Indigo Paints Limited (INDIGOPNTS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Indigo Paints Limited Q4 and FY '25 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you, sir.

Yes. Thanks, Shruti. On behalf of ICICI Securities, we welcome you all to Q4 FY '25 Results Conference Call of Indigo Paints Limited. Now I hand over the call to Mr. Srihari Santhakumar, General Manager, Finance and Investor Relations, to introduce the management, then we will have initial comments from the management on quarterly and annual performance, and then we will open the floor for question-and-answer session. Thanks, and over to you, Srihari, sir.

Thanks, Aniruddha. Good morning, everyone, and thanks for joining our earnings conference call today. We have uploaded the investor presentation in the stock exchanges. Kindly refer to the disclaimer page for any forward-looking statement if any statement is being made. To discuss the performance of our company for the quarter ending and as well as the year ending March 2025, we have with us Mr. Hemant Jalan, Chairman and Managing Director of Indigo Paints; Mr. Suresh Babu, Chief Operating Officer; Mr. Chetan Humane, Chief Financial Officer; and myself Srihari, I handle Investor Relations here. As usual, we'll have a quick brief of the performance of the company by our Managing Director and followed by Q&A. Over to you, sir.

Thanks, Srihari. Thanks, Aniruddha. Good morning, everyone, and thank you for joining us to discuss Indigo Paints performance for the fourth quarter and for the full financial year ending 31st March 2025. As Srihari mentioned, our investor presentations have been uploaded on the stock exchange portals, and hopefully, you've had a chance to go through our financial results. Now we have all navigated a challenging market environment in FY '25, which saw sustained sluggishness across the paint industry and may I say so, across the entire consumer sector in general in the country. Despite this, Indigo Paints demonstrated a robust profitability in the face of extremely tepid growth. You may recall that in Q3, we had reported a negative growth on a Y-on-Y basis. During Q4, we have returned to positive growth, albeit at a very modest 0.3%. However, the profit growth was significantly superior. First, let me come to the stand-alone results. Compared to Q4 of FY '24, our sales in Q4 of FY '25 have registered a value growth of 0.3%. We continue, as always, to maintain the pole position in terms of gross margin in the industry, which stood at 47.4%. The EBITDA on an absolute basis increased from INR 82.3 crores in Q4 of last year to INR 85.9 crores in Q4 of FY '25, registering a growth of 4.4%. The EBITDA margin in Q4 of 23.4% is the highest that has ever been recorded in any quarter in the history of the company. The EBITDA margin was higher by almost 1% from the 22.5% of EBITDA margin that we registered in the same quarter of the previous fiscal. The PAT increased by 6.3% to INR 56.9 crores in the quarter compared to INR 53.5 crores in the same quarter of the previous fiscal. And the PAT margin for the quarter improved from 14.5%, which was clocked in Q4 of FY '24 to once again a historic high of 15.3% in Q4 of FY '25. If we look at the entire fiscal of FY '25 on a stand-alone basis, we have clocked a top line growth of 1.8% and achieved sales of 1,277.2 crores. The EBITDA for the full fiscal FY '25 slightly reduced by 0.5% to INR 231.6 crores, and our EBITDA margin for the full fiscal clocked 18.1%, slightly lower than 18.5% that we recorded in FY '24. The PAT decreased to INR 143.9 crores for the full fiscal with the PAT margin at 11.1%, slightly lower than 11.7% that we recorded in the previous fiscal. Coming to consolidated results. For the quarter, our consolidated revenue grew by 0.7% to INR 387.6 crores. The EBITDA grew by 3.3% and the PAT grew by 5.4%. The EBITDA margin for the quarter on a consol basis was 22.6%, and the PAT margin was 14.6%. Our subsidiary, Apple Chemie, has registered a good growth of 8.3% in Q4 of FY '25. However, their margins have been impacted due to adverse product mix, which has been going on in the whole year. It was very severely impacted in the previous 2 quarters of Q2 and Q3, but they have started showing distinct improvement in Q4. Various strategic initiatives are being undertaken by Apple Chemie team to improve the margins further in FY '26. So for the full fiscal FY '25, on a consolidated basis, Indigo Paints has achieved a revenue of INR 1,341 crores, which is a 2.7% growth over FY '24. The EBITDA has reduced by 1.9% to INR 233.5 crores in FY '25 versus INR 238.1 crores in FY '24. And the EBITDA margin has contracted to 17.4% on a consol basis from the 18.2% recorded in the previous fiscal. Other numbers are given in detail in our investor presentation. I'll now take you to some more operational details about the quarter going beyond the simple financial numbers. Now during this quarter, the overall A&P spend as a percentage of revenue decreased from 6.3% in Q4 of FY '24 to 5.0% in Q4 of FY '25. And if