KANSAI NEROLAC PAINTS LIMITED (NSE: KANSAINER) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Aniruddha Joshi — Research Analyst
Anuj Jain — Managing Director & Chief Executive Officer
Analysts:
Abneesh Roy — Analyst
Aditya Bhartia — Analyst
Tejas Shah — Analyst
Avi Mehta — Analyst
Percy Panthaki — Analyst
Mihir Shah — Analyst
Mrunmayee Jogalekar — Analyst
Ajay Thakur — Analyst
Sheela Rathi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Kansign Limited Q3 and FY ’25 Earnings Conference Call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Aniruda Joshi from ICICI Securities. Thank you, and over to you, Mr Joshi.
Aniruddha Joshi — Research Analyst
Yeah. Thanks, Manau. On behalf of ICICI Securities, we welcome you all to Q3 FY ’25 and nine months FY ’25 results conference call of Kansain AeroLac Paints Limited. We have with us today senior management represented by Mr Anuj Jain, Managing Director; Mr Prashant Pay, Director of Finance; and Mr Jason, Director, Corporate Planning, IT and Materials. Now I hand over the call to the management for their initial comments on the quarterly as well as nine months performance and then we will open the floor for question-and-answer session. Thanks, and over to you,, sir.
Anuj Jain — Managing Director & Chief Executive Officer
Thank you. Thank you, Onirud. Good morning and a very warm welcome to all of you. Thanks for joining this call of ConsignerLife for quarter three of financial year 2024-’25. It’s the first meeting of this calendar year and also a special one. Over the last three years, we have navigated challenges, taken some bold steps and made some strategic choices that are now bearing fruit. The journey would not have been possible without your support. For that, I essentially thank each one of you for believing in Har and your company. For the quarter, the top-line is up by 1.5%, EBITDA is up by 2.9% and PAT before exceptional items is up by 7.2%. On relative basis or comparative basis, I think this performance or our performance — our team performance quarter three has been one of our strongest given the market challenges of declining demand and new competition. We started the year facing tougher-than-expected environment. Market demand has slowed and we did not expect when we started the year and competition intensified. Despite these headwinds, we delivered strong performance. This is not just testament to numbers, but to the strength of the foundation which we have built over a period of time. We chose to adapt to invest in right areas and remain strong future-ready company. I’ll give you some gist of the function-wise, the segment-wise, some of the highlights, which I’ve been talking about for last few years. So coming to Decorative, the key growth drivers, which we have been discussing with you was one is premiumization and Paint+. So overall, if you’ve seen this year, we have introduced — more than 20 products. In the first-half itself, we have added 10 products. And the salience of Paint+ product is in double-digit now. So that’s the first milestone which we wanted to achieve and it is in the double-digit now. There was also focus from our side on the premium mix and there also consistently we have been improving the salience. And in the quarter three, it has further gone up. Overall, if you see the new products, we continued launching more-and-more products because the market fortunately is ready for the micro-segmentation and therefore, a lot of new products are getting introduced, the functional products. And our overall contribution of new products is also in the double-digit. So that’s a good sign. Some of the new products, because in this situation, we are trying to bring up the product which can differentiate us in the market. And in this year, we have introduced a texture range, which is very, very different. We have introduced the product in XL, which is in category. But I think what I want to highlight is the launch of Wah White. So White is the range of products. It’s basically a Wah White in different brands in the product what we introduced. These products are far, far more superior. You can say the best of the whites in the industry when it comes to the whiteness, brightness and the coverage, these are the best products in the industry and they are available at a different price point. So that’s a range of White, which is very, very differentiated unique offering which we have brought to the market. There are more new products which were introduced in the construction chemicals, the wood finishes and those products are also receiving a good response on the market. In new businesses, our growth continues to do well. If you remember, we discussed three years back when we were not there in this category, our first intention was to complete this range, which is acceptable to the retail market, introduce the range and see that if we are able to place the product at least in our channel, so we have achieved that successfully. And even for new business, the salience is now crossing double-digit. So that’s again the milestone which we wanted to achieve critical mass and we are on-track. In the project business, we are also we were under-indexed and then we initiated in terms of launching a range, expanding the team in the towns. Today, we are present in more than 80 towns now and our growth continues to be better that even if we compare with the industry, either it’s a new business or projects, so we are doing better. And here also the salience is continuously going up. It is still not in double-digit, but it has been going up. The other part of retail, because we divide the business when it comes to decorative in three-part. So one is the project, the new business and the retail. In the retail, we worked on strengthening our position because we are a number two-brand, but we wanted to strengthen through the influencer program and services, which we have been talking about. So the services what we introduced about two, 2.5 years back through as a service — paint as a service and through the architect interior decorator. So there also we have kept our milestone critical mass, which is around, say, 5% and I’m happy to share that we are now in that particular range. We have touched a critical mass and it has contributed significant — significantly to our business. And this gives us very good confidence because here we are able to reach-out to consumers directly through the digital marketing, able to contact the customer, able to convince them about our Paint+ differentiation and our conversion rate also is good. And in this business, there is a lot of competition, not only four or five companies, many other companies are also there and that conversion you know, give us a good confidence that our brand has a strength and we can increase this business. Our number of architects what we are reaching quarter-on-quarter it is increasing and now we are with this architect initiative, we are there in more than 40 cities and this also is giving us a good fruits. On the painter front, the number of painters, you know we have been targeting — initially we were little slowed on this initiative. We were not on-target. But the last two quarters here also, we are seeing that now we are in