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Yes, Hi, all. Welcome to Q2 FY '23 and H1 FY '23 investor call of Akzo Nobel India hosted by ICICI Securities. We have with us senior management of Akzo Nobel India, represented by Mr. Rajiv Rajgopal, Managing Director; Mr. Ark Krishna, Chief Financial Officer; and Mr. Hashi Rastogi, Company Secretory.
Now I hand over the call to the management for initial comments. And then we will open the floor for question-and-answer session. Thanks, and over to you, Rajiv.
Thank you. While we just correct and sort of put the slide back on starting with first -- good afternoon to all of you -- thanks for taking time out to join. I do understand from Rushad, that is pita schedule loyalty was already for taking the debt out. I talk a best way to sort of start this fall with metadata for as a part of our tele futures bot, but is really start turning the iconic city to put back to blue we've seen some huge traction on it, not just in India, but all over the world, something that we work with in our we work them. We don't put administration to really start making it once again in the blue city. But let's get on to within the business, how things have been. Just to start with, as I will start in terms of us.
Many of you who are fully connected with the company, I know that we got a new CEO, [ enounoinesus ] as from [ Renovias ] 2 weeks back, succeeding Sharian, the was a brand materials experience. He was the CEO of [ Suzefore ] that of berate out store, I mean also the managing director of risk capital partners companies work where the conservation agenda at Sofa I think got a 25 of business experience. And so that's really model. I'm sure we just joined. He's starting to travel very soon, and I'm certain that September early next year, given the focus on intensity now the agent. So requiring, I think we should sort of see Grana and to also have a chance to interact.
Yes. So if I can move to the next slide, I can see a pipeline raising hand by the request but allow us to time complete and then some of -- then we will come back to the Q&A. Yes. So 460 employees, they've got 5 officers. We sort of mentioned in the last call that we are looking at capacity orientation across our paints and car coatings business. We've got expansions in place. We've been scaling up our distribution rep’s outlets in that quarter-on-quarter basis sort of basis, what we call we have spoken model after exclude model, and we today are now moving our development from more than what -- when I joined this company of about 2,000 tons in 2015, we are already about 5,000 tons or 8,000 tons to in the next couple of years. We also cater to about 4,400 million customers. We've got a world-class color center in AST in Bangalore, and we have also launched what's called a low-cost innovation center and driving differentiated products at our yes. So this is some of the fees that sort of been up to. Yes. Next slide.
So on the business, I guess a mastitis as just to summarize. The good part is to be really proud to be a part of the Indian economy, great to be such organization, which is now leading the growth actin terms of India and talks about Crow in India, significant global roads. I don't think from our perspective or in comparison because that's anyway something that's expected. Yes. But really, I was also say that while India is doing very well, and it is coordinate are not couple completely from.
And so if you look at inflation, 7.4%, yes, it's within the range that the RBI or Colombia on the fact that policies are going forward pin the range of around 6 on prices or so to get a little behind. While I think the real impact to benefit of that will take a while for us to see are seeing some of the commentary by some of our other calling companies in the industry, but are you believe, as I mentioned the last quarter of for that is correct continue report. So we don't have as a mean are almost equal to it, but as the crude and relatives and marketing, et cetera, the other currency more all of us see that from March this year, was about 74.5%. It's moved its way into '18 83.
So rapidly to summarize, India continues to be the space Still, when we talk of accessions all the distal about rate of winning by between 6% to 20%, 5% to 7%. So from that perspective, I think we are as well. And if you look at our performance over the last 3 years, I think substation there happens to the fact that we are quite serious about our participation. Yes. So just to sort of go yes. So we, as of you know, have sort of focused on strategy. We haven't grown deliver strategy for 2020.
But because of the time that the cogs now short with global risk, the amount of lines in Europe and China, our global [ Teribano ] before out the end of the call. As following the new CEO to articulate or is going to be client that should get a bit -- from a mix perspective, I would have changed that nothing changed because of canine right resent the Experian country in May were that and be one of the finest stores of the company. sometimes even start inspire to things happen. And so that this quarter so far seem to have sort of held on the bid that we intend to be in the top 3 players put them in watt eventually in terms of incremental.
What have we been doing? I think our focus has been to enhance customer experience, right? So whether it's brand building, whether balance advertisers [ alt amortizing ] the sorting a setup or the new bullish advertising, then you'll get to see later this year, beginning next year. We are focused on looking at customer focus, winning adjacencies and expanding up -- our entire station crude or where we are now moving to the next housing down is what we are really working on a quarter-on-quarter basis, same can be as we start our ingot is an illustration of what we are trying to tap absolutely untapped areas where creating a Deluxe franchise is going to be the way we able to set the market.