you look at the entire fiscal, the A&P expenses have reduced from 7.4% in FY '24 to 6.4% in FY '25. The focus now in the company is more on digital outreach to our target audience, which includes not only the end users, but also the influencers. We have also intensified our BTL marketing activities, that is below-the-line marketing activities to better track and promote secondary sales from the dealer counters. We continue to punch above our weight with a 6.4% allocation of top line going towards A&P activities, which is far above the industry spends. In line with our disclosure practices, we have given our volume and value growth numbers for each of the 4 major categories of paint products. If you recall, in the previous quarter, that was Q3 of FY '25, all the paint categories had degrown. However, during the current quarter, the quarter just gone by, which is Q4 of FY '25, the volume growth has picked up in the enamel category and in the primary distemper category. Though the volume growth in the emulsion category was mildly negative, the value growth was positive at 1.3%, which is a clear indication of the steady premiumization of our product portfolio. If you look on a full year basis, the value and volume growth have registered positive growth across all categories, except for the putty category, which has witnessed a very small 1.3% value decline. Now you all know that the putty category is a very low-margin category, and it continues to face intense price competition from our competitors. The revenue contribution from our differentiated portfolio of products was largely flat at about 28.2% in FY '25 compared to 28.4% in FY '24. As a company, we continue to focus on network expansion, on improving the throughput per active dealer and increasing our tinting machine population. As on 31st March 2025, our count of active dealers was around 18,400 and the tinting machine population was at about 11,000. On the CapEx front, work is progressing in both the water-based paint plant and the solvent-based paint plant, both being set up at Jodhpur. We have experienced some delay in the civil construction work at the water-based plant, and the water-based plant is now expected to be commissioned sometime in Q3 of FY '26 whereas the solvent-based plant is expected to be up and running sometime by the end of the current quarter Q1 or at the start of Q2 of FY '26. The Brownfield expansion of our putty plant at Jodhpur will also be completed at around the same time that is towards the end of Q1 in another 1.5 month time. However, these minor delays are not expected to cause any impact on our sales as we have enough capacity to cater to the forthcoming demand. The waterproofing and construction chemical products continue to consistently yield good results, resulting in a healthy mid-single-digit contribution to the overall revenue pie. Coming to our sustainability initiatives, we had installed rooftop solar panels at our head office in Pune, which has been followed with the installation of rooftop solar panels at our Cochin factory, which is now complete and just awaiting some regulatory approvals. We had mentioned earlier that we have started a new initiative called the Indigo Seva Utsav. Under this initiative, Indigo Paints, along with the painters and the community at large, undertakes painting of government schools in Tier 2 and Tier 3 towns. And I'm happy to inform you that as of now, we have already painted more than 150 such schools across the length and breadth of the country. On the CSR front, we continue to extend educational benefits for the underprivileged girls around Pune. There are already over 300 beneficiaries of this initiative so far. In FY '24, Indigo had introduced a painter health benefit program, starting off with the state of Bihar. In the start of the last fiscal FY '25, we extended this program to a few more states and by the end of FY '25, we are covering painters across the length and breadth of India. And more than 25,000 painter families are now beneficiaries of this program. In this current fiscal FY '26, we have launched yet another initiative called the Indigo Skill Up program. This is a unique training initiative designed to empower painting professionals with skills that go beyond the brush and help them in their business development front also. I'm also pleased to inform you that our Board has recommended a dividend of INR 3.50 per share for FY '25, which would be disbursed after receiving shareholder approval. Finally, I may add that a gradual improvement in the demand sentiment was clearly visible in Q4 of FY '25 and a further improvement is visible as we speak in Q1 of FY '26. We expect the demand to come back to its original growth levels sometime in Q2 of this fiscal. With raw material prices continuing to soften, the EBITDA margins for FY '26 are expected to improve with a general improvement in the demand scenario, lower raw material costs and an improved product mix. Thank you. That's all I had to say as an opening remark, and I'd be happy to take your questions.

[Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama.

My first question is on the overall demand side. So what we are seeing is you did mention that gradual recovery is there. And in this call, Q4 call, almost all the staples companies and paint companies have also said very similar that FY '26 demand outlook is looking better. My specific question is, if I see till Q2 of FY '26, your growth rate was much faster than industry. And in Q3, Q4, when I compare your growth with the official #2 paint company, where I'm talking about official #2 as per sales, the difference is you are growing 6%, 7% slower than the Berger paint. I wanted to understand, given your scale and size versus Berger, what could be the specific reason why Berger is growing 6%, 7% faster? Because you also have a good presence in the Tier 3, Tier 4 market. I understand Kerala is a very large 25% of your business. Is that the issue when I compare your performance with Berger in terms of why your growth is slower Q3, Q4?

So Abneesh, when you look at all companies in the paint sector, other than the market leader, which is perhaps as strong in any state in any part of the country, when it comes to any other player, whether it is Berger or whether it is Nerolac or Axo, whether it is Indigo, I don't think our strengths are uniform across India. We all have our pockets of dominance and we have our pockets of weakness. That is true for all companies, #2 downwards. Now when a gradual recovery in demand starts, and that is -- I mean, Q3 was perhaps the worst quarter for everyone, including for the #2 player. Q4 has seen a mild uptick for everyone. As the demand scenario starts moving up, it usually does not happen linearly in the same proportion in every part of India. So depending upon which part of India, the demand recovery happens a little faster and which parts of India, the recovery lags behind a little bit, you may find these quarterly differences between companies. If you look at the entire fiscal, I think our growth in top line is about the same as the #2 player. It is true we have not outperformed them as we had been doing. But if you ignore the #2 player and look at the industry as a whole, we continue to outperform the industry by a fairly wide margin. We have done that in Q1, Q2, maybe we were slightly on par with the industry in Q3. But again, in Q4, if you look at the entire industry growth, we have done significantly better. Now as I said, Berger has its pockets of strongholds, and I'm sure it has its areas of weaknesses and so do we and so does every other paint company with the exception of the market leader. So, unless that recovery in demand happens uniformly across the country, and I don't think we are very far from that, you will start seeing that breakout of Indigo growth rate versus our larger peers happening as we move forward. So, I don't know if that answers your question.

Partly it does, but could you tell us which are the states which are bringing it down a bit more? Will it be Kerala and South India where the growth is a bit more challenging?

So, Kerala has been under a challenge for quite some time. And our market intelligence seems to suggest that most companies have degrown a lot in Kerala. Maybe we have not degrown. We have just about managed to hold on to our FY '24 numbers in Kerala, plus or minus 1%. So, since we have a reasonably large exposure to Kerala, it is essential that Kerala comes back into growth trajectory for our numbers to start looking good. Separately, I would say that Berger is very, very dominant in Eastern part of India. It is also a strong area for us, but not as dominantly strong. And I think the recovery in the market has been a little stronger in Eastern India, that may have been partly responsible for Berger's good numbers, and I'm not at liberty to discuss as to what a competitor has done better in the last 2 quarters to get slightly higher growth numbers. It's a question that you need to ask your friends at Berger who can answer that better. But yes, we respect good execution by the #2 player in the last 2 quarters. But I think that as the demand starts recovering, I'm very confident that you'll see a breakout happening between our growth rate and every other company's growth rate, including perhaps the #2 player, hopefully. So, let's ride it out till then.

Sure. One last follow-up on the demand side. Starting Q4 FY '24, you started growing much faster than the industry for 6, 7 quarters. That point of time, 2 things you have done in terms of expansion on feet on street and then you acquired in terms of the waterproofing business, which also would have helped in the overall TAM increasing. My question is now if you want to again grow faster than the industry, say, from Q2 or Q3, is there some proactive step you are already taking? Or is it needed in terms of, again, augmenting the feet on street or increasing the product segment in terms of TAM? Is there something needed or it will be more of the industry recovery, which will help you come back to 2x to 3x of the industry growth rate? Because that was one aspiration you had always shared that you should grow 2x to 3x of the industry number.

