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[Audio Gap]
very, very strong way. So if you look at it from the point of view of overall volume growth, that is the blue bar which you see is about at an 18% growth over the previous comparable quarter. And if you look at value growth, it is at about 27%. What we've also highlighted is the fact that the CAGR, I think it is very important because what we've seen is that the last 2 years have been a little bit abnormal in various parts of the year to that extent. And therefore, we have looked at the CAGR over 2 years and 3 years, which you can both see that both on the volume front as well as on the value front, it is very, very strong and healthy, which is just indicating that the trajectory in which the business has been taking over the last 2 to 3 years has been very, very strong. And this is despite the fact that we have seen that the environment has been a little bit of uncertain because of the COVID which has been prevailing over the last 2 years. We see the 9 monthly kind of numbers. I think the numbers are even far more healthier because you've seen a very strong Q1 and Q2 with respect to the top line as well. And we see very clearly that from an overall volume point of view, we are at about a 40% kind of a growth on a 9-month level, and a value of about 43% as compared to Q3 of last year to that extent. And therefore, I think these numbers are pretty strong by itself in terms of what has been indicated. Overall, as I said, CAGRs, if you compare both the quarter 2 and quarter 3 -- sorry, the 2-year and the 3-year CAGR numbers are looking very strong in terms of the double digit at 20.2% and 18.8% in terms of the 2-year and the 3-year for volume. And for value as well, if you see the 3-year CAGR is at about 15%. So overall, the numbers seem to be very, very good from the point of view of top line. And I must indicate that this is something which has been the focus of the organization, and we are committed to the fact that we would like to kind of really be aggressive in terms of top line growth as we kind of really look at going and that also looking at profitable growth. Coming on to just to kind of show you the trajectory. As I said that the trajectory has been very, very strong over the last 5 quarters and also if you look at it. Overall, if you see the numbers within the blue bars, which is at very strong numbers, 32%, 47%, 105%, 34% and 18%, you can see the trajectory which is there over the previous quarters. But more importantly, if you see the 3-year CAGR, I think that is something also which is just kind of revalidating the whole scenario of the fact that we have looked at consistently going at very, very strong, double-digit growth, which are there. And we can say that these growths are definitely much higher than the market in terms of what we have been able to see over the previous years and over the previous quarters to that extent. So I think that really tells the story about the overall top line in terms of the it has been kind of growing. The updates from the point of the business, we feel that when we look at the numbers which have come in for quarter 2, we have gained a clear 2.7% market share gain, which is there to that extent amongst from the organized players to that extent. And we feel that if you look at the volume market share gain, it would be even higher than 2.7% in terms of what we see. We've also possibly gained some share from the unorganized sector over this -- in the quarter 2 when we see it overall. So I think very strong share gains, if you look at the first half of the year, where the numbers are available in terms of the published numbers. Secondly, if I look at, in terms of what's really happening across various geographies, we have seen that quarter 3, especially if you take the metro T1 and T2 centers. They have been kind of growing at a much higher rate as compared to the T3, T4 cities. It is indicative of the fact that when we didn't have a COVID kind of a scenario in the markets, we are relatively open we've seen higher growth coming from these centers in a very strong way. But I must say that even T3, T4 markets have grown at a good growth rate to that extent, not lower possibly than T1, T2, but they still have gone at a very healthy growth rates. Our overall focus has been in terms of the premium in the luxury space and in which we have grown in a very, very strong manner in quarter 3. It is also coming from the fact that the metro T1, T2 centers have grown much better and therefore, the premium in the luxury space has really gone in a very, very big way to that extent. We've also had a good launch of some of our newer products coming in this space, both at a premium and a luxury, and they seem to be doing extremely well in terms of how we [indiscernible] products going in. Projects was another very, very strong highlight. It really grew in a manner which is quite strong, and we looked at that -- it kind of really indicated the fact that the real estate, the infra market was doing extremely well. We have grown across segments of builders, government, housing societies and so on and so forth. And a lot of good traction because of the Waterproofing and the other admixtures and other products which we have at the construction stage, which is going on, which is giving a very, very big traction to our overall growth . I would even say that the Projects business has outgrown the Retail business in terms of the focus we've got in quarter 3. Overall, waterproofing is one story, which has continued for the last 7 years in a very strong manner. We have been consistent in terms of registering growth even quarter 3 was very, very strong. More than 50% growth coming in strongly here. And this has been the feature both at Retail and Projects, when we look at the overall business in India, and this is something which is really propelling the growth in a very strong way. The other category, which is a strong category for us and largely in the premium and the luxury spaces of wood finishes. Again, there is a market which is dominated by specialized products and technology-led products to that extent, and that is something which we have been driving very strongly. And we can say that amongst the entire organized sector, we are way ahead in terms of looking of a wood finishes to that extent, and that is something which has been a very strong focus in terms of driving it to the premium and then also looking at some of the urban markets in a very strong way. So that's the story in terms of some of the key highlights which happened to Retail. We have done very strong work with respect to wallpaper, and there's a launch which we have done this year was this. Actually, I wanted to just say that this has done extremely well. and it is doing quite good at the metro T1, T2 cities level in terms of how we see. We've also done an alliance with GM Syntex, which has a brand called Pure. And in this, we have been able to sell as part of our decor story, a very, very strong range of fabric and furnishings across the country. We have now more than retailers who are selling this entire fabric range. And as part of our Decor initiative, we have been able to sell this in a very strong manner. And this is also forming a part of our high and [indiscernible] stores. which are there. So this is an imperative, which is gaining now very, very strong momentum in terms of going forward. Some of the new products which have kind of come in where we have seen a very, very strong impetus is the Royal Glitz, which has focused in the luxury space, which has come in, in terms of, if I look at from the point of view of SmartCare and flooring zones, we have epoxy [indiscernible], which we have launched in wood, we have the [indiscernible] and the Ecuador which has come in to that extent. In the premium space, we have the all product fire-retardant paint, which we have got