The next is digital, all of you know, we are one of the few countries that launched pay in the free future. It was a global initiative, but we worked very closely with the NASSCOM really grateful to NASSCOM and NIPP supporting us to the car where we've now got 2 startups, tube and virtual Bart to really start looking at initiatives where we can start driving digital industrial, whether it's through a printed a size and also looking at ways to run customer life sector management in a very differentiated. We are also looking at but creation because in a world that's not with global risk we are, at the end of the day, a European company. So we are mindful of the fact that we need to drive value creations hard because expectations from India as we start driving top line, we'll also be to start now taking a little bit of onus on taking the lead over the next 3 to 5 years for Angelo batten.
People continue to be at the part of what we are delighted to inform all of you that for a flyer in a row, we are on the top the side of the OHI, Organizational health net. It's a mechanic role that produce of almost. We are also now replaced to work. And for us, these are evidence of the fact that we are building a forward. And our entire core is probably really drive renovation significantly. We are going to do that by bringing the what I call the power sites to the Magic Copal, and that's something that we'll talk more about as we start moving forward -- so we have a few numbers of what we've done on the and stickier words and recently from Moderate for a successful dealer our flagship brand, as one cats now with terrific growth.
We've launched an economy prime Smart Choice in Gina Waller which is actually, as we speak, we are strengthening our ordering portfolio in your base code and also a 5-year performance went or on a product. Yes. So I already talked about this, the 2 fluid for Mumbai and hyper-technology from Bangalore. We are now -- what we've done is on electrometer. -- and we are working over the next 6 months with both of them to look at solutions where we can enhance the digital experience of consumers and also look at ways in which we can enhance our thought united in terms of the for pain -- on the coatings business, it's been also again for coaching a terrific quarter.
Yes, our business has bounced back. It's after a long time, the roll business was done very well. So I mean, Marine and Protective, we see very strong growth in infrastructure, oil and gas, power, new construction. Our power business continues to accelerate. We've seen some good sort of bounce back in the architectural space and automotive, which, as all of you have all reported ahead of the automotive business has started seeing some good demand. We are also trying to look at paying a need road in the entire men as we start moving forward.
Our industrial coatings are down many, led by growth in the packaging segment. So the pets and other beverage cans that -- we are treatise country. We also try to buy differentiated and bringing certain segment products in the same. In the automotive space, relighted change that we grew across both in our premium brands and our brand. We see a strong recovery in the auto segment, and this is something that we are cognizant of and also the ships, as I mentioned, the technology ships, there something they really working on as a team to try and see how we can piracy -- so with this, let me hand it over to Krishna. Krishna will walk you through the numbers.
Thanks, Rajiv. Thanks for all the investors who are participating in this call. I'm very happy to report the continued progress on our brown delivered ambitions in Q2 2020 123. In line with the lower aspect of our ambition, we clocked a strong double-digit growth across the both Paints and ports businesses. Revenue stood at INR 946 crores, with a growth of 25%, which is supported by the good phase II demand and the calculated pricing actions and a strong order book under concretion of the pipeline in the bookings business.
Revenue growth of 25% is especially commendable, given the strong base. I'm proud that we continue to surpass our own reports. Despite some targets in our portals, business post a strong growth across all the channels and categories, as Rajiv explained the quarter saw a continued success of the recently launched campaigns and proportions. Mixes are strong and police business and then markets outperformed obvious in terms of the other verticals in the business. India core sector continues to expand, which is an into quoting business. During the quarter, the business had a strong order book across the infrastructure marine, auto on the consumer segments.
Moving to the next slide. The industry experienced that some of the inflationary challenges that we have seen previously and coupled with the FX volatility during the quarter, but our price actions helped us to grow the 19% and GM stood at 28.4%. Although we also invested in advertising and for marketing, in shaping some other growth in expense. We maintain our focus in terms of the delivery aspect of the ambition, delivering 15% EBIT growth. Profit after tax stood at INR 65.4 crores and which is up around 17% compared to the previous year.
Moving to the OWC and cash flow. The easing of the supply chain and the concern actions from the power and to optimize the water you see our working capital has improved. What do you see as a percentage of revenue is at 9.6% in the September end versus 12.3% of the last year? you could see the significant decline in the inventory days from 141 to 1 team. and operating cash flows positive, coupled with our -- which is coupled with our investments and CapEx and the [ degen ]. At the end of the quarter, we saw cash core INR 189 crores and liquidity remains strong. With this, we believe with a maiden in terms of macroeconomic risks, which has alluded to RRG. However, I'm quite confident in terms of our progress on the grander for the H2 as well. Thanks.
Rajiv, all over to you.
Yes. Thank you. I think some on the things that we are very clear on working on and as dealing with the exercise is the same tire thing on ESG. We want to make sure that we are a deep player in the country. We are globally one of the lead players in it. So what are some things that we are doing a walking through it. On the environment side, you remember total stimulate with Airbus. We started using an initiative like that can make a [ substinate ] difference to the. Let's colitis one example. We are looking at many others. We've also got all our sites covered by Loans yes. So really to monitor it because I see believe that you can only manage one measure and hence, having a very clear, not just a target but also the mass line ban is significant and important way of deriving.