the greener zone where we have started increasing our painter number and our extraction from the painters have started going up. So this initiative where — which is like physical, so we have a team on-the-ground and also the digital initiatives. This also has started working. It took some time. We wanted to achieve it maybe about six-month year back, but maybe it got delayed, but I think we have started seeing the positive traction on this initiative also. In terms of retail experience, the total number of shoppies and shop-in-shop concept, we have more than 300 plus now in almost you can say more than 100 towns that we have the representation of Shoppee, which is a good experience center and the customer can have a good touch and field experience in these stores. Overall on distribution front, satisfactory growth in terms of the distribution expansion. We are very close to our target what we want to achieve in this particular year. So these are some of the highlights for decorative. Coming to the industrial business, the automotive part, where in fact, we are market-leader, our market-share is high. Despite that based on the approach to focus through technologically superior products and launching sustainable technologies, which is one of the requirements of our customers and we went quite aggressive on that. Also, in addition, we were focusing on the new segments, theme sealer, underbody, alloy wheels and all these initiatives have been executed and now we have started getting a decent contribution from this. And overall, based on this and the new businesses what through our efforts we wanted to generate, we are increasing market-share in automotive on the base of high base, we are able to increase our market-share. Some of the new product further we have introduced is the MAT clear code for passenger vehicle, which has a very excellent line workability. There are some special clears for two-wheelers, which we introduced, some special PU metallics, the MAT finish, which goes with the monocode and these are also very innovative product, which has excellent workability and it helped to eliminate because it’s a monocode system, so it helped to eliminate one-product and therefore very helpful for the — for our customers to increase their productivity. In electrical vehicles, which is the trend though the penetration still is very low, electrical vehicles in terms of four-wheelers, 2% to 3%, two-wheeler about 5%. In three-wheeler, it is very-high, more than 50%, but — and there are a lot of players there and we have worked on the right product, right approach, whatever strength we have in this segment. And in electrical vehicles also our market-share is similar or maybe better than overall share what we have in automotive. In auto refinishes where our market-share has been low, but here also our growth is better than the industry. Our major focus was in terms of getting into the A-class body shops where consistently and constantly we are expanding our numbers and quarter-on-quarter basis, we are seeing the growth is going up and the growth is coming from the premium product, which has been a part of our strategy. Coming to non-auto performance coating division, which is a combination of general industrial, high-performance coating and powder. They are in fact, this was part of our strategy, which we discussed earlier that we wanted to focus in the given market situation, we wanted to expand this business, increase our market-share. And for that, we expanded the business development team and the feet on-ground. That’s the initiative which we started and we are increasing the number. The high-performance coating business, one, it comes from the OEM, the other it comes from the dealer network also who cater to the small industries. So that was — that number, dealer number we are expanding and our reach has gone up significantly in this particular channel and the contribution of the channel sale also has gone up. We got good approvals continuously we are increasing in high-end coating for railways, bridges, oil gas through use of new technologies like fluoropolymer, anti-carbonation. These are high-end technologies and which — which are functional and give a high curability. We are witnessing a strong traction in the market on these. As I spelled out earlier also, Parat is one example and Bridge and a lot of credentials we are able to generate in this business. The growth is good. We know mainly high-performance coating where our market-share is low, there our growth is very, very strong and significant and that is driving the growth of entire performance coating division. Some of the new products we have introduced in this category also, the product for glass field and ABS plastic sand, some related to a top called Fusion bonded polyster for external internal pipe coating. Some of these products we introduced, it is just to give you indication that our journey or the effort, the endeavor to keep introducing the good technology product in the premium category continues. The focus has been in the premium salience that few years back, we decided to exit some low profit business, which we successfully came out, it took one, one and a half year time and we wanted to replace that business with the premium. So our saliency in the performance coating through the premium is consistently going up and it gives us the confidence that we are on the right track. Some of the segments which we are now catering through performance coating include bridges, windmills, appliances, construction equipment and also in the powder, the rebar, pipe coating, alloy wheels, construction equipment and some of the global products like performance Coating for metro railways, which where we are taking the help of subsidiaries of, our parent company. So that also is working. So these are some of the highlights related to the business front. Our capacity is approximately 6.16 lakh KL per year. In ESG, we were rated in top 8% globally within Chemical Industry Group in the CSA at 2024. In FTSC IV, good rate we are rated in top 12% globally within constructions and material sectors. Also, happy to share some of the award, which we have recently got one in the CSR. So we — we are the winner of Golden Peacock Award for 2024 and in terms of quality, best quality supplier from Toyota are some of the awards which we have won. So these are some of the highlights related to quarter three and the confidence is that since we are seeing good traction on the initiatives what we have launched and I know it give us a happy feeling that we are on the right track and our performance is improving. And at least in the quarter three, all these segments, whether it is automotive or performance protein division or in the decorative project and our new business and the retail front. Most of these segments, probably whatever results we have seen so-far, our performance is better relatively. Thank you so much. So these are some of the comments on the performance. And now we invite for the questions.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and want to ask. So if you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles we have a first question from the line of Roy from Nuvama Wealth. Please go-ahead.