a patent court. And in the [indiscernible], we've launched [indiscernible]. But one of the great products which we have launched now is, which is gaining very good momentum is the Apex Ultima, [indiscernible], which has basically exceeded [Audio Gap] And some really kind of memorizing kind of finishes in terms of what we have launched goes both for interior and exterior to that extent. And we think this is a winner of a thing which is kind of getting a very strong response from the market in a big way. Other things in terms of the update, we have been really focusing in a very strong manner at the network expansion. And this is something which has been going in a big way over several years now, but I think we have very -- made a very strong progress in the last quarter. And the overall year to that extent, we have added 45,000 new retail points almost over the last 7 quarters to that extent. Our entire Colour Worlds expansion into newer towns, suburbs, smart cities have been very, very strong. We have retailing set up all the other ideas where we make the customer experience decor and look at in terms of a guided journey into surface the core. And therefore, we have about 28 new color ideas which we have opened. And the total numbers have really gone above 450 shops across the country. We have now about 29 beautiful home stores, which are functional. We have spoken about this case earlier and given you a glimpse in terms of this is a store which has got Decor under one roof. So this is all part of our whole home decor strategy which you see. So as we have said earlier, a very, very big focus, which we have maintained our transition from a share of surface within a home to a share of space. So we are not only about the 4 walls, we are now between the 4 walls also in the Home. And we think it is a very, very strong strategy, which basically is also giving us a leverage on the core coating space in a very big way. How we see this is that because it is the same customer. So in the customer life cycle, today, we are looking at the coatings customer going through a decor space and a decor customer coming to a coating space and therefore, the interplay doing these 2 strategies is very, very strong. And therefore, we think it is a very strong strategy in terms of getting into the whole business of home decor in a very big way because it is complementing our existing business going forward in a very big way. As part of this, as you see, we have got these beautiful home stores, which we call as the one-stop decor shop in which we are looking at everything which goes into the Home, right, from kitchen, bath, furnishing, lighting, furniture, fabrics and everything. As I said that what I showed you, the entire Fabric and Furnishing business is something which is doing very well as part of the decor. And we have also looked at the whole range of Nilaya and Royale play in terms of going forward. So I think this is something which has done extremely well for us. And the whole deal that is something which is strong.As we see in future, this home decor strategy overall should be kind of looking at contributing to 8% to 10% of the overall business. So we are very serious about this business going forward. And you will see a lot of action happening in the home decor space as we look at our future going ahead. Coming on to the other big differentiator which we have today. We have today a very strong services kind of a setup, which is there. I would kind of say that globally, in the industry, which is of the coatings industry, there is no other company who has such a big service footprint as we have today, what we have created. We have the service, which is what we call the safe painting service, which is now spread across huge number of towns in India and it is a significant part of our entire strategy in terms of how we look at. We also have basically beautiful home service, which is there, which is about the home decor. So I think -- and in addition, we also have a service called the San Assure, which is about health and hygiene in terms of homes. So if you look at the entire services framework, as we kind of go from a point of view of GMV, we can say that as we kind of keep on going, this will start contributing to almost about 7% to 8% of all our turnover. So this is a very big one. And we think that today, there is no other one in the industry who can really compete with us with respect to looking at giving this kind of a service, this kind of an experience and this kind of a differential in terms of the overall business going forward. And if you look at the whole area, the inflationary trend has really impacted, if you think you -- when you saw Q2, I think we saw a big impact in terms of what it has done. And obviously, this took a lot of price increase corrections, which were done in the month of November and December where we took almost something like a 15% kind of a price increase, which was phenomenal to that extent. But at the same time, even this price increase happening, we've been maintaining a very strong volume growth and a value growth which has happened. Still, if you look at it in quarter 3, while the overall margins, the gross margins have improved sequentially from quarter 2 from 35.7% to 37.5% . I think the true potential in terms of this price increases, what we have taken at come in Q4. And for Q4, obviously, the margins will become very, very healthy. I would only like to point out that some of the gross margins, which we have seen in the early quarter 1 and so on and so forth are something which were on the basis in terms of what we saw the year in terms of where the price -- where the inflationary trend was not there, and therefore, the gross margins were very, very high at that point of time. The inflation has overall gradually taken short in terms of this margins coming down, but we are hopeful now that Q4, we should see even a healthier kind of overall gross margin even over Q3 as we kind of go forward. I think one of the big things in terms of where there was a lot of queries in terms of saying that are we really pursuing profitable growth in a very strong manner? I think the price increases which have been taken have been able to mitigate the effect of the inflation in a very strong manner. And we see very clearly that sequentially, if you see, we have been able to move from a 14.2% PBDIT margin to about 19.6%, which is, I think, a very, very strong jump which is there to that extent. And I think this is something which is clearly reflective of our overall intention and promising that we are looking at a certain band of PBDIT in terms of going forward, and we will continue to kind of pursue profitable growth in terms of going at the same time, we will be aggressive in terms of our top line strategy going forward to that extent. Coming to key business updates. First of all, global, the International business has been affected a lot in quarter 3 as well. We have seen a lot of disruptions, one earlier because of COVID happening all across to that extent. But I think what we've seen is that some of the markets like Africa has been affected very well, both Egypt and Ethiopia, there's a strike, which is going on and Egypt was also hurt in a very strong manner. In addition, we had ForEx problems happening in [ Lanka ] and so on and so forth. So I think it was quite a mixed bag in terms of what we see. Still, what we see is that we have been kind of able to kind of grow the overall revenue, which is there. However, I think Africa was something which was definitely down in terms of what you can see right on the screen. However, I think the larger impact came with respect to the overall inflation really kind of telling on the profits. And we have taken certain price increases across various regions. But obviously, they were not very -- the inflation numbers were far higher, and we try to maximize it so that we are not