Greatly agree with you. I don't forget what we have committed, and there is no change in that commitment and that intent and reserve to grow at 2.5x to 3x the industry growth rate. And I'm sure forward numbers will bear that out. In terms of what new strategy, I think there would be a minor increase in number of feet on the street. It is happening partly on the direct sales force. It is happening much more on the business development officers who are not directly connected with sales, but connect with the contractors and the painters to encourage secondary movement of paint from the paint counters. That is something that we have found very useful going forward, especially in the last 1 year. I mentioned in my speech that although the emulsion category showed a marginal decline in volume for the full fiscal, but -- sorry, it didn't -- for the full fiscal it didn't show a decline, but the value growth was significantly higher than the volume growth. And for the quarter, it did show a decline in volume, but the value growth was higher. Now that simply means that the premium end of the emulsions is growing much faster than the economy range. And that is something that we have been focused on, and that is something that we'll continue to be focused on. In terms of a tweak in strategy, you will also notice from the presentation that we have uploaded that our active dealer count has slightly declined in the last 2 quarters. At the end of Q2, that number was 18,700. It's now come down to 18,370, whereas you should have expected an upward decline -- upward ramp-up. Now partly, this is a reflection of market sentiments. Notice that these are a measure of active dealer count. And when markets become slow, some of the dealers who were active earlier tend to become less active. So, at the moment, the complete trust expansion continued expansion of the network and to drastically increase this dealer count significantly. And as we speak in the last 2 months, I would say that we have made excellent progress in that. And when the numbers come out for Q1 of this year, you will see a healthy increase happening in our active dealer count. Along with that, there is also a faster adoption of tinting machines. Although tinting machine adoption did continue through the fiscal, but I think a detailed analysis will suggest to you that the pace of adoption of new tinting machines slightly slowed down in the last 2 quarters, again, because of subdued demand scenario. That seems to have picked up again as far as the current fiscal is concerned. So, at the moment, the tweak in the strategy is drastically increase the count of dealers and along with that, the count of tinting machines continue to pay much more focus on secondary sales activities to engage more with the painters and the contractors. And I'm sure the results will be evident as we go forward.

My second and last question would be on the competitive intensity side and 2 aspects to that. One is if I see the margin guidance, which Asian and Berger has given, that margin guidance is higher than what they have delivered in FY '25, which is a good outlook. Now obviously, raw material side is benign, but raw material side is benign even for the new players. So even they can get more aggressive because raw material is soft. Against that, #1 and #2 paint companies have given a better margin guidance than FY '25. Second aspect to this is 10% market share claim by the new player. They have said that this includes putty, paint plus putty, 10% market share, which makes it slightly difficult to really understand their performance in core paints. So sir, from your aspect, how do you see competitive intensity? You have always maintained that this is a large industry, et cetera. But if you could comment on trade incentive and trade margins, how are things on that side? That is my last question.

I mean you're talking about the new entrant who was always the market leader in putty. So, to add, putty which is run in a different company within the group to that for what worth it is to calculate market share, I really don't know. To be honest with you, we are less concerned and we never have been very concerned about the new entrant, and we are consistent in what we say. And if you do an analysis in numbers, and Abneesh, you're a very sharp person in analyzing numbers, whatever may be the market share that a new entrant may have got, if that so-called disruption effect that you all have been talking about or been worried about for the last 4 years, if that had gone out, the first place where it would have been evident would have been a significant contraction in the gross margin of all the paint companies. Now I think a detailed analysis will show you that, that has not happened. Everybody's gross margin may have declined marginally by 0.5% or 1 percentage point. And that has really nothing to do with the entry of a new entrant who's probably offering 10% or 12% higher discounts than the rest of the industry. I think that has been largely ignored by the existing players, and it is not affecting them materially. Yes, in a weak demand scenario, which is 90% of the reason of subdued performance by all paint companies, in a weak demand scenario, irrespective of the existence of a new entrant or not, that does become a temptation to give slightly higher trade schemes and a little higher discounts to your dealers in the effort to gain some extra sales in the top line. Now there is no doubt that, that has been happening during the slowdown period of the last 12 months. And even if we look at our own numbers, our discounts have slightly gone up compared to where they were a year ago, which is why you will see that even our gross margins are about 1.5% or so lower than what they were in the corresponding quarters of the previous year. There has been some pullback on A&P spends because by all companies because in a weak demand scenario, it doesn't make sense to keep throwing money at advertising when the underlying demand is weak. Also, we have made a lot of improvements in our freight expenses, and some of that has happened with the premiumization of our product portfolio. So despite all that, we have managed to stick to our EBITDA percentages and maybe EBITDA percentage have dropped by less than 0.5% compared to the previous fiscal. Now, as we see the demand recovering, I can't say for the others, but we are beginning to moderate our trade discounts. And I think other companies are beginning to do that also. So that aided with gradual recovery in the demand and continued small but steady softening of the raw material prices, we will see on a Y-on-Y basis, you will see a small expansion happening in gross margins and EBITDA margins, at least for us, and I would guess that you will see the same for across the industry.