Abneesh Roy
Yeah, thanks. My first question is on Pute and. There is a decline for you in this quarter. And last quarter also the feedback was for the industry. Some players were offering putty at a very, very low-price. So if you could comment what is the current situation in industry? Is it still rational pricing? And is there some slowdown because in some of the real-estate, the approvals have been delayed in many cities. Is that also contributing to this?
Anuj Jain
Abneesh putty, as we were saying earlier, so pricing definitely is a challenge in the marketplace. I have not seen that whether market is able to realize or companies are able to realize better pricing. So maybe the volumes are already built and to some extent when the demand is down, you’re not able to correct the pricing. And yes, in our case, it is negative because we are clear in mind that we have to strike a right balance between the growth, profitability and sustainable growth. So that is very, very important. So as of now, we don’t see much change in the putty scenario. And related to real-estate, overall project business is an indicator. There I think the growth is still continue to be good. So maybe some approvals, it’s fine, but I think if I look at the growth as of now, the project business is on the — is on the good traction.
Abneesh Roy
My second question is on the competitive scenario in the decorative. In the earlier quarters, you have said that your confidence level is improving. So if you could tell us how is the confidence level now, now that almost two, 3/4 have panned out for the new entrant. And if gets sold to say JSW or say PD light, what will be your thought process? Because essentially it means a good brand goes into maybe stronger hands who have a more aggressive policy of expansion in India in that space.
Anuj Jain
So Abneesh, like we discussed earlier also that now obviously, because the new competition, many new players have entered one player aggressive, but there are other players also. And what we are definitely seeing, as we said earlier that the market take time to build brand distribution and the painters, it takes time. It does not happen immediately. Generally, when the new competition come in as a competitor, what we want to watch, is there a differentiation, is there a some kind of unique thing, innovation because that can — that can create disruption in the market. We have not seen that. As of now, it’s more related to a maybe more spending in the market, whether it’s a marketing activities or a customer-free material on that particular front. And if you look at — if you total it up, I think that amount is pretty large. And despite that, that whatever we think the response, obviously, there is a response to the competition, it’s not that to some extent, the redistribution of the market is happening in terms of the market-share. But I think if you see based on the spending history, which I feel is short-lived because we have seen that whenever there is some movement of time when their profitability pressure start and then you start withdrawing, the market does not accept. So I think with this kind of approach, whatever sale is there, I think that gives you more confidence that market is built based on the brand distribution and when I say distribution, the quality of distribution, because just by spending money if you’re getting the distribution, all those things, how much it will work, we have to see because obviously, the competition is putting their best effort. And as we said earlier, also there are good names. So I’m sure and they have good people, so they will continue to work. But as a — as a company, we feel that, yes, there is a decent amount of visibility what we have today. There is an impact of the new competition. I won’t say that there is no impact, but it is visible to us. And then based on the initiatives what we have taken, I think our confidence is high that we will be able to mitigate and navigate these challenges. On your second question, I don’t have much comment as of now because at the end-of-the day, whether the business is in one-hand, the other hand, what is more important is that how any company when they get into it, how they want to take the business forward, how much aggressive they want to take because the current strength of the business is the premium sale, a good profitability. So I think if any company want to maintain that, then whether it is in this hand or that hand, the competition remain similar, but if any, there are further changes, I won’t be able to comment as of now.
Abneesh Roy
Sure, that’s helpful. One last follow-up from my side. Essentially on the new competition only, I do I completely agree that no big disruption in terms of product or the marketing strategy, etc. Only question is in terms of the dealer’s shelf-space, it’s very limited. So have you seen that the new player is able to completely remove the second or the third player? I understand removing market-leader is out of question. But in any market, I’m not saying only the one brand Pan-India, I’m saying in one region, one can be bigger than the other. So I’m asking the second or third brand, is it getting replaced by the new competition in the dealer shop? And similarly on the painter side, if you could tell us is there any pushback for the legacy players for you, for example, versus the new players.
Anuj Jain
So Abneesh, the distribution — they are getting the distribution, new competition is getting the distribution, but it’s more of a numeric reach. So paint industry work on two fronts. One is the numeric, the weighted. Weighted are the larger one who probably have more say in the market. As of now, it is more numeric and — but that is also helpful in terms of bringing up the visibility. So that is there. But on your second question, where you’re saying the sector number two, number three players are getting replaced, my answer is no. So as we said earlier also because I don’t think it’s a matter of size, what is more important is the agility. A player like us work with the good relations and as we said that the differentiation what we are trying to create, I think impact on the number two, number three players is lesser, I would say that.
Abneesh Roy
Understood. That’s all from me. Thanks a lot. All the best. Thank you
Anuj Jain
Thanks, Abnesh.
Operator
Thank you. We have our next question from the line of Aditya Bharthia from Investec India. Please go-ahead.
Aditya Bhartia
Hi, good morning, sir. Sir, my first question is on competition itself. Besides some of — besides some market-share gain that, let’s say, some of the new entrants may have had, how are they really impacting the business economics? Are incumbents also being forced to respond to some of higher rebates or incentives that new competition may be giving or higher marketing spends is that something that you’re seeing?