able -- affecting the consumer in a very, very strong way. So overall, the margins if you see the profitability has been affected in largely all the regions, apart from South Pacific, but the larger impact, obviously, has been in terms of -- if you see Africa, Middle East and Asia as well to that extent. So I think what we are confident is that overall, the overall revenue has been something which is very strong. And if you see on a 9 monthly level, we are still growing at about overall percentage of good growth across regions to that extent apart from Africa. So overall, we think that top line, we will be able to grow. And I think as we go forward, having taken the price increases, I think the situation going forward will be much better as far as profits is concerned. We look at the Industrial business, the 2 joint ventures we have, the PPG-AP. Now here, again, there were obviously challenges, especially in the automotive sector where we all know that there was a negative build, which was happening. The chip shortage, which was there and the entire automotive industry has been affected. But overall, when we see in terms of revenues, we have still kind of done fairly well in terms of -- if you look at quarter 3, which we have grown by about 38%. Obviously, there was a bit of a depressed base last year in terms of what we looked at here. And in the other business, if you look at the PPG business, which is the general Industrial business, it has been very, very strong. The growth has been to the tune of about almost 64%, what you can see on a 9-month level and on a Q3 level about 33%. So overall, if you see that the general industrial business has done much better. The automotive business, which is coming under [indiscernible] the in Q3 grew at only about 5% compared to the 9-month number, which you can see there. Again, like other businesses, I think inflation impacted the profitability here. If you see both on quarters, both the businesses were down with respect to the profits in terms of what we see, although at a 9-month level, we still see that PPG AP is at about 1% and the other general industrial business is at a good growth of about 14%. So that's the net upshot with respect to the industrial business as we go. Coming next to our entire business, which is about home decor, which is what we call the Kitchen and the Bath business. Both businesses have done exceedingly well. And today, both businesses have been able to cross the INR 100 crores mark in a quarter to that extent. And Kitchen crossed it last quarter as well in this quarter as well in Bath process for the first time in this quarter. So I think overall, the top line has been very, very strong. As you can see, Kitchen grew in Q3 at about 37% and Bath grew by about 42%. The 9-month growth has been also very strong from the point of view of top line in 67% and [ 63% ] The heartening part here is that we've got now, I think the business is sticking well from the point of view of achieving not only breakeven but starting to deliver some profits as well. So Kitchen was at breakeven in terms of the overall [ PBDIT ] at the Q3 level. And when we look at Q3 in Bath business, we have actually got the profit there in terms of which we have delivered, which is very strong. So I think that is a very good indication that both the businesses now are on a good fitting, growing the top line and even now the bottom line is something which has started to do well. In summary, when we look at the entire stand-alone financials to that extent, the story is very clear that there is a clear double-digit revenue growth, which is happening, which is 28% by value in terms of coming, we spoke about 18% by volume, to that extent. Overall, if you look at the contributions have improved to that extent. However, at a Q3 level, if we see the PBDIT is about down by 11% and PAT is down by about 14% to that extent. On a 9 monthly kind of a scenario, we see that the revenue growth is very, very healthy at about a 43% growth. Gross contribution is also -- has also grown. The PBDIT figure is about 1% negative. And PAT is just about at about 0.1% profits to that extent. So overall, what we see is that the impact of the inflation has taken care of by the price in quarter 3-- And obviously, the full impact will come in quarter 4. But I think the story has been very clear that given the fact that we've improved the PBDIT as well, we have been still very, very strong with respect to growing the top line numbers in a strong manner in quarter 3 as far as the annual results are concerned. If you look at the consolidated numbers, again, the revenue here overall, is at 26% in quarter 3. The gross contribution is just about -- up by about 2% overall to that extent. The PBDIT is about [Audio Gap] of the other businesses like global and all selling in terms of putting the profits a little bit down as compared to the stand-alone business in terms of what we see. At the 9-month level, again, the revenues top line, very strong at 41% to that extent. Overall margins are still low. PBDIT is about 5% and PAT is another 5% down to that extent. So overall, that's the story in terms of what we see. Obviously, I think the stand-alone business has done much better as compared to some -- the global business to that extent, and that is something which is a story the consolidated numbers are saying. But overall, on a 9-month level also, the top line numbers are very, very strong, and we are hopeful that as we kind of go forward, the profitability numbers will also improve. Finally, I think this is a question which all of you have in mind in terms of what are we looking forward to. Obviously, I think with the third day coming very strongly and the Omicron being there and so on and so forth, there are all kind of consumer sentiment, which have got dented to that extent. There are also state-level restrictions, which are kind of coming, which has kind of clearly had an impact in terms of some of the demand conditions definitely there. What we obviously see is that the current situation might continue for some time, but I think overall, what we have seen in the past also that it is only that we see a deferment of the demand which kind of takes place. The demand doesn't go up to that extent. And therefore, what we see is that possibly as we kind of enter [indiscernible] the month of March, I think those are going to be very, very strong because there will be a pent-up demand to kind of support. And also what we see is that, as I said, the real estate and the income market is up to that extent. So even Projects is something which is supposed to kind of do well as we kind of enter these kind of months and quarter 4 as we go forward. Overall, from a point of view of raw materials, we believe that the inflationary trend will continue further, although the kind of rate of increase, which is there would be moderate in Q4 to that extent. But we've just seen that the prices have gone up and so on and so forth. So I think the inflationary trend will continue to be there for some time, and we will look at in terms of how do we really tackle it in terms of going forward, whether there is an increase more pricing is needed or what we need to kind of do we will basically evaluate as we kind of go forward in the quarter 4. Overall, in the international portfolio, as I said, we are looking at really seeing that we can take some more increases, which are there looking at -- saying that how some of these markets really have kind of evolved because the external market has been disturbed. And we are expecting that some of these things will ease out. The ForEx conditions will improve to that extent in certain markets like Egypt and [ Lanka ]. So overall, I think our estimate is that Q4 should be definitely better than Q3 in terms of going forward. So that's the overall outlook in terms of looking at it. Thank you so much for listening. Thank you.