[Operator instructions] The next question is from the line of Sonal Minhas from Precinct Cap Investment Advisors.

This is Sonal Minhas. I hope I'm audible.

Yes, sir.

I wanted to ask, sir, a question with regard to your working capital cycle. Sir, your debtor's days seem to have come down. The receivables have come up. So overall, the working capital, if you see the year-end, the numbers look a little stretched. If you could give some subjective guidance on that on a year-on-year basis, what has happened, that would be great.

I don't see that our number of days outstanding, if you -- see, it's always the number of days outstanding to represent it in number of days should not be divided by the sales for the entire fiscal because the sales during the entire year do not happen uniformly. For us, Q4 is by far the heaviest quarter by a very wide margin. So the way we look at outstandings is that we divide it by the sales during the last 45 days of the period. So on 31st March, we look at whatever sales have happened from 15th February to 31st March and divide that and then gross it up to the full year to decide how many days of outstandings we had. And my figure shows that if we go by that, our outstandings at the end of the quarter were 32 days, and at the end of 31st March of last year, it was also 32 days. So I do not see any increase in outstandings happening. Our inventories have marginally gone down. Our finished goods inventory is showing as 56 -- 57 days of finished goods inventory across the company versus 60 days on 31st March of '24. And raw material inventory has also gone down from 36 days to 29 days. And the number of payables, days of payables to our suppliers has also reduced from 60 days to 55 days. So I don't think that there is any significant change in our working capital position at all.

Got it, sir. So actually, the trade payables, if I see the year-end numbers come down as per the reported numbers from INR 220 crores to INR 165 crores, which means -- so I thought I'll just ask you.

That is more because during the last 1.5 years, the government has given a guidance that payments to all MSME suppliers have to be mandatorily made within 45 days. It's a guidance, and we, as a respectable company, adhere to that guidance, and we ensure that all our MSME suppliers are now paid within 45 days. And that has been the main reason for reducing the number of days payable because a large portion, most of the mineral products that we buy, a lot of the solvents, et cetera, that we buy and many of the other additives and containers, et cetera, do come from MSME suppliers. And previously -- I mean, they are happy to extend a longer credit period to us. And we used to enjoy 90 days' credit from them. But because of this mandate by the government, we have had to reduce that to 45 days, which is why it has resulted in a slightly faster payout, but it's not something that bothers us. We don't have any working capital borrowings. Our treasury chest goes on increasing with surplus cash investment and cash generation. So it's not a matter of concern at all.

Got it, sir. Sir, if I may ask my second question, if I'm allowed to.

Please go ahead.

Sure. Sir, I wanted to understand your position on the institutional sales side, especially in particular, the B2B, given that the real estate demand has been booming and some of these projects would be nearing delivery in the next maybe 12, 18, 24 months. How do you rank yourself on the institutional sales? And how good is your team? If you could just give us a bit of a guidance there, compare yourself to Axo who's fairly dominant in that market as well with Asia, that will be great.