Anuj Jain
So what I would say that the — because the new competition is aggressive on all fronts, whether it is marketing or dealers or painters or demand-generation team, they’re pretty aggressive. So that way we have a good competitor in the market like accept it. But over a period of time, what we have realized and as we have been saying earlier, building brand takes time. So even if you’re going aggressive there, as a company like us, we are number two-brand. It is already built. It will take time and we don’t have to react to that. So I think in this situation, maybe we’ll have some reaction, which is specific to some product and some geographies. But overall, it’s not a reactionary approach. Overall, it’s the approach where we would like to strengthen our customer value proposition and that is what we have been working upon, the initiatives — some of the initiatives what we are talking about. And initially the competition has spent a lot of money. We don’t have to react on that because we are not required to outspend on that particular part. So I think we are going fine. When it comes to the market, there is a realization that you know market for even if you give some higher discounts or some higher incentives or painter, it’s not that based on that, the market will move away, some market will move away. So my guess is that maybe if you say 4%, 5% of the market could be going-in favor of the new competition. But as of now, that’s it. So even there, it’s not a situation where you have to match and therefore, beyond a point, margins will get impacted. So I think the quality of distribution over a period of time what we have created, the brand stand, what we have, the relationship what we have with the painter is working and no one can deny that there will be some redistribution of market-share for one year or two year, but it will get reset. And to me, it’s a sign of the mature and competitive industry where in fact the market is big and market has room for growth. And I think in this situation, what is more important is that without overly worried about market-share redistribution, that how do we reposition ourselves is more important, but I think the clarity is that market has a room for growth for all players. And what is important is that what you carve-out for yourself, how do you reposition for yourself and that’s a positive scenario.
Aditya Bhartia
Sure, sir, that’s helpful. And on competition in the putty market, sir, just two clarifications. One is that from my understanding, we largely use outsourced manufacturers to kind of manufacture putty. Is that understanding correct? And with the kind of pricing that’s going-in the market, what — what do you think would be the prevailing margins both at the gross margins and maybe some estimate at the EBITDA margins as well?
Anuj Jain
Very, very low margins. So it’s outsource, you’re right, our understanding is right. Margins are very low, maybe I don’t know whether they are margins or margins are very, very low. That’s why in fact, in our approach of striking the balance between the market-share and sustainable growth and profitability, we appropriately decide and that’s why we said it is. As of now, margins — margins are question marked.
Aditya Bhartia
But would they at least be positive? If you sell more putty, would it be accretive on an overall basis or there is a risk that it may lead to losses?
Anuj Jain
Yes. Yeah. There is a risk.
Aditya Bhartia
Yeah, understood. And sir, just one last thing on auto Refinish segment, if you could give us some indication about what your market shares may be today and given that, I mean, my understanding is that market shares at this stage may be low, then from that perspective, do you think that a single-digit growth is not good enough and maybe you would have liked to be growing at a faster pace?
Anuj Jain
Yeah, that is our approach, but where also the route what we have taken is through the premium. So we are not getting into the categories because there are lot of categories which are low-profitable item. So we are not targeting that. So our market-share was low-single digit, but last two, three years, every year we are increasing the market-share. Even in this year, we are increasing the market-share. But we have chosen our segment. We are not going — if you are asking, we are not going after auto refinish, it’s full. We are going after some segment in the auto refinish. And in those segments, we are gaining good market-share, double-digit market-share. Overall market-share is low, but overall market-share is also increasing.
Aditya Bhartia
Okay perfect, sir. Thank you so much. Very, very helpful and wish you all the best.
Anuj Jain
Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go-ahead.
Tejas Shah
Hi, Rich. Thanks for the opportunity. Sir, post COVID, the residential and commercial real-estate picked-up and logically, we expected that to translate into strong demand for paint players by now, but it has not happened. So that is the gap in our understanding here?
Anuj Jain
Very good question, but I don’t know whether I have the answer for that because I can only give some indicators that maybe post-COVID maybe there is a preponement of things have happened, maybe people wanted to concentrate more in terms of painting, they wanted to improve the lifestyle. So there was a pent-up demand and in that process, maybe there is some kind of advancement which has happened. Second, obviously, in last one, one and a half year, because obviously the paint industry also has not seen it in last — probably this is our first experience we are also experiencing otherwise paint industry has been able to navigate all kind of challenges, all kind of slowdown and still continue to grow. This is the first time we have seen that the paint industry demand has impacted. So I think it’s directly proportion of the consumption down, which is — which is affecting all discretionary items. Also, there are a lot of new technology areas where probably people are reallocating the money what they get-in their pocket. So to some extent, there is an impact of that. Earlier the rural was impacted, now the consumption is a problem in urban sector also. I hope with some of the good steps the government has taken in the recent budget of both the pillars related to consumption and the capex, this will help. And I do foresee that gradually, I do foresee a gradual recovery in the demand. How much it will go, whether it will go back to the earlier-stage, we still need to wait-and-watch, but I see a gradual recovery.
Tejas Shah
Perfect. Sir, last not pertaining to the quarter, hypothetically, if you had one or two years more in the role, what unfinished business would you tackle? And what one-line playbook advice you will give to your successor, Mr? Yeah.