[Operator Instructions] Now we have the first question from the telecom platform and that is Mr. Abneesh Roy. Sir, please state the name and company name and ask your questions.
This is Abneesh Roy from Edelweiss. Congrats on extremely strong volume growth and good margin recovery. My first question is on volume growth. So consumer behavior post Diwali, did you see a preponement of demand because your price hikes, which are coming, say, in December and maybe even in November because it happens in a bit gradually. So that was quite well known in the media. The consumer also would have picked up dealers and painters definitely would have picked up. So did you get some benefit of that? And second is, when you see [indiscernible], they are paying rural slowdown very prominently. We have seen very high inflation in diesel prices, fertilizer prices, pesticides. Plus, we have seen a very sharp COVID wave 2 smaller town. So could there be some lag effect on paint? Currently, headline numbers are not suggesting that. But in paint, do you see the rural growth at some stage getting at a lower level?
Okay. Overall, see, what we feel is that the festive season this time was very, very strong and we felt that the consumer demand, which came in was very positive at that point of time. So overall, when we look at October in the entire quarter was at the maximum volume growth to that extent. And therefore, October was a very healthy month and so was November to that extent. In fact, we feel that the overall volume growth would have been higher if in the second fortnight, we would not have been hit by the third wave of COVID kind of starting to that extent. What we feel is that largely to some extent, since we have seen that it was an early Diwali to that extent. And that is why also we saw that a larger demand came in October in a very, very strong way, which basically kind of helped us in terms of achieving the overall volume growth, which we are speaking of to that extent. The second thing, which is there is that we are seeing that the effect of COVID very, very strongly in quarter 2. What we had seen was that it was the T3, T4 cities which were performing extremely well, and they had given a very high growth number overall to that extent because there was still a little bit of an impact in terms of what was happening of the COVID in terms of T1, T2 and the Metro in the larger cities to that extent. In quarter 3, we saw the reverse since the environment was much more open to that extent, the spending in the metro T1, T2 has really exceeded the kind of demand which was coming from the T3, T4 cities to that extent. We feel that, one, we did not see that the for cities were way off the demand to that extent. So the demand was still pretty healthy but not lower than T1, T2 to that extent. And we still feel that the story, as the other companies and industries are feeling for us. I think the T3, T4 has been very, very strong, and we have looked at a large part of network opening, looking at getting into upgradation products and a lot of work which we have done to kind of scoop up the demand in terms of the T3, T4 cities to that extent. So overall, what we see is that the story of T3, T4 cities should be quite relevant. The overall rainfall has been pretty okay to that extent. And I think there is still a strong story, which is there as far as the T3, T4 cities are concerned.
Sure. [ That's sense ].One small follow-up here. In the international markets, your price hike in pain would have been how much? And will the 18% price hike, what you have taken in India, will that be the highest with any paint business has seen in any other part of the world? [indiscernible] other place.
So I can't give the second part of your question.
So 18% price hike, this is the highest in the world. So India will be the higher price...
Yes. In the international markets, see the inflation has been upwards of about close to about 28%, 29% kind of a percentage. What we have been able to take overall increases is in the zone of about 15% to 18% in various markets to that extent. And we have not been taken increases as we have done in the Indian market, which has grown to almost something like about 22% to 23% in terms of the overall increase, which is there. I would say that, yes, this kind of price inflation, which we have taken, I think it is for the first time in the history of Asia Paints would have taken this kind of increases to that extent. And it would be definitely something which has been one of the stronger price increases we have taken in the past.
My second and last question is on waterproofing. What kind of price hikes have you taken there when you compare -- which has had a huge head start because there was there in that business will be for book. How do you compare yourself versus Pidilite currently? And longer term, would we look to dominate here at #1, the way you dominate paint?
So actually, what we see is that overall, waterproofing, I think the pricing has been comparable to what we have taken the increases across all other products. There is nothing it is special about 1 or 2 things to that extent in the same league as what we have taken for emulsions and other products to that extent. Going forward, see, waterproofing is an integral part of our strategy, and we feel that it comes as a natural thing from a consumer's point of view because the consumer earlier used to really blame the top coat because of the fact that he sees any problem there. And therefore, we saw that waterproofing was a very big potential in terms of putting in place. Overall, as we see we have been growing, as I said, at a very, very strong rate over the last 7 years. And we see that the overall potential in terms of the overall waterproofing market is extremely high. And therefore, we really do not compare in terms of how are we doing with respect to some of the other players in the market. But what we know very clearly is that with the kind of range which we have, the kind of products which we have and the kind of resources which we have put behind, I think we are growing much faster than the market than any other player, Indian or multinational.
[Operator Instructions] Our next question is from Mr. Avi Mehta, who has joined us in the room. So please mute yourself, state your name and company and ask your questions.
This is Avi here from Macquarie. I just had 2 questions. Barring the short-term impact of this we would it be fair to expect that the sharp price increases taken would result in volume declining because 3Q possibly didn't see the full impact of that 15% price.
I don't think so that would happen because we've seen an early -- almost about a 10% increase, which we did it in November and still we saw very healthy growth, which we were able to achieve in November. And if I look at the second price increase, which we implemented even the first fortnight of December was very, very good from the point of view of overall demand to that extent. It is only that in the second fortnight, we got hit with the third wave coming in. As I see it, the elasticity of paint from the point of pricing is pretty good. The only to some extent where it kind of starts making an impact is at the economy and to that extent where it can start hurting you a little to that extent going forward. However, we must remember that when you look at, there is a cost of painting, 60% to 70% cost is of labor. And the material cost is only about 30% to 40% to that extent. And therefore, even if there is a larger increase, if that gets nullified from the point of view of an overall increase, which you see in terms of prices to that extent when it translates into a [indiscernible] on a certain surface. So what we see going forward that largely, I don't think so that we could kind of get impacted, especially the luxury premium space would be very strong to kind of happen. There could be a little bit of an impact at the economy and by and large, I think the volume growth should be healthy.