In terms of Sorge, we’ll continue to work on our skill building initiatives being 21.5 million. The Star program, medicine initiative, we've also been contributing to the market initiated startup ecosystem or pain the future system people performance. And what I'd not put sure, but I'm very proud of is started a project where we are trying to work with us, particularly in, and we started this in the state of Assam more than double avenues partners.
We've seen some excellent response rates with one of the things we noted as a comp, the particularly rat society. -- post-coved have been really struggling to get back and also looking at ways to enhance the income so we are making for the days on trying this and also in our plans well. The last governance, it as to say I think our admission of one world class in terms of coverage from actual belt but also expand point of view, pains. So whether it's making buses merit in terms of corporate governance, 5% depending board, 3% order that rate -- so it's really we call it the part of our network, we have a team which is people trying to pain, that's really the purpose. So really, that's what we are doing Yes.
Suffice to say that we continue to intend to continue to really grow out the form. I mentioned to all of you that our endeavor is to grow tech. I think clearly 2018, we've had some rocky movers in 2020. Kuia, -- but again, I'd like to thank all of you to support patients because it's key that now probably in my quote not low -- to outperform Yes. Our focus continues to be on brand distribution innovation. Sorry to distant year. but your voice is very feeble. Okay. Can you hear me now? Yes, now it's better. So really, we continue our focus on brand solution, digitization and sustainability. These are the areas that we continue to drive to drive acceleration in our business, and we continue to commit to regular investor engagement. So with this, pretty much come to the end of what I had to say. I thank each one of you for taking time to join us and we have order to keep it as interactive as that's possible. Yes.
So with this, I go to hand it back to you on request if you can identify yourself. And it would be nice if you turn on cameras you can see us, but you only focusing you given the sort of technology that we have.
[Operator Instructions] So first question we have from Mr. [ Laminaranan, Ganpati ].
Yes. Am I audible? I don't know whether my video is visible. I think it's just not allowing me to allow to do that, but anyway. Let me not take waste time. So you've been -- first and I have a 2 question. First, you have been consistent and looks like you're going ahead of the market in decorators. What changes in the width and depth of distribution you have done that, that is actually giving you this growth right? I'm asking from a dealer point of view, right, why he is increasing depth at the counter and why new people are coming and taking new dealerships with you. That's my first question.
So look, I think the answer is a bit subject natural. I think if I ask you a euro boats. I think the answer to that when we did a consumer survey was because of the quality of the product, right? And so what we read was we started a program. If you remember, 2 launch it works. I mean that program has seen a significant lift of our brand because the newer said, this is what we. And it's a variety of other issues that -- and the fact that we were not investing enough business perhaps in earlier that we sort of fact had a bit of a slide -- with that coming back, I think we've been able to drive extirpate. Our value per outlet has been significant and really outperforming on this from an India perspective and from an industry perspective, but also some of the leading benchmarks.
Now in terms of it, we are adding roughly about 8 were between 600 to 800 a quarter, right? So our endeavor continues to be that. But in pain, I've seen all the headline news. It's not about the number of audits -- it's about a number of occupancy meeting. It's like at earlier, but nice to say gross side, doesn't mean helping them finer net adds, which means major consumers actually add to the revenue. So that's the key. I think in terms of debt and net additions of it, we seem to be seeing a traction which is very compatible in the industry. We are not -- our endeavor was to get the right ports input. So if you remember, in 2020, we launched promiscuous wise an entry into the entire economy space because that was a sector which is booming.
We wanted to participate in the high-growth sectors. And I've been saying this consistently that it's about building things big by breed. So I'm glad that things have over the last 8 quarters really started falling in place. I think today the result of this is not an overnight success. And while we continue to do that, lull me also assure that we may industry will continue to face headwinds. So it's about 10 million. To answer your question, versus sort of a set I've given you in terms of what are the ads we do in terms of gas. And in terms of is the BPO going, yes, there is nothing exploring pretty high double digit. It's the reason why our revenue growth is more.
Sorry, what is growing, sorry?
The revenue growth is double digits, high double digits -- in cans, we are growing in -- we would have grown almost equal to our overall book. So that tells you what you seriously gain market share.
It's great. And while there is an output, clearly that it's growing and also that new products are coming in, right? What makes a dealer, somebody to actually put -- go for the new dealership with you, right? What is the compelling proposition which he ERC has, right? What is the input that is actually going into what you're getting as an output, right? What has materially changed over the last 2, 3 years with respect to the previous 5 years. I'm just looking for from an input point of view.
So for part of things. When we explained that our brands semiretired advertising and the sort of scores we've seen on webcast, maybe be honest, I joined this company Jens. We've not seen that sort of so great about that by the TV. The second is really our fit-for-purpose portfolio is firing adjacencies are finding. And they are firing in tandem with some of the games that we're getting distributed. So it's a combination of areas. We are seeing a lot of digitalization and automation, which is also driving our ability to be able to execute a laser mama, sharp manner at the point of sale. So these are a combination of things. I think it's one thing that can react if you look at it, it's really a very focused approach and a lot of discipline going in execution. And yes, I think for me, this is to see matters.