Anuj Jain
No, so I think for me, leadership is about guiding organization through the change and ensuring that it is stronger than when you took the charge. So I think the transformative journey what we had gone through and the initiatives what we have implemented. So we have, you know, from one stage, we have come to the second-stage. So one, obviously is the continuation, that’s something which is working, how do we continue. And obviously, with every change, there is always opportunity to bring something better. So as a combination of foundation what we have built and which is definitely indicating today that the quarter-on-quarter basis our results are improved and we continue on that and then bring something better which every change is supposed to bring. So I think as a combination of that, I feel confident that the company will see a better future.
Tejas Shah
Okay. Thanks and all the best of future, sir. Thanks.
Anuj Jain
Thank you.
Operator
Thank you. A remind to all participants to restrict yourself to two questions per participant. The next question is Avi Mehta from Macquare. Please go-ahead.
Avi Mehta
Yeah, hi, sir. Hi, sir, I just wanted to check with you on how should we look at when we had started the quarter as in — towards the end-of-the 2Q, you had indicated towards an expectation of margins. Now do you see that range of 13% to lower-end of 13% to 14% probably being much better than what you had started given how the 3rd-quarter has been? And the second question that I had was on the decorative side. So this is the quarter where you’ve done better than the leader. Is it fair to expect this to continue going-forward? Or is there anything that one should be aware of which could delay the continuity? Those are the two questions, sir..
Anuj Jain
So we — margins, in fact, that has been our endeavor. That is what we have been maintaining that our endeavor is to maintain the range of 13% to 14%. We stay with that. Obviously, based on 3rd-quarter, you may see it — you can see it better, but let’s remain in that particular range because we need to be prepared for any — any additional step of the competition. So it can be better. If I have to say it can be better, but we would like to restain that range of 13% to 14%. So that’s what. And second, our growth because it has been a journey, if you remember last two, three years also, we have been talking about it. So yes, every company changed the numbers, but we changed the numbers through some process. And for that we have clearly spelled out our initiatives and our complete focus was in basically ensuring the effective execution of those initiatives. And today, at least and when we talk about those initiatives, the critical mass we have crossed and our betterment of the growth has come based on the successful execution of those initiatives and therefore it is definitely sustainable. It is not something you know that just changing the numbers. So it has come based on those execution of the initiative and therefore I definitely see it sustainable.
Avi Mehta
No, perfect, sir. And it was a pleasure talking to you, sir, and I look-forward to more conversations even later. Thanks a lot, sir for all our interest.
Anuj Jain
Likewise, thank you.
Operator
Thank you. The next question is from the line of Panthaki from IIFL Securities. Please go-ahead.
Percy Panthaki
Hi, sir. Since the drivers and the demand situation is very different currently for decorative versus industrial, could you give us some idea for the quarter, what was your value and volume growth in the decorative business, please?
Anuj Jain
Volume growth — paint volume growth is marginally positive and value growth is a degrowth or a slight degrowth or low single-digit degrowth you can say. And industrial part, it is high-single-digit growth and overall growth is 1.5%.
Percy Panthaki
Sir, in industrial, did you mention the volume or the value growth?
Anuj Jain
Industrial, I’m mentioning the value, because generally industrial we talk about value. So revenue is high-single-digit value. In decorative, it is low single-digit value and negative. Decorative negative, low-single-digit value negative. In terms of volume, paint volume growth is slightly positive. And overall, obviously, because of industrial, our volume growth is decently positive.
Percy Panthaki
Understood, understood. Secondly, I just wanted to understand, given all the initiatives that you have done over the last two to three years or even if you want to take a longer period like five years, for example, has it resulted in any kind of change in your geographic sales mix? And if so, can you give some quantification or some idea about the same?
Anuj Jain
So little difficult, but let me attempt to answer it. So generally we are stronger in North and East and we are so northeast, West and south. So what we have done is some of the initiatives, for example, project business. Now in some market, weaker market. So we have not gone after the retail, we have gone after the project. So to that an extent, today, the weaker markets also started performing on the back of, say, project and this business, right? So it is not that we pressed all the levers in all the markets. So some — so you know, what is important to know is that, yes, we remain strong in the markets where we were stronger and in the other market through some initiatives, we have started performing better because there are limited resources and it is very difficult to apply all the resources across all the market. So we have chosen some segments are like segment and market approach, geography and segment approach. So it’s not that approach will give you a very good increase in terms of market-share because, for example, if you’re taking a project approach in a weaker market, project business could be contributing, 15%, 20% of that market. In that business, when we start improving, our market-share will go up in the project business. But overall impact will not be very, very significant. The only thing it will help is that if you are going behind the market, we’ll start going ahead of the market. So overall mix has not changed, but some of these initiatives have started giving a result in the pockets.
Percy Panthaki
Right, sir. And last question is, if you can give some idea over the last three years or so, what is the increase in the number of distributors and tinting machines? And what do the number of distributors and tinting machines stand as of today?
Anuj Jain
So we have been targeting — double-digit increase in the distribution expansion, which we are plus-minus 1%, but even in this year, we are on-target. So continuously, we are able to do that. And our part this penetration of the machine is closer to 75%. So. So that’s the penetration which we are maintaining.
Percy Panthaki
And would I be right in assuming roughly ballpark that number of distributors you have would be somewhere in the region of 35,000 to 40,000?
Anuj Jain
Yeah, you are close to that.