Now I just wanted to kind of check on the pricing please. What kind of [indiscernible] price inflation is built into the price hikes [indiscernible]. Would it be fair to say price till INR 80, INR 85 because that's what the level was have already passed on, but further inflation would necessitate more price hikes?
So see, it is not directly correlated with just the crude prices because a lot of products, which the raw material is going to paint our derivatives, which are there. So it's not a direct correlation that if the crude price goes up by $2 and there will be a correlation in terms of the price hike, we need to kind of take overall. So I think overall, we had taken a median in terms of about [ INR 80 to INR 82 ] kind of a range in terms of the crude prices going forward. And we think that it would really depend on certain group derivatives in terms of how the price would translate in some of those zones. As we see right now, the inflationary percentages might not be very, very high as we kind of look at the quarter 4 to that extent. But we'll have to kind of wait and watch in case, obviously, I think the inflation goes very, very high. We will have to take a call in terms of what to kind of do, but there is no direct correlation, which you can put to crude prices in terms of there and what increases we need to kind of take.
Thank you, sir. Our next question is from Mr. Manoj Menon, who has joined the first [indiscernible]. [Operator Instructions]
[indiscernible] The first thing, I just wanted to understand if it is possible for it to help us, is that the -- in the overall volume revenue growth in application pain disclosed every quarter. Would you be able to help us understand what is actually paying and what is the, let's say, the non-paint contribution list over the net now last 3, 5 years, et cetera. So let's say, for [indiscernible]. The reason I'm asking because when I compare and as an analyst station performance with the other paint companies, it does appear that nation has done a far, far better execution for the strategy execution when it comes to [indiscernible]. So it will be very helpful if you could quantify, let's say, what is the non-paint contribution to your overall portfolio.
So overall, if you look at from a point of view of non-paint kind of a sale. Today, we account for everything which is happening in terms of whether it is waterproofing, or whatever, that's part of the paint sales as well to that extent. It's only the area which is the Kitchen, the Bath business and the other areas of home decor, which we see are basically part of the non-paint which kind of really qualify under that category to that extent. And that part is not a very, very big part of the overall business. You've just seen that I spoke of Kitchen and Bath business crossing about INR 100 crores in each of the quarters to that extent which is there. Plus, the fact that today, there are other home decor areas like furniture, furnishing fabrics in terms of what we deal with. So if you look at from a point of view of an overall percentage to the overall coatings business, the non-paint would not form a very major part of it. So the larger performance, you can take it is largely on the paint performance obviously.
I fully appreciate that comment, but maybe I'm happy to kind of connect one-on-one on this, but is it even actually fair to call waterproofing as part of paint actually? Because [indiscernible] supposed to be delivering a different functionality. Let's say, versus the waterproofing where the consumer understanding is meant for the route, but whereas. Let's say, waterproofing, which is meant for the wall, it's like obviously should classify a different classification. So I'm trying to understand you in, I think you have done a very good job in terms of [indiscernible] that are very reluctant to acknowledge the good work which you have an [indiscernible] in terms of the non-paint diversification.
No, no. We will take the credit of doing good work all across and not look at only one category in terms of doing good work there. But principally, I disagree with you because, see, if you look at -- and that's what I emphasized the point that waterproofing is an internal part of painting. Just like you put a primer and a today, waterproofing is put to kind of take care of any seepage which happens on the wall or any dams, which are there to that extent. So I think the way we are pitching to all the -- our retailers to painters to contractors is the fact that today, you can't see what are 2 things separate to paint in to that extent. And that, I think, has been the largest story, which we have been taking. Unless sure, waterproofing is going on a very, very specific specialized purpose of saying we're looking at a [indiscernible] pool where you are looking at applying waterproofing there to that extent for a special delivery to that extent. But in our business, the larger goal which we are looking at is that how it is integrated with paint going forward. And as I said, that is why we don't want to really compare with any other company in terms of what is there because they might be talking of waterproofing as a totally separate business in terms of how they see it. In our business, it is very well integrated into the main streamline.
Understood. That I think probably the achievement of which paying companies like you and some of your peers products unaged in the last 2, 3 years. I get that. Sir, the second question is an status demand think about the assumption 15 to 18 months back versus, let's say, what basically transfered and actually happened in the market. That when I go back to April, May, June of 2020, the assumption or the expectation was that -- I mean consumers are very worried and kind of [indiscernible] First, we [indiscernible] one of those industries where we've actually not benefited from, let's say, whether it be consumer are spending more time at home. It kind of completely turn on its side from versus expected. Second aspect is also that possibly rental or people go to villages and kind of let me have more rental apartments [indiscernible]. Just trying to understand that in your opinion, just for a minute, you leave the half of the CEO and the sector the head of a marketing manager. In your scientific observation that you've seen in the last 18 months, is there any significant noise in the last 18 months of performance at an industry level, including you as the market leader?
No. As I see it, overall, as I said earlier, that there are 2 larger components of painting. One is the repainting segment, which is there. The other is the new construction segment, which is there to that extent. What we saw very clearly in the year 1 was that the repainting, which is there only got deferred when there was COVID to that extent. And therefore, we always kept on referring to a pent-up demand which kept on happening whenever the market really opened for us to that extent. So the repainting market in nutshell never got affected to that extent. It only got deferred to another quarter or 2 another 2 quarters to that extent in terms of what is there. The fresh construction is where it got impacted far more strongly for the industry as a whole. Because it has not been easy that if you have started the construction of a building that you can stop and kind of start it very easily because there is labor, there is other infrastructure, which kind of comes into place to that extent. So what I've seen year 1, which is the last year, the construction business got affected in a very big way, and that is why some of the projects areas got defected in a very, very strong manner to that extent which is there. But coming into this year, we have seen impacts in terms of both the businesses. Apart from the month of May, which kind of created that COVID crisis, which was there, we saw definitely the pent-up demand happening in June, July and August to that extent, which is there. And also, we have seen a very strong demand coming from the real estate construction infra business this year, which has basically accelerated the projects in the institutional business.