Got it. Sir, I just have 2 more questions. One is, I mean, how your go-to-market has actually changed in terms of numbers, right? Because you had a direct, which you call it a single tier distribution. And then the second is the 2-tier distribution, right? That go-to-market, I think when you took over, there was -- it was in a particular mix that it has actually changed now, I believe, right? Can you just throw a light on how your single tier versus your distribution mix has changed in terms of rate and whether that is propelling growth and how do we think about it?
Distribution is something really -- we spent time within 2014, '16, which was my earliest thing first in India. And then between 18 and, I would say, mid-2021 that we're really focused right on really bringing distributors in place, as I mentioned earlier, and they've got 175 distributors. They're all pretty much there now for the last 4, 5, since several years. We got a -- this will turn into a very strong sort of performance there. What we've done is to be variation because one of the things you very worth franchise. -- beat from about 2,500, 2,000 tones to about 5,000 506,000 tones is how do now start taking it further because you would realize that when you advertise, Otherwise, the advertising spittle amount of waste that happens because of the shared recurvate.
So our endeavor is to identify using certain commentators that we have. of looking at districts where we should be present using certain sort of formula that we are working on and say that with these districts that we are targeting. We've seen some very good response there. Suffice to say that we, as I told you, told what we are adding in a quarter in terms of outlets. And for us, I think in terms of retention, we will be one of the highest in the industry of the outer where we internet. We still do have challenges but we honestly confused. We are, for example, some of the new players, product launched at products. We've seen only lost it given our products. Given the quality of our products, we become the choice, automated choice because we don't care on price, right? -- are, if you value, we are selling a premium compared to most of our comps right -- so our endeavors to try and make sure we get the right. We get the right the right propositions and get the right distribution to broadly what I've done what I can sort of inform you.
Got it. Good. Just one last question is that how your mix of projects versus non-project has changed in decorative? And per se, what is any change in the product portfolio? Because last time you mentioned that you were 65% into paints. And so how that mix has changed over the last 3 years, both projects and non-projects and how the decorative and the industrial mix has changed over the last 3 years. And [ badgitwissettled ], because globally, we are like a 50-50 player.
So we can remain the same. I mean, 65, 25, 67, 23 that's the range Europe depends on a particular quarter, for example, the -- for most businesses.
Sorry, I didn't hear you.
I said we will remain the same way, whether it's 65 to 67 in for pain, we will remain in the low change in the ratio of the inside in the next 3 to 5 weeks.
Projects, non-projects.
Project projects I already article, our products continues to about in plans, right? We continue to see very strong growth. That's largely because of the fact that real estate is bouncing back. But again, our retail is also doing it query well yes. So very clearly, I don't see too much of a variation between the 2. I guess, projects growing faster.
[Operator Instructions] Next, we have a question from Mr. [ Garo Nigam ].
Yes. Am I audible? Yes. Sure. This is Garo Nigam from Tokai Investments. So first question is, again, on the distribution side, -- so as I understand, I think historically, we have been very strong in Eastern North is what I understand. And now when we look at the -- like going forward on the distribution side, what are we like doing like in the last 3, 4 years and going forward, are we consolidating on our existing regions and going further deep into them or we are expanding it to new regions. Obviously, there will be doing both, but just want to understand more from the management philosophy on what is the plan on distribution growth and how it has changed?
So, thank you for the question. I think the answer is a bit of approval. We don't look at it as unions. We look at it. operates is very body-on at it. We look at it at a moat level. We've got 650 districts in India and I'm sad some calls. If we look at the top 100 districts where we've got a significant presence and about 100, 200 disti. So we were very limited. Yes. So our strategy has to be important. The brand elastin on proxies certain that there is propensity on the brand, a slow coming back. We have to continuously work hard. We are very competitive seen where we've got your giant as the market year.
So all the new entrants who are also doing reasonably strong jobs. We do respect to Eva, I think we need to continuously fight for our lunch and our share of the making. So I need to have a strategy articulated on the call. In my wisdom is not the most sales thing to do, but suffice to say that we will do a combination of both, depending on which lever we need to accelerate, yes. And those levels have been identified. Very care, we are working on a plan that we sort of put together as a management team in 2021, and that plan continues to 2024. I see no reason, even if you burn a couple of months on the road that we need to change that plan.
Okay. Just if I can just follow up on that question. But is there a focus more on expanding in our existing like strength of regions? Like what is the focus area? I think we can always do everything, but we have to choose our battles right?
So look, obviously, if you've got a strength in Serbia our presence already in markets where you're strong, right? That's natural. But that will come through a lot of other portfolio category shares, assortment. So those are still profitability and most of the fees. Right? So to my mind, the wages will shift, right? But we've articulated our strategy, if you want to tell you the ideas very clearly, -- we're sticking to that. So pretty much we are already building our velocity in existing markets, while making sure we start looking at share gain into the market. Now obviously, if you're going to drive into new markets and lose an existing market, that's not a wise thing to do but. So suffice to say, I can announce to that.