Percy Panthaki
Okay, sir. Okay. Thank you very much.
Operator
Thank you. We have our next question from the line of Mihi Shah from Nomura. Please go-ahead.
Mihir Shah
Hi, sir. Thank you for taking my question and congrats on a good set of numbers, sir. So there is a very stark difference in performance this time for you and the market-leader in both in sales and margin. If you can share your thoughts around why this difference is there in sales, is it due to the difference in geographic presence or urban rural presence or is it due to the your focus on premium more versus less focus on the economy segment or the party segment? And maybe a third-part is that, is there an angle for competition not impacting your regions as much as it is impacting the market leaders regions? I know it will be a combination of all the three, but maybe which is one — which one is contributing the highest and the lowest, your thoughts around that would be really appreciated, sir.
Anuj Jain
Yeah, I think we were never — never, ever got into that what competition is doing. Obviously, as a company, we keep a track. We respect all the competition. But as we said earlier also, for us, what was important in this situation is that what is best for us because as a company, we cannot keep following because something which is good for other company may not be good for us. We developed our strategy. We completely focus on that and we were never going here or there. So we were just simply putting efforts in terms of execution of our strategy, whatever we have spelled out. And I’m just happy to share that, that is working because some of the steps, if you see, there were new steps. We were not there in the services at all. And today when we are generating a business which is coming closer to 5% is the new capability what we have developed and all these initiatives were new initiatives for us. And when we started because it is what-if you see the — I will Call-IT a transformative journey because we reimagined the business model where we said we’ll go from paint to paint plus, primary to secondary and product to services and that is what we have demonstrated that paint to paint plus today paint+ is more than 10% of our business, primarily to secondary. We have a large team in the market and today we are able to track when we are selling to our dealers and distribution, how much we are converting to secondary and it’s ongoing journey and then product services that part of the business started coming from the services, which is like what ultimately, we are able to generate the business on our own and partner it with our able dealers and the painters who are a part of our ecosystem. So I think as of now, I can only say that strategy what we have adopted and it will take some time to give it a shape, which I’ve been talking about all competitors also that nothing happens overnight even when we started this journey, because otherwise there was no differentiation in this industry. It’s like that you have product — similar kind of product, go to the market, give discount and sell it. It’s a pure sales job. So I think we have taken a new route or maybe some companies are doing it, we were not doing it. But I think even if we are able to take that particular route, which is more qualitative route and we are able to build those competencies that today that business we can handle that when we participate into that business, we also get the business. So that is what is working for us and that is what is giving. It is not a question of that whether the competition is affecting one geography or other geography. I think competition is equally affecting our the geographies that they are entering as of now, I’m just saying. So I think it is just a patience work for us, sticking to our strategy and continue to work on that without getting disturbed with what is happening in the market.
Mihir Shah
Got it, sir. No, thank you. That’s very clear. And clearly, it is showing up and we have always appreciated your strategy into getting into new things and what you called out in your opening remarks, reaching double-digits in many of the new segments is a testimony of the strong execution. We are hoping that it will continue the strategy that you embarked on will continue going-forward also. And just wanted to wish you all the very best and thank you for all your contribution. Wishing all the best, sir.
Anuj Jain
Thank you,. Thanks a lot.
Operator
Thank you. Before we move on to the next question, a reminder to all participants, you may press star and want to ask a question. I repeat, you may press star and want to ask questions. The next question is from the line of from Asset Meta Investments. Please go-ahead.
Mrunmayee Jogalekar
Hi, sir. Thank you for the opportunity. Sir, my first question actually was with respect to the revenue growth that we expect maybe in the next couple of quarters. So is it possible to reach high single-digit kind of revenue growth, say, starting from Q1 of FY ’26 or considering that the base would catch-up and some improvement on the demand-side as well?
Anuj Jain
Can’t really comment upon it because to be very frank with you, when we started last year, we never anticipated that market will degrow, okay. And to some extent, market growth is down, which is impacted by demand and also to some extent, new competition would have taken 3%, 4% of the market. So let me accept it that we fail to predict that what is going to be the market demand. As of now, I can only comment that based on some trends, what we are seeing some action from the government what we are seeing that there is going to be a recovery. Very difficult to comment that whether it is going to be high-single-digit, I see a recovery, maybe from the negative will get into a positive area, but how much positive, difficult to comment. We’ll have to wait for one or two more quarters to see that how it is ramping-up.
Mrunmayee Jogalekar
Okay, sir. And secondly, actually I wanted to ask that the A&P spends that we have, most of them would be for the decorative side of business, right?
Anuj Jain
Yes.
Mrunmayee Jogalekar
So if I look at our A&P spends as a percent of not the overall revenue, but as a percent of just the decorative revenue. It is kind of a higher percentage compared to the other players that are there in the industry. So is there any parts where we are maybe reducing that percentage or something like that we have on cars and
Anuj Jain
So we don’t look at the percentage to sales basis. Basically what is you know, per or what is optimal to support these strategic initiatives. That is how we calculate activity-based initiatives we decide. And obviously, the percentage is higher, but as our activities are maturing, I think that we definitely feel that this percentage over a period of time will come down. Today’s situation saying it difficult because we still have to wait-and-watch that how completion span out, what we need to do. But maybe some indication as of now that at least it will not go up, it can be definitely controlled, maybe now or maybe a year from now. But I think this initiatives which has started working, we will continue to invest there. But I think even if this percentage is higher, we see that it has supported the initiative. So it will not go higher, it may remain in the same range. Or maybe there is a potential to reduce over a period of time.