[Technical Difficulty] and developers. We don't have an active project team. We do some amount of sales in smaller towns, but those are of very small magnitude. But as a corporate strategy, we have stayed away from institutional sales thus far, and there is no immediate plan to get into that in a big way. However, our subsidiary, Apple Chemie, which is in the business of providing construction chemicals and waterproofing exclusively to the B2B space of supplying them to large infrastructural builders like L&T and the Shapoorji Pallonji and a whole lot of other metro projects and irrigation projects, et cetera, across India, they are seeing an uptick in their demand, and they have registered very good top line growth during the last 1 year, and they are hopeful that, that will further accelerate in the coming year because infrastructural spending by the government is ramping up quite fast. But in terms of decorative paints, we are not in that space. And in any case, institutional demand for new construction does not account for a very high percentage of paint sales. And at the moment, we have not gotten into that sector.

The next question is from the line of Jasdeep from Clockvine Capital.

So what are your thoughts on getting into a few of the adjacencies in your business, like industrial paints, et cetera. So are there any plans on the table for FY '26?

See, we have entered the adjacency of waterproofing and construction chemicals in the retail space during the last 2 years after the acquisition of Apple Chemie and onboarding the technology transfer from them. And as I said, that's a very fast-growing category for us at Indigo Paints at the retail level. Indigo brands of waterproofing and construction chemicals are accounting for slightly in excess of 5% of our top-line growth, which was 0 until 2 years ago. And we see very high growth traction there. When it comes to industrial paints, see, there are 2 kinds of industrial paints. One is the very high margin, very high IP-protected kind of very -- high technology sector, things that go into tank linings and offshore oil rigs and gas pipelines and stuff like that. Now, those would require some kind of a technological tie-up with a global giant who has the necessary certifications and approvals for that. And we don't have that kind of a tie-up. We have been open to looking at that space and have had conversations with several prospective companies in the past, but nothing concrete has worked out. And then there is the other part of the industrial paints, which supplies low-end primers and low-end enamels, et cetera, to general industries. Now that's a very, very low-margin business, and that's not a business that we are very interested in getting into. And some of our competitors do have a component of their sales that go into that segment. It does give them a little bit of a top line, but I think it's a big drag on their bottom line. So I think we'd rather not get into that kind of an adjacency.

Got it. What about auto paint, sir?

Auto paint is a whole different sector. So, auto paints, again, can be classified into 2 categories. One is the OEM, and one is the auto refinish. And both are very different technologies from conventional decorative paints. And getting into the auto sector, A, it is a low-margin business because the buying power of the buyer is far greater than the power that a seller may have. And you can see that reflected on companies in the listed space in the paint industry who derive a very high proportion of their sales from the automotive sector. Their margins, et cetera, are much, much lower than what the other companies are. Also to get into the auto space, if you have a tie-up with, let us say, a Japanese or a Korean paint manufacturing company, unless you have that and that company has a global tie-up with some of these automakers who come out of Korea or Japan, it's very difficult to make an inroad into India. And similarly, if you have a tie-up with a European or an American paint manufacturer who has a global tie-up with some of these American or European automakers, unless you have those kinds of tie-ups, I haven't seen anybody starting from scratch in India and being able to make any headway with any of the auto manufacturers as far as supply of automotive paints are concerned. So I don't find it a very attractive proposition, both from an entry barrier viewpoint and from a profitability viewpoint. So when I say that we are open to getting into adjacencies in the high-end industrial space, auto sector is not a focus area in even exploring as far as we are concerned.

[Operator Instructions] The next question is from the line of Shubham Shukla from Voyager Capital.

My question has been answered.

The next question is from the line of Jesh Goenka from [indiscernible] Capital Advisors.

Sir, in this competitive environment, your A&P spends are trending downwards. So, how should we see that? And ex of A&P also, the cost has been coming down. So is this structural?

A&P spends on an absolute amount, it depends when you say they are coming down. Are you talking about A&P spends coming down at an absolute level or as a percentage of revenue?

Absolute, sir.