Got it. Just one more question on this project versus non project, I think the previous participant asked. Just wanted to understand how is this business being done? And is this course via the dealer channel and -- or is it done directly? And in project business, are we doing something different, which is leading to that higher growth, which you alluded to?
I think it will be only fair that we allow everybody to get a chance. So would it be possible for you to come back -- we make you answer your question, is to very different the companies be central deals also in projects to were actually side. So if we can allow you to allow the next person to ask a question, and we'll come back to that.
[Operator Instructions] So by the time the question you assemble let me -- just go ahead with some questions. Sir, regarding the floor pans, how is this business doing? Whether it is launch across other states also now after the West bingo? And secondly, how was waterproofing has done in this quarter, particularly considering there were a lot of rains. So some of the peers have indicated that water proofing has done very well. But due to rains, there is some loss of paint sales. So just wanted to understand how is the performance of water proofing? And assuming if there would be normal means, whether our decorative paint would have. I’m sure it would have definitely done better, but what is the real or indicative impact of loss sales for go? Yes, that's it.
Thank you for the question. So first, the flow Court, we started putting it in a few more states that our product acceptance has been very good. However, this is something that we need to work [ ridiculously ] on because you're right. See, flowed in the which is also affected a bit by because of the fact that there are in times of enhances that obviously use more on the floor. So it's important to have going on Sunlight. So really, we'll be able to get the true measure of it as we start moving into different markets, perhaps not will take a little longer because of what's happening around here in small and for, et cetera. But other than that, I will see the pickup now across most parts of the country being very strong.
However, I'm not happy because very clearly, we've got a particular couple of players in mind that we want to outperform. So we are not -- in my standard is we are not doing as well as the sort of benchmark that are idle for we will be doing well by -- in certain markets by the market stats, but that's not enough to be -- that hopefully answers your first question. The second question, water confines a growing category. I don't want to overdo it, but suffice to say that, look, I think the percent contribution of it is relatively small.
So we've got a long way to go. I would say that, look, we need to wait as much. Yes, in the last 2 weeks of September, we had a bit of a challenge because of the monsoons or the -- on some of our emulsions. But our growth is what it is. We recorded our growth. upgrade are pretty much in upwards of right? So I don't think that is a bit of a for us I mean we are working on a strategy of total. And in the quarters, months ahead, we will start looking at taking our management goal on saying how do we get in taking this now much higher level, right?
So we are also playing with a lot of giants who are leaders in this space who have really created this category. So again, with all modesty, I just want to make sure that what we do, we are able to need -- we started very small. We are now in a very large business in this category. But we've got over when you look at some of the other.
The question is from line of Mr. Nikunj Doshi.
Yes. Yes. This is Nikunj Doshi from Bay Capital. Just one question on the auto segment, [ Minsa ], what is the focus area because I believe our focus was repainting segment. And on OEM side, is there any breakthrough or any kind of efforts that we are making to address that. Our OEM yes, we have some going in the were very limited in India. It's largely through '20.
Yes. I assume you're talking about the automotive be -- so in the installation automotive refinish business, we are a much smaller player in the OEM business, it or dull. But yes, we made some products and et cetera, but you are not statistically significant income back to Sao, right? Our agents need to grow what we call the non-franchise potters, what we have in the [ refinished ] part of in aftermarket, and that we are going very well, which is why we've seen some carrots in the premium end of the market while going with our premium brand sites and also growing Wonder in the mass segment. So which is also quite profitable. So that's been our strategy.
[Operator Instructions] We have next question from Mr. [ Ram Krista ].
I'm from [ Gen Wealth Management Services Limited ]. Sir, I have a couple of questions. Actually, in the AGM, you have mentioned that you've been working on putting on some CapEx. If you can please share some details on that front? That is my first question. Second question, I'm just trying to understand, is there any trading component that is there in your product mix, where you import from the parent and sell in India? And finally, on the adjacencies, do you have any plans to expand your product base?
Yes, it wants to first take the trading question and very. The possible CapEx, we explained that we are expanding on our major CapEx. We are expanding our order capacity in [ Goliat ], which we are progressing well. And the second point is regarding the trading. Some of our product sales, Rajiv, our premium flagship brand in automotive work aftermarket business, which is maybe 34%. We are importing some of the dorm multiple companies, group companies. What's the main -- what's the third question on the -- in case?
Sir, the third question is on adjacencies. Is there any plan to expand your product base? And also coming back to the CapEx, can you please indicate any numbers that you are putting into? I mean that would be helpful, just trying to understand a broader perspective.
Okay. So CapEx is not that significant, and it's not different from what we explained in the Asia. It's roughly around INR 100 crores of capacity expansion in Vale on the older manufacturing, which is done a bolt-on for the brownfield project. And that's the point on which we are looking.