Mrunmayee Jogalekar
Okay, got it. And just one last clarification. Are you able to share what is the share of rural in our decorative business?
Anuj Jain
It is dependent on how the rural is defined, but whatever way we define it could be around 35%.
Mrunmayee Jogalekar
Okay.
Anuj Jain
30% to 25%, 30% to 35%.
Mrunmayee Jogalekar
Okay, great. Thank you so much.
Operator
Thank you. We have our next question from the line of Anirud Joshi from ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yeah. Sir, just two questions from my side. So, first of all, now with the new Managing Director joining, what will be the likely change in the strategy because after you had joined, we had seen there was a multiple initiatives done towards premiumization as well as expansion of the product bouquet as well as services as well as expansion of the distribution network. So what are the possibilities? I mean, obviously that is a really question to the new team, but anyway, what can be the likely changes in the strategy? That is question number-one. And secondly, in terms of putting the putty business, so plus primer plus waterproofing, what is the total revenue contribution? And what is the current profitability of that business also? And lastly, now we’ll be taking a — and in a way a big amortization in Nepal and in Bangladesh — sorry, Bangladesh and Sri Lanka businesses also. So how should we read about the future over next three years in these two entities? Yeah. Yeah, that’s it from my side.
Anuj Jain
You know, in our company consigner I think it is always a teamwork. So it is not that my work or this is completely a teamwork, the complete leadership team has worked together and including KPJ, who is our parent company. And the new managing writer is Praveen, who is part of KPJ. So everybody is involved into the strategy. The strategy is well adopted by everyone. So it’s a teamwork and the team continues and you know that I’m also there with the company, may not be as a Managing Director, but to ensure that smooth transition everything is set. So to that extent is a teamwork and teamwork will continue. The second is on the putti business, contribution may be higher single-digit contribution to the business. Margin already said that I don’t know the exact margin, but I think the margins are not there, you can read it like that for this Sri Lanka, Bangladesh, yes, we have done that because Sri Lanka, Bangladesh have gone through a very volatile geopolitical situations and therefore, the business have been impacted by the prudence that we have taken the impairment and we hope that now these countries will pick-up, the business will be good and therefore it is positive because we have already taken the — taken the note and taken the impairment, conservative prudence we have taken. So it can be only better in the future.
Aniruddha Joshi
Okay, sure, sir. Understood. Just one clarification post 31st March, is it total retirement you are taking or you will still continue to remain associated in a — at least in a non-executive role or guiding force kind of a role or something like that.
Anuj Jain
So I am made-for. So whenever company requires, I’m available for any kind of advice and ensuring there is a smooth transition. I’m available.
Aniruddha Joshi
Okay. Sure, sure, sir. Understood. Yeah. And wish you all the best post the life after 31st March.
Anuj Jain
Thank you and
Operator
Thank you. We have our next question from the line of Ajay Thakur from Anand Rathi Securities. Please go-ahead.
Ajay Thakur
Hi, sir. Thanks for taking my question. Sir, I wanted to understand a bit more in terms of the redistribution of the market-share, which you were pointing out to. What would be currently on the share gain by the new competitor, if you can throw some light, will it be something in the mid-single-digit kind of a range or higher? And do you believe that given the consistent of the redistribution expansion that they are obviously kind of trying to play-out or can it reach to maybe something like a high-single-digit
Anuj Jain
So as of now, just a rough estimate, I may not be very strong on the numbers, but 3% to 4% of redistribution would have happened. If I just talk about the history, if you see last 10, 15 years also, two, three players have entered and they gained 2% to 3% each. So last 10, 15 years, 10% of redistribution has happened over a period of 10 years and that’s why probably the market has not realized. But this has happened faster, maybe the 3% to 4% redistribution would have happened. Going-forward, whether it can be in high-single-digit, no comment because as I said that a good competition has come in the paint industry. And therefore, I definitely give a credit to them because in the past also some companies have come but not been successful. At least now there are good the companies are doing a good work and they’re able to do it. But whether it will go to the high-single-digit, I have no comment on that. I can see the intensified competition in the market, but to me, you may achieve market-share, but market-share is not the only metric to me. When we talk about the business, market-share is one metric, but also what is important is the profitability and the sustainability of the growth. The achieving the market-share, it can be achieved, even the high-single-digit can be achieved. But if it is coming on the back of effect on the profitability, then how — whether it is really a short-lived or long-lived, it need to be seen. A higher market-share, sustainable market-share is the function of quality of distribution, brand equity and the product differentiation. What we have not seen as of now is the product differentiation. Brand-building will take time and the quality of distribution is yet to be seen. So that is how I would like to answer this question.
Ajay Thakur
Understand. Quite helpful. Thank you, sir. Second question was more on the volume value gap. So industry has been seeing the volume value gap on the persisting, while it has kind of reduced for some of the players, but leaders still kind of struggling with the volume value gap, if you can throw some light in terms of when can we expect the volume value gap to kind of diminish or kind of go off for the industry and for us as well.