I'm sorry, sir, just to push the envelope on this [indiscernible]. Basically, what I'm trying to understand is in the last 18 months, let's say, since March 2020 or rather 2020, 21 months since March 2020, did the industry benefit from any one-off noise about, let's say, people in urban moving to rural which means you have more, let's say, apartments available in urban for rental or let's say, if I [indiscernible] from urban to rural, you said, okay, let me paint my rural home as well. So one thing to understand is that are there any, in your opinion, as a CEO marketing manager that look, are there any noise one-off in the last 18 months of demand trends, which you have seen?
Okay. Quickly, just to tell you that, see, I don't think so that has got really too much impact overall because, in fact, with a lot of metro homes going down, the rental homes basically, repainting came down to some extent. On the other side, the second homes market kind of increased because a lot of people were purchasing second homes and so on and so forth to that extent. At the same time, a lot of people started focusing on their homes, which they were staying in to that extent because the stayed in the home for a very long time. They started basically painting more in the home and the frequency of possibly the painting cycle increased to that extent. So I would say it was overall, just a shift of the demand to that extent, I don't see that anything which has really contributed in terms of the industry increasing a lot just because of any of these demographic changes taking place.
Understood, sir. So just to clarify...
I'm really sorry to interrupt you. We have many questions in queue. So we'll have to move on to the next one, really sorry for that. The next question is from Mr. Tejash Shah. He's joined us on a Zoom platform. Sir please state your name and company name and ask your question.
This is Tejash Shah from Spark Capital. So thanks for the very detailed presentation. So I'm not left with much questions on the [indiscernible] part of the core business, but except one that you spoke about Project business today and now Project business is coming out of slumber after a long. And we did well in the quarter materially just the other part of the business you called out in the opening remarks also. So I just wanted to understand that how is the growth runway looking here because it is after almost 7, 8 years, we are seeing the cycle reviving [indiscernible]. And 6, 7 years back, we vaguely used to say that the mix of fresh painting versus repainting remaining a 75-25. And I believe in the last few years, that number would have moved in favor of repainting materially. So where it stands today? And how do you see it panning out in this cycle, let's say, next 2, 3 years?
So I would say that structurally, we still kind of talk of the new construction to be still around about 30% and today, the repainting to be about 70% kind of a zone because what we've also seen is that in the -- while there is a pickup, which is there, both from the point of view of builders coming into this space, we also see a lot of action happening at the factories, the institutions and so on and so forth. But more importantly, I think government spending has really gone up in the last 2 years to that extent. So government is a very strong space in terms of where we have seen a lot of kind of spending which is happening from a project institutional space. For us, that segment has also gone up because of the waterproofing coming in to that extent because Waterproofing becomes an integral part to start the foundation in terms of what is there and then basically gets into the whole painting cycle after that to that extent. So overall, I would say that the percentages would be like 70-30. And my take is that going forward, I think we will see a lot of CapEx, which would happen from a point of view of the budget, which is coming on infrastructure going forward to that extent. And therefore, I would say that the fresh construction, I think, as an activity would continue in the coming 2 years very, very strongly in terms of both government spending. And as well as the private probes coming in terms of spending on the housing segment.
Just 1 clarification on that. So waterproofing in construction project or government projects will be part of Asian PPG or it will be part of Asian decorator?
No, the entire project business also is part of the Asian Paints only to that extent where Asian PPG comes in, that they look at applying to OE businesses like the auto and so on and so forth. And the general industrial business basically would -- basically give larger things to acres for tinned for maintenance and so on and so forth to that extent, which are all basically as we call as the protective coatings and the powder coatings to that extent. The Projects business, which I just spoke of, which is the builders and which is the cooperative housing societies and some of the government projects which are coming up or the portals or the institutions all will come under the Asian Paints business.
Sure. That clarifies. And sir, second question is also the last few quarters, the most exciting part of your presentation has been the vision that you have shared on from share of voice to share of space. Now if you can share some operational insights on the Decor business, how does customer discover us? What's the material losing arrangement? And how the fulfillment happens on the toll line of business?
Okay. So there are 2, 3 things. One is, obviously, the physical brick and mortar model in terms of what we follow. So we have stand-alone Kitchen and Bath stores which are there across the country, which where we are able to kind of push the home decor items through those to that extent. We have started with this whole vision of something called the beautifulhomes.com which is a central engine where the customer comes in looking at inspirations of home decor and so on and so forth. We are able to kind of then generate a lot of digital leads, which kind of come in from there where people are seeking home decor in a very big way. And then we kind of direct them to 2 areas. One is we have got a beautiful home service which provides basically them a full experience sitting at home of redecorating their homes or renovating their home. In addition, we have now 29 Beautiful Home stores, which are there, which is decor under one roof. So we will guide a lot of those people who are coming on to our center engine in beautifulhomes.com in terms of going into those stores. and really kind of getting their home decor requirements from there. In addition, these stores will get basically walk-ins, which are happening because they are related they are in a high retail street market to that extent, so on and so forth. So I think the whole model, which works in is from the point of view is that there is a digital engine, which is energizing the people on aspiration and business. And then there is a brick-and-mortar model, which basically makes people experience things see the physicality of it, experience it, and then kind of take those things home.
Our next question is from Mr. Jay Doshi. Please join us on Zoom. Sir, please state your name and company name and ask your question.