And I think good to understand this. When we say this, we've done a lot of both on digital technology and driving productivity, where we've been able to produce the same volume than we used to do earlier from [ Bossip ], to 2 shifts to less than 1.5 to -- so we're using a lot of digitization technology automation to drive that. And hence, for us to scale back, we can almost 1.5x the volume 2x the volume that we do using our existing footprint. And then you have to know where these are many years ago as pain in coatings core, one of the things that we've done over the last 3 years is integrate most of the site, right?
So that's as far as that is concerned, are intended to just be honest. If it is -- our adjacencies needs or in force and the to look at, right? We need to continue to play in the play and coatings. I think we are very clear when you say aliens would catch the things at this point of time. We are reviewing everything what we tell generally see material sort of benefit, and we'll talk about it more grows into at the time was launched, right? But total we will play unique pains and coins and all categories [ Goja ] included today the plans and going space. So not only to do with outside that camel for example, furnishings, fabric, those are not our intent from a strategy perspective. Have I answered your question?
Sure. This helps you. Can I ask one more last question, please?
If I can request because just to be so everybody gets a chance. Otherwise, what happens -- we sometimes you get people to come...
Sir, we have received some questions on the chat box. I will go ahead with those questions. What is the mix of premium to economy to mass in the decorative side?
Yes. So look, we don't give those splits, let's be honest. But I think our contribution margin gives you an indication of that, right? In terms of -- as we Killer significant contributor to our business. markets play for institution and not from a strategic big of a challenge to the brands. We don't think it's important in material, but we also understand that why we play that team. So that's the question on the mix. I'm reading some of the other questions on so that we don't have to be read out for me. So how do much margin do you see playing back that we have onetime 17% operating margin when you want to get back.
Look, as far as margin rate margins are concerned, we are looking at long-term sustained margin last year is in play a market where we are still a #4. Okay? We have to make sure that we start putting -- also start investing in our business and to grow. And what you've seen these are very challenging times, okay? We've seen a lot of headline ounces by various players and compete with respect to each one, anybody every human has to have an envision and every organization has particularly saying they want to become a #2 no player in the next 5 years.
[ Valaris ] also have obviously an ambition, right? So for us, to make sure I think we have to balance the way we grow, invest in the business from a long-term perspective. Today, I think the mandate from the global really now start getting India to start lifting itself, right, to play a much longer in -- so are no longer Dinesh Kartik of the team where I come in the last 5 over counts I think what is expected for me is to play in the entirety 20, a much longer radian really start seeing how we can do what China is to do many years in. It's a very big ask.
So remember, when I started the JV, we lessen INR 2,000 crore company, I mean today, when you just look at last resort, we are significantly bigger. So we also have to do the right thing to answer your question, we will continue to do that as we move forward. Yes, -- we are launches driven by percentage, it is important, but we note to then of course, if there is a benefit, et cetera, we rather look at how we invest in our portfolio or people to get sustainable long-term where could the -- the next is what's the trend of nonmetric share in revenue on the full -- so again, look, metros being a lot this contributor [ net about ] it. We are now growing in our Tier 1 chain 3. That's why it position. We don't give percentages, but suffice to say that obviously, international cost is coming because a racing there's a cost attack, right?
But what's also important is that we be the right portfolio to me the right design. -- on the right margin side. And as we call, there are some smaller players who were starting to put some have also given us some lessons 2, 3 years we started doing it. I think suffice to say that we are very where we move, but not content because I think some will start see working were not content because that's not where we want to be here. I think in terms of our mission, we have a more ambitious and that's what we sort of -- so that answers that question.
Then we've got one more, how our competitors reacting on ground to gaining share consistent and get more in the past. Yes. But they are seeing a few years back they had not seen a few years because let's be honest. Typically in the governing all the changes in management in that. I think we used to be a tender question. I complete now genital in changing different stems. -- one in India as a team had for 2 years and then to the foot years back right?
So I mean achievable, we were a very good question in terms of how we sort of grow it. We are trying to -- I think it's better to ask competition than rather than steel. If there is anything that you [ pinometostat ] I mean are saying, we are on ability to all to grow. We have been very mindful of the fact that still relatedly the number for players in the market in gains and there we will sort of have a fair play. We believe that as a global brand, et cetera, many of you remind me, you have a right to win.
That's what we've been focusing on -- can we have the mine focusing, look, wearing the white span electron, I don't look at bit distant, the point to say that in about 200 districts we've got very intact 780 districts are number will be surprised to -- and I shared that in my first investor week, people thought I was pulling until some of them actually went to some districts and state in seeing it. So my thinking look, if -- despite all the things that we've done or not done in the past, we still remain as the #1 in districts.
The question is I tell you taking that slowly learn what can quickly translate it. Not an easy exercise, a very aggressive when dependent, but I think that's something we are working on being set, right? Royalty 2.5% of revenue house, it's by 14%. Is there a definitive number? Look, let's look at what loyalty. It's about saying, I can borrow from me. I'm proud for the parent because guys like in the future, et cetera coming because I have that in a great amount of [ geoexpertise ] -- we are running in India what we call a local low-cost innovation for the globe. So today, it's a bit about 2 ways to because I don't only want to borrowing things for the low but also giving back. But one of the things that royalties to make sure that I get things seamless. I worked in [ Gubagoo ] different parts of the world in 3 different companies.