Anuj Jain
So for us, it is significantly reduced. The volume we have significantly reduced, but I won’t be able to say whether it will diminish because one is the function of. So is a good product, but maybe at the wrong price. So tomorrow, if there is some correction in the price and the growth goes up, then volume value growth could remain. Also, like there are a lot of products which are getting introduced in the construction chemicals, which are also lower ASP products. And then there are efforts by the industry to pick to pick-up the sale on the lower-end emulsions. So I think the volume value gap would remain, but the gap is reduced, but it will remain in a healthy manner. So today maybe the volume value gap is reducing because of and putty, obviously one need to see that the pricing should get corrected. But in the future, if there is a gap, some gap which I still feel volume will be ahead of value, it will be a healthy gap. It will not affect the margins of the company.
Ajay Thakur
Understand. Quite helpful. Thanks, sir, for all the key interaction that we had over the past few years. It’s been a pleasure kind of interacting with you and all the best for your future.
Anuj Jain
Thank you.
Operator
Thank you. Thank you. A reminder to all participants, you may press star and want to ask a question. If you wish to ask a question, you may press star and one. The next question is from the line of Sheila from MS. Please go-ahead.
Sheela Rathi
Yeah. Thanks for taking my question. Sir, my question was more on the medium-term. As we sit today and I know the demand environment is not as we would like it to be. But when we think about the next three to five years, what in your view would be the industry growth rate for the decorative paints business? I know in the long-run, we have always said that this is certain ex of the GDP growth rate. But today, how do you envisage that? An earlier participant had asked the question around the real-estate demand and how it’s not getting reflected in the paint sector. So taking everything into consideration, how do you think the trend would be?
Anuj Jain
So my take is the trend will be positive. I foresee a higher single-digit growth for the industry over a period of five years. And there is a simple calculation for that, the penetration of the paint is lower. With the new competition coming in, many more good players coming in and they are getting into marketing, creating awareness of the product, the penetration will definitely increase. So that will definitely help. And also the upgradation will happen on the back of the communication going up because even in this year, if you see the share of voice of the paint industry, if you look at the entire media, if you look at all companies put together has gone up and therefore I definitely see more formalization will happen in the paint industry and penetration is low, more formalization and more awareness. So these are clear-cut indicators that this is just a short-term impact on the demand. And if you’re talking about next five years, high-single-digit is something what I.
Sheela Rathi
Just very below the nominal GDP growth rate, is that the right way to look at it?
Anuj Jain
So generally, difficult to say. And that’s like a positive scenario. I’m just saying that if you look at last, 30, 45 years then it can be closer to the GDP growth also. But based on the current situation, I’m saying higher single-digit is something what I feel, it can be better.
Sheela Rathi
Understood. Sir, my second and final question is the point you made about how the painter — painters have become an important influencer for us over the last two quarters. Just from your lens perspective, in the previous question also, you said how quality of distribution, brand equity, everything matters. But from an influencing standpoint, how do you place the various stakeholders to drive growth? When we talk about dealers, we talk about painters, we talk about the interior decorators and others. So how do you place each of these stakeholders from an influencing standpoint to drive consumption or right demand?
Anuj Jain
So we actually all are equally respected and all play our role and they are very important part of the ecosystem, because everyone maybe somewhere the role is lesser or higher, but this is a chain. So you can’t handle one and then leave other and there’s a chain is broken. So everybody is to be taken care of. But having said that, obviously, for the — for any company to increase the business, demand is definitely more important and demand comes from two-parts. One is the consumer demand, which is a function of advertising and marketing. And the second is the painter because there is a large influence of influence which printers can also make. Therefore, building up the relationship with the painter and therefore, in return, getting the recommendation for the — for your brand is very important. So what we have been working upon is a demand factor because our — this brand equity is high and we are at now in terms of the mind share, we are number two. So we have been putting more emphasis in creating the demand through the influencers. Influencers include painter, contector and architect.
Sheela Rathi
Understood. Thank you very much, and best of luck for the future.
Anuj Jain
And it also help in terms of — because our customers are our partners, our dealers are our partners. So when we do that, we are able to give them more positive contribution to the business in the process, we are keeping our customers happy and that’s what works.
Sheela Rathi
Understood. Thank you very much, sir and best of luck for the future.
Anuj Jain
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. And I now hand the conference over to the management for closing comments. Over to you, sir.
Anuj Jain
Thank you. Thank you, everyone, for asking questions. Your questions are always insightful for us and it always give us some good insight that what you feel, what you want to have. I understand that you want to have more visibility, more predictability. And I have tried from my side that to give you some transparency and that you’re able to read that how we are working and that’s what we have been talking in the other forums also and today also we tried to highlight related to the progress on those initiatives. So I had two, three good years, transformative years, I would say, and time has come for me to retire from the services. Praveen will take-over from 1st of April. He knows the company well. That is what I was trying to tell you. And the leadership team is fully equipped, strategy is clear and the foundation what we have built is strong enough to sustain and accelerate growth despite a market challenges. What we have demonstrated and what we are doing is the quality over quantity has been our approach that will continue. I’m grateful to the trust you have placed in me and I go with full confidence that the company is poised for a better future. Thanks for support and trust. Let’s move forward. Thank you.
Operator
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.