a case for price cuts in the industry?

Abhijit Roy — Managing Director & Chief Executive Officer

So, in my current situation, I don’t see that immediately what is required to be done, especially if the demand scenario is decent and good, there is no need for that at all. If the situation so arises that the demand starts faltering and we see the prices remaining benign and stable at these points, reducing further in terms of raw material prices, then maybe a price cut might be required, but not at this stage.

Mihir P. Shah — Nomura — Analyst

Got it, sir. So the other question I wanted to check with you was on the product mix that you have. If you can share any broad range of your product mix between premium, mid and mass, where do you — where is it standing currently and where do you see that in the next three odd years, because we’ve seen a lot of new differentiated high-end launches that are happening. So if you can throw some light on that product mix change that you are endeavoring to do.

Abhijit Roy — Managing Director & Chief Executive Officer

The growth is improving as far as the premium luxury category is concerned for us. And that continues to happen over the period of years. We are seeing that improving. And then we have become in the prelux category, not in the luxury category, we still need to do some work on the luxury category, and I believe that there is a lot of growth opportunity in the luxury category as well, where we have a product called WeatherCoat Long Life and the exterior category, which is doing very well, but in the Silk Glamor, which is the interior luxury, that hasn’t grown all that well that we would have anticipated. So there is some space there for growth in that particular category. We are doing very well and we are a leader in the immediately below luxury category, which is called the premium luxury category, which where we have two brands: Easy Clean and Anti Dustt, both are leaders in their own category in that particular segment. So that continues to grow very well and we will be investing in advertisement and also in terms of other activities to grow this premium luxury and the luxury category to help premiumization of our entire product portfolio.

Mihir P. Shah — Nomura — Analyst

Got it, sir. Thank you. And my last question, sir, is on the subsidiaries, Bolix on the — any visibility by when do you expect an improvement in that region or when we can start seeing some growth numbers versus a de-growth and increment in margins?

Abhijit Roy — Managing Director & Chief Executive Officer

Last three months, which is January, February, March which gets actually consolidated with our April, May, June accounts that has been good. But it’s very difficult to say how things will be going forward. As of now, the situation there remains tense, because the war continues. lots of refugee flow into Poland and it creates some amount of disturbance. The inflation is at a high level. Though, we manage to sell and do reasonably well. Whether we will be able to continue that, that is something which I can’t give visibility on. [Indecipherable] is a small operation for us, overall the stakes are not so high, and so it doesn’t impact us so much as far as the overall result is concerned.

Mihir P. Shah — Nomura — Analyst

Thank you very much, sir. Wishing you all the very best. That’s all from my side.

Abhijit Roy — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Avi Mehta from Macquarie. Please go ahead.

Avi Mehta — Macquarie — Analyst

Hi, sir. I just wanted to check on the sands business in the Powder Coatings. When do you see that kind of turning around, because it’s been some time since that weakness has been continuing?

Abhijit Roy — Managing Director & Chief Executive Officer

That is true. And we were expecting that it would have summer are setting in and April-May, it should have been much better. So it really did improve to some extent, because all these five-star rating etc has settled down and the expectation was that it will do much better. It did improve, but not to the extent that we would have loved it to. It is still below the threshold level that one would have expected. But May, again, there has been further more improvement on that. Hopefully, this trend will now continue to improve, because the pipeline which has got reduced considerably needs to be filled up. So gradually I think it will come back.

Avi Mehta — Macquarie — Analyst

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

Abhijit Roy — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Deepak Parmar, an individual investor. Please go ahead.

Deepak Parmar — Private Investor — Analyst

Hi. Thank you for taking my question. My question is, among the listed competitors, are we planning to grow at the fastest in FY ’24? I mean, that is and gain market share? Can you put some color on this?

Abhijit Roy — Managing Director & Chief Executive Officer

Yes. So, the intention is that, because last year also we grew the fastest and we gained market share. My estimate is about 0.4% in the overall market for the companies which are in the listed space. And we were the only company which would have grown significant market share in the year gone by. And we expect that this year too in ’23-’24, we would again some market share. The quantification is difficult, but we would like to be the fastest growing definitely in the market.

Deepak Parmar — Private Investor — Analyst

Okay. Thank you so much. Another point is this UP plant, how is going to help in terms of improving margins because North is your second-best market. So will it help in terms of improving the margin for UP plant which has come up?

Abhijit Roy — Managing Director & Chief Executive Officer

Yeah. So some amount of help definitely will happen — two things which is there. One, of course, is the freight cost reduction will happen to a large extent and the responsiveness of the Company to certain changes in requirements also will be much faster. So thereby both sales and in terms of operating margin, the freight cost reduction will help. In addition, of course, we have some tax benefits, which will come in, which will kick in also.

Deepak Parmar — Private Investor — Analyst

Okay. And one last question, as you rightly said, lot of other competitors coming in by Q4 and Telangana, Maharashtra and Karnataka, these are one of the biggest paint markets. So how are we going to counter the current existing players and the new players in our weaker markets? I mean, how — what are our strategy to counter these players?

Abhijit Roy — Managing Director & Chief Executive Officer

These have been markets which where we have been traditionally on the weaker side. We have taken some initiatives which are out-of-the box little bit and attempting those things. Last year, we did that in — we achieved some degree of success, I would say. But this is something which needs to be continued this year as well and hopefully we will be able to grow at a reasonable pace even in these markets.

Deepak Parmar — Private Investor — Analyst

Okay. Thank you so much and all the best. Thank you.

Operator

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.

Abhijit Roy — Managing Director & Chief Executive Officer

Thank you. And this has been a good year for us and we are entering into the 100th year. This will be, in fact, our 100th year in existence in India. We started our journey in 1923 in the month of December. And then, therefore, we will touch exactly 100 years in December of 2023. We expect that this year will be a good year for us. And the 100th year will be one of the best that we have seen so-far. We have crossed this milestone of INR10,000 crores, that gives us some wind to our journey. And we hope that the year which is ahead of us, we should be able to deliver on the promises that we have made. Thank you once again for listening to us patiently and hope and wish us the luck as well for the coming year.

Operator

[Operator Closing Remarks]