I think it's pretty much a standard to see or Woolies all my shareholders are that this is not going to come in video or many other things, including divide, et cetera for you. And I think the last 2 years have been despite [ cobi ], we last year, had one of the highest payout seat media's important vision mentioned the global report as Otis China, you got to ask -- what I just to be fair, if you actually read the last couple of reports, quarterly reports, I will report a sufficient mention of India, but it's my request to keep it a little understood -- to be honest, let's be honest. I come from a school where I don't want too much of attention. That's not my style.
I think all of you I think my style is to say that lower here to win, but you have to make as shown. -- not here for trout -- were to, I think, for the team to grow for the team and the company to grow, something I'm very proud of being a part of as a team member of. So really, I'm fine in the rope continue to mention China that's fine by me. I know how but because I will take in the last 10 years, a then presentation to the executive commutes -- so clearly, and we've got very high profile is.
We're going to achieve commercial officer coming here on Monday for 1 week. We've got our global CEO ligament Marsh mostly -- so I think at least in the first printer, it to them, but we have to continue to perform. It's like any I'm sure like each one of you. these are things that you cannot gain for granted. So could to be humble is good to be looking and allow them back to move talking. That's what I'm -- yes. So these are some of the questions there has come -- there are any further questions.
[Operator Instructions] Next, we have a question from Mr. [ Yu Panda ].
[ Yu from CSI Prudential Life Insurance ]. Congrats to the entire team for good result. So sir, the question is on the demand side. I mean, most of the companies are talking about some kind of slowdown you and your team being on the ground, what are the fillers you are getting. And why I'm asking this is that probably if there is any improvement or benefit on the lower RM basket slowdown in demand would result in passing on of those prices and probably not getting the benefit of the lower price. Basically, demand also determines the gross margin so how this equation is working now based on the demand fees you are getting?
The value was very short in demand with ones that where some of my past talked about monsoon, I think the bigger impact of action was in October because this year, we are -- like some of them already mentioned the very short debates, we get a benefit of the pie normally when we have it in November like next year, we will add. But in October month Diwali, that also -- the number of working days are much lower. There's a bit of a challenge. So that's one.
Two, yes, we've seen some heading growth in this industry. Myelin structurally is at that change. It's it be to way of me to say, yes, based on a couple of 1 month or 2 months. So -- well, I think you need to wait and watch for that. Yes, there is a little bit of a slide I would see there a slowdown, but marginal sort of primarily because of the fact that there is inflation and inflation is vital in some of our rural markets and different consumer segments, right? So that is there. But fundamentally, I believe that pinpoint will go 1.5x.
So not where the grow this. This is more relevant to the paints business, where I do see because of various reasons, a bit of down stocking because remember that the channel -- the interest rates are going. So even for a dealer, cost of capital is -- so really that wants to be very mindful of. And remember that because of the cost of capital going up, we look at saying, that was 2 months or 3 months or stock more towards the end of the year or early next year -- those are decisions that will -- we have -- significant changes yet. But yes, there is something like you don't need to wait and watch for a couple of months before I get back will be very enable me to take 1-week sale or 1 month.
Okay. And our recent introduction at the lower side of the pyramid are we seeing -- I mean, it may be a blessing -- not blessing in disguise, but basically, are we seeing any kind of down trading? And we have launched low-end products. Are we seeing, say, the mix or suitor changing for us we have launched.
This portfolio No, we have not seen a down trading. Look, I think we see bias. -- topic was continuing to buy odontoid about the brand right? So I mean, honestly, they look at consumer into ever touch a very clear, right? So I don't think we are very interested in many other offerings. But yes, as some customers will be market people are looking at it, but I am not seeing visible launches. But I've seen the commentaries of not just some of our investment per but other industry in a way is watching this premium market share has been getting significant yes. So for us, acceleration.
Understood. Sir, one question. I mean we -- as an English community, don't get idea of a very minute list of raw materials. I mean, we just get to see crude oil as a benchmark. So have we actually seen fall in the RM basket? And when I ask this, this is in terms of high because we have seen like 10%, 12% depreciation in the last 6 or 8 months.
Yes, scale on a purchasing price level, we are seeing a softness in the deal and post this is partially offset by the volatility in the ForEx. But we could definitely see in the margin, primarily on account of the food offers unless there is some of the super comes up.
[Operator Instructions] So we have received one question on chat box. What are the 3 biggest worries for you as a CEO considering the business over next 5 years?
Well, to be honest, I would use about because when you are a number of the, I think you're moving with a mindset saying, how do we start driving growth arising market share gain and how do we do it in a profitable manner. I think that's really key challenges as we move forward is willing we can only control what we can. -- to uncontrolled. So really, how much of more of these controller business. As the CEO cost in the last few years, we -- I think this has been the best experience that they don't get to are taking goat or a challenge of brand, you are to be profitable, you have to be terpene, right? So my sense the ability, stay focused and sort of talking about the strategy go map to the company and I'm really make sure that the strategy articulated is terribly there's one of the top priorities for me. Yes.