This is Jay Doshi from Kotak Securities. I have a couple of questions. The first one, you indicated significant progress on network expansion older 45,000 outlets being added over the past 7 quarters. Can you provide some more insights in terms of quality of the retail outlets that you added? What is the tinting machine penetration in these outlets? Or over the last 7 quarters, how many tinting machines have you seeded? And what is your overall network down today in terms of decor?
So see, overall, if you look at -- when I -- when we speak of this 45,000 retail touch points, we think of the overall increase, which we are making with respect to one, putting our tinting machines there to that extent. We are also now working with respect to certain distributors in terms of reaching out to smaller players where we want to increase the reach in terms of smaller towns and so on and so forth, which is there as a model in terms of what we are taking to that extent. And therefore, it involves all kinds of retailers coming on to the picture, there could be retailers who are dealing in electricals, there could be retailers who are kind of dealing in cement and steel and so on and so forth. So it kind of includes the whole plethora of people who come on to the Board to that extent. In terms of overall tinting machines, I think the interest has been very, very strong in terms of what is there because literally, now it has become like a hygiene because where a retailer cannot operate without the tinting machine not being there with him to that extent. And therefore, what we see is that that's the overall zone, which we are looking where possibly we speak of today, retail touch points, which are almost about -- more than about 1.4 lakh overall to that extent. But not necessarily every one of these would be a direct retailer to that extent and not everyone would have a tinting machine in terms of which is there to that extent. But overall, that's the kind of touch points which we are talking in terms of going forward. And gradually, what we see is that as these retailers mature, they will eventually take a tinting machine and go forward to that extent. So that gives you an indication in terms of how the numbers kind of look for future.
But have you seen -- just a follow-up, have you seen -- have you increased your tinting machine penetration of seeding per year or per quarter significantly versus the previous run rate?
So we see that, that is the overall focus, which we have been maintaining for the last 4, 5 years. Yes, if you compare from what we have done possibly a decade back, the run rate would have kind of gone up to that extent. But that is, I think, a are part of our strategy that we kind of keep on looking at putting more and more machines, as I said, in newer towns, suburbs, newer cities and so on and so forth as we kind of go forward.
Sure. And the second quick question is you called out that you're targeting 7% to 8% revenues from services and 8% to 10% from home decor. So what is the time frame that you were referring to do? And in services revenue, typically for a paint project services is 2/3 of the sales. So what does this mean in terms of revenue accounting, does it mean that when you indicate 7% to 8% of your revenue could be service, has it been 3% or 4% of your projects or overall pain business will be through your services?
So what it is that, first of all, I think we are saying that by definitely in the 2 to 3 years, we will kind of get into this number percentage contributions in terms of what we are speaking of. So specifically, I think by March of 2025, we are definitely looking at this kind of contributions coming. In case of services, what happens we talk of the GMV, which is the gross merchandise value overall. So therefore, to that extent, it is a combination of the material plus labor in terms of what really kind of plays in. Whereas from the point of view of decor also, it kind of varies that in some cases, it would be only the material, which would be there. In some cases, it would be a question of labor plus material coming into the play to that extent. But what we are definitely saying is that, that is if we look at the overall GMV, they will start contributing to those kind of percentages in terms of the overall business.
Just so that I understood correctly, 17% to 18% of your revenues will come from home decor and services in the next -- by March 2025. And that number would be less than 3%, 4% today?
So today, you can't take it at 17% straight today because, as I said, there is a gross merchandise value which is there. So if you look at it from the point of view, you will have to break it up from the point of your material plus labor to that extent. So there will be percentage possibly lower than that in terms of what we are talking. That is 0.1% to that extent? And secondly, today, yes, today that number definitely is in the region of about 5% to 6%.
Moving on to the next question. We have Mr. Shirish Pardeshi who joined us on Zoom. So please state your name and company name and ask your question.
Good evening, Amit. Good evening, Mr. [indiscernible]. and team. Thanks for the opportunity. I really appreciate the comments what you have passed on before. I think the volume growth momentum is very, very strong. Just one quick question. I think not to say the rural, but the fantastic work that you have been harping on think that Tier 2, Tier 3 market, and now we are exploring the distributor-led module. What is it that the merit base can go up to? And this is a continuous journey, which I can understand. But obviously, there is some level in your understanding that you have been trying a new format. But what is the this kind of growth, how long it will continue? I mean, demand conditions are very good that the channels and formats which you are losing will have some limitations at some point of time.
I would not agree to that because I see that we are a consumption market in India. We are also a growing market to that extent. I think the GDP projections, which are there are not the projections that are coming down substantially as compared to what we look at the Western markets to that extent. I would say that if GDP is remaining in the healthy zone of anywhere between 6% to 8% kind of a zone for our country going forward, I don't see that growth would be a problem to kind of come in. What we also significantly see is that today, when you go into T3, T4 cities, I think the consumption is kind of going up the decor levels are going up to that extent. The purchasing capacity is going up to that extent. And therefore, what we see is that the potential which kind of some of the rural geographies kind of give you is very, very strong. And therefore, we think that the expansion process will continue. Today, as the town get populated more and more, you kind of look at 2 or 3 outlets coming in when it get populated more and they expand the outlets go to 10 or so to that extent in terms of that base. So what we see is that it's a continuous process, and I don't see that there is any stoppage to this, if I look at it from the point of view or even from the point of view of next 20 years or so.
My next and last question is on, obviously, the margin. You did mention that this kind of price increases has never happened in the history of paint industry or any of the industry. But this suspicion that if the way inflation is looking at, and you also said that the derivative -- 2 derivatives will have a lag. And if I assume that. Hypothetically, if the inflation is still hitting on. Would you have a confidence today saying that in the way you want to protect the margin further, you will still exercise or the management is of the view that we will still be able to pass on some more price increases to the trade or whatever has happened is the cap.