The second is really an engaged and inspired deep because really all of us come with 10 hours, completely my fourth year, I get on to my first -- last year in my first term, right? And then, of course, business they want, right? So really, it's about building the next level being the next leaders of tomorrow. That's the second I thought really are you built a business where you can scale it up. I think as a -- what I wanted to demonstrate was that we can go up, particularly before we look at any -- but at some point of time, I think one of the things that I got hired not back to India was because I didn't not very conscious of things in my last one in Middle East after. Are we looking at some organic options? We don't think it's pretty potent. -- something that is going to excite Sunshine, but it -- so I just want to reactivate. Look, there are many reasons that you can get by. But really, I think for me, I'm thrilled that it's got an opportunity to get a platform and perform, right? That's the way I look at it. Yes.
Another question in the last seat is the pointing for the firm and what has been a positive surprise something that you and the management did explain how are you building on these positive at -- so okay, that's a great question. Great question. So no, I think the base disappointment for the firm was I came in 2018. We did a massive restructuring. And one of the things when we saw the time the it starts in China, I still remember would I tell you last said that slot down to India. And do you hold by March, we were all looking at a sundown. -- it disappointing because all the enablers that we started putting in place started creating a coffee book all went out sales -- so it's close staff don't be engineering that what we do in the first year in contention the same. So for me, I think we are able to handle a very complex environment.
We up your strategy allowing the larger team to know that there is a bit of disappointment in the way things are in the performance that we sort of had in that couple of quarters during November, we were by far the #4, right? -- was really the -- and the strongest positive surprise maybe bounce back. I think the postal I expect it for poles I expect to be at like this I think that's been a positive. So really, that is something. I keep telling people that work on the processes.
We are now moving to decide. We are bringing some of the best things like advanced planning tools, all automated systems or machine factory et cetera, over the next couple of years, as we digitize the journey, how do you really unlock the productivity fold into harnessing growth and sustainable yes. Again, as I keep saying, you will always -- one thing business you realize you will trade pumps at the end of the, yes. So during foramen global coverage, make sure that we are now yet reflected by and continue to work on that generally, I think, is something that we are building for -- yes the mean otherwise there is there was one starts I don't -- we're a pay…
Yes. Sir, we have last one hand from Mr. [ Yu Panda ]. It's a follow-up question from him.
Sir, just one question. I mean a lot is talked about decide just want to understand in the context of a lot of buzz around CapEx cycle revival and a lot of infant real estate demand. Are we -- so how being the industrial segment doing? If you can throw some light on 6 sub segments and the outlook the industrial sent.
I said this, I think, in the beginning of the call, I think you've seen showroom. 25%, 1% one way we 2012 -- it's not really material. All the 4 system plans, automotive, marine and protector, industrial coatings and done remarkably well. So to me, I don't see the industrial segment continuing to grow. I think going forward, I see that we started putting a template where we give that to win in terms of some products. We are building ourselves to all the ships, readerships that are happening in the market, electric vehicles being in terms of interest. But because certainly because of the quality of our products that we sell, right? -- you may or may not know that we also have just quoted dialysate. So it gives you an idea of only moderate Express always quoted with us. I think we're on pace to code, which we are very -- we are a leader by far in the worth winnows order is rose place an idea, but we got borings, right? So broadly, this is from my end. Yes. So we don't see strong growth coming in this.
So is there any other questions? Can we close.
Yes, sir, that was the last question. From ICICI Securities, we thank the entire management team as well as all the investors for participating in the call and I hand over the call to Rajiv sir for his closing comments.
Thanks, and over to you, sir. So thank you very much. I want to thank all of you, Pedro Luca, and please convey my -- so thank you all for helping to say See, look, we've been with you, whether it's a good quarter or back quarter I think we have now good orders don't beat enough to call ourselves to the highest of corporate ones come in to explain how perform. We realize that we've got lots to. So really for us, the focus is on the road ahead. We are mindful that they will be on in the road, there will be sort of banks that we have to, but really it's about navigating those that we are working as a team.
We continue to drive our investees brand distribution, really penetrate and Suina or customer enticement infinity towards a customer of proving. What really harness means the fact that today, if you look at the last few quarters, while we mentioned that is not reaching in the top of South Asia, South Asia is only largely India 75% of South Asia, India, in fact, a little more now, right? So I think suffice to say that India is started putting in Am I happy? Look, I'm a person who's never happy. I always believe that there is more to do. But that's why I have to also extend that this is something that we have covered to and we really want to build in big by rank as we move forward. So thank you so much. Thank you so much. And if there are any other questions, please don't feel free to reach up to Asha. I harshly discover at antelope.com. We'll continue to see operated. I hope to be able to see all of you soon. Thank you.