See, I think it is always a very, very dynamic situation in terms of what we pay out to. Now if you look at it in the last 6 months, we did not take such a heavy increase because we were trying to balance the whole area of consumer demand, the consumer sentiment because you are going through a far more stronger COVID period where anyway, the demand conditions are not looking very good to that extent. I think you would always kind of balance the fact that when we kind of go ahead and if there are inflation, what is the part which you can absorb, what is the part you can pass on. I think these are dynamic questions, we take a call as we kind of go ahead. We would like to respect the consumer sentiment and look at in terms of not offsetting that. At the same time, we would not like to kind of take and say that the profitable growth component kind of goes out of the story to that extent. So I would say that we would take a very, very balanced opinion in terms of going forward, in terms of balancing demand versus the price or pass on which we kind of do as we go ahead.
Just one quick follow-up.
We have a lot of question. Sir, the next question is from Percy. He's joined us on Zoom. So please state your name and company name and ask your question.
Yes. This is Percy Panthaki from IIFL Securities. Just wanted to check some information, which was discussed earlier, whether I got it right. So basically, you said that the repainting constitutes 30% of sales now which was a couple of years earlier, pre-pandemic.
No. Not the other way around it. Repainting is about 70% definitely.
Correct. So repainting is 70 and pre-pandemic, it was 75%. Is that okay?
Very difficult to really assess that it was exactly by that percentage because no one measures it that strongly to that extent. So you could take a band that it has remained in that band over a period of time.
Okay. What I'm trying to understand, Amit, is you mentioned that real estate revival is one of the things which is sort of benefiting the top line. So I just wanted to get a sense of how much that benefit would be. So let's say, if the real estate cycle has not revived and it has remained as sluggish as it was 2, 3 years ago, then the sales growth of 28% beyond on, that would have been how much lower is what I'm trying to understand.
I think if you get into that kind of a micro analysis, it is very difficult to kind of say whether it would have taken 2 percentage of the volume growth or it would have taken 3 percentage of the value growth to that extent. I don't think so it works like that to kind of micromanage it like this because as far as even the construction segment is concerned, the growth is kind of very -- it is never dead to that extent. So it might basically -- if it is growing at possibly 30% it might come down to 20% or 15% because some projects will keep on going, some government spending will keep on happening, some hotels will keep on coming in the environment and so on and so forth to that extent. So I think to that extent, depending on what is there, you could just say that maximum, it could be 2, 3, 4 points here and there, which you could kind of really see in terms of the market can behave to that extent. But I don't think so that it would kind of do a very big major intent in terms of bringing it down to 50% or so.
Understood. That helps. Secondly, I just wanted to understand, based on your input cost scenario. You mentioned that margins in Q4 should be better because part of the price increases will filter through in Q4 only. But wouldn't the same hold true for input cost inflation as well that Q4 versus Q3 on a sequential basis, don't you see input cost inflation still being positive?
No. See, if you look at the quantum of the price increases, which we have taken in November and December, they are pretty substantial and we would not have realized that over the full quarter period to that extent. So what I meant was that this whole price increase of close to about 15%, the full would kind of take shape in quarter 4. And whereas the inflation which we see over Q4 to Q3 would not be of that kind of dimension to that extent, and it would be possibly much milder as we kind of go and see. So therefore, I think a larger impact in terms of profitability will definitely come in Q4.
Understood. And my last question.
I'm sorry, we'll have to move to the last question anyway. We have one participant waiting. Last question in the interest of time is from Mr. Abhijeet Kundu. He's joined us on Zoom. So please state your name and company name and ask your question.
This is Abhijeet Kundu from Antique. So you said that in the last few years, you have added about 45,000 on touch points, which is oddly about 15,000 touch points. So when we compare it with your previous year, I mean the -- I mean, last 10, 15 years. Typically, it used to be in the range of 4,000, 5,000 per month. sorry, per year. So now does the addition has been quite substantial. So what you how much would be the -- I know you can move particular figure to that. But there would be a good amount of growth coming due to the -- I mean, outside addition side. one would be that and -- in terms of geography, which are geographies where because we have been very strong in south and west and followed by a -- I mean, there is a good amount of presence across geographies. The south and west have been very strong already. So all the incremental outlets that have we've added, which sort of geographies that have done well for you or I think in major additions in [indiscernible].
Okay. See, when I speak of the number of outlets, as I said, these are outlets which are direct and some indirect outlets which you are getting. And so there are outlets where you will open directly and there are outlets now, which we have started opening through distributors as well. So I think the combined impact of 45,000 that we spoke of is coming as a combination of both to that extent. And what are the things which you were kind of referring to earlier was more in terms of the direct outlets to that extent which were coming in. So that's clarification number one. Second, when we look at the overall, I think all geographies have done extremely well for us. And we are seeing that the kind of double-digit growth, which we are seeing today across the country for several quarters now. These are kind of spread across all the divisions to that extent. And we would say that I think the impetus that is coming from all the divisions across the country geographically very well. But I think if you were to kind of pick up, we have seen that the geographies which are there of North and Central and East have been possibly having far more outlets and far more listings, which are coming as compared to possibly relatively South and West.
And last one. In terms of your capacity, you still have fair capacity can be added in your last few years. So when do you plan to add capacity there? Because you had I think the line is built, but you have to add proper capacity there?
Yes. So I think it will happen definitely. I think we will look at in the next 2, 3 years to kind of look at in terms of adding that capacity going forward. And the rate at which we are growing definitely, we will need that capacity.
And what would be the utilization level is currently?
It is at about 70%, 75% level. .
Thank you, sir. That was our last question. May I now request Mr. Amit Syngle to give his closing remarks?
So thank you all. I'm sure that there would have been many more questions than we could have carried on for the next [indiscernible] as well. But I think it's been a pleasure interacting with all of you and it's great, I think, listening and answering to your queries. I look forward to meeting you and wish you a very, very safe next quarter. Thank you.