Yes, so I'll answer both. As a percentage of revenue, if revenue goes up significantly, then the A&P spends will come down because they will not grow along with top-line growth, and they don't need to grow. And therefore, if you go back to 6 years ago, when our A&P spends as a percentage of top line were 12.5%, and now they are half of that. And that is because our turnover has almost doubled during this period. And therefore, if the A&P spending have increased by, let's say, 25%, then as a percentage of overall revenue, they will come down. Now, the last year has been an aberration, that there has been negligible growth in the top line, but the A&P spends have come down. But on an absolute amount, this is the only year when there has been a mild decline on an absolute amount from INR 92 crores, it's come down to INR 82 crores, and that has been a conscious decision that when the demand is extremely sluggish, then to go on spending money on advertising and bombarding the media and the end users with that doesn't yield you any significant benefit. And instead, the focus shifted to another form of promotional activity, and that is the heavy focus on engaging with painters and contractors to improve secondary sales. Now we have been tracking the A&P spends, at least the amount that gets spent on television and mass media. And I think almost all companies on an absolute amount have reduced their advertising exposure on television and the digital media during the last fiscal for the same reasons that when the demand is slow, it doesn't make economic sense to keep throwing money. Now, as the demand scenario starts picking up, which we can see signs of that happening, you will see again an uptick in the total spend that we will do as an A&P. It may still come down slightly as a percentage of top line because hopefully, the top line will grow faster than that. But there is no effort to reduce the emphasis on advertising and promotion in whichever form we do it.

Okay. And sir, ex of A&P?

Pardon?

Excluding A&P, the costs have also been coming down.

Isn't that good? Other costs are what -- I mean, the reduction, as I mentioned in my speech, is largely on account of freight. We have been able to handle freight better. There are 2 reasons for it. One is that we commissioned our plant in Southern India in Pudukkottai in Tamil Nadu. So large parts of India, in Southern India and even in Central India, which were previously catered to from our Jodhpur factory, now the material started moving from a shorter distance from our Tamil Nadu plant. That reduced freight costs slightly. The other thing that has happened is that with higher growth happening in the premium section of paints, at least as far as we are concerned, see, the cost per kg to transport goods are the same, whether you transport a low-value product or a high-value product. But the freight cost as a percentage of revenue is drastically different from transporting a high-end premium product to transporting a low-end product. So as the premiumization improves, and I sincerely hope it will improve further this year, as that grows, the freight cost as a percentage of revenue will come down, and that's a good thing.

The next question is from the line of Aditya Bhartia from Investec.

My first question is on material costs. We have seen a very sharp reduction in crude prices. But at the same time, it seems that crude derivatives haven't fallen by that much, and there's an antidumping duty also that has gotten imposed on some of them. So just wanted to get your perspective on how sharp has been the reduction in the relevant materials for us.

For a very, very long time, and not just me, I think I've heard the narrative by other paint majors that the linkage between raw material prices for paints and crude oil prices is extremely weak. Somehow, people are not able to comprehend that and keep talking about crude oil prices. Yes, crude oil price reduction does impact 1 or 2 of our raw materials, but they are not major raw materials at all. The other products are governed by entirely different demand-supply considerations that have very little to do with crude. Now prices have come down slightly. And I don't think it is because of movement in crude oil prices. It has something to do with the demand-supply situation and various monomers that go into making up the emulsions, which are our biggest raw material. And the second is titanium dioxide, which has been pretty much stable during the last 5 quarters. There is no variation in the prices of titanium dioxide. What you talked about an antidumping duty, yes, 2 weeks ago, there has been an antidumping duty imposed on the import of titanium dioxide from China, which is significant. And there is a court case going on led by the Indian Paint Association, representing all the paint manufacturers. And I think the final hearing of that has concluded in the High Court of Calcutta just 3 or 4 days ago, and the judgment of that is awaited. Now I cannot second-guess as to what the learner judge will give as a judgment, and I expect the judgment to come out in the next 3 weeks or so. The judgment has been reserved. The hearings are over. We are fairly hopeful that the judgment will come in our favor because the rationale for imposing an antidumping duty on titanium dioxide, we thought, was extremely flawed because the domestic production of titanium dioxide can hardly cater to maybe 5%, 7% of the demand of this country. And therefore, to kind of protect them by imposing an antidumping duty on imports on which the country is fully dependent on seemed a little irrational in our opinion. But for whatever is the reasons, there is a temporary duty imposed, which affects everyone. And until the judgment comes out and hopefully, if the judgment comes out in our favor, this is a temporary aberration that we will have to bear for maybe a month or so, for whatever imports that we have on titanium dioxide. But there has been no other levy of any antidumping duty on any other paint raw material. So I don't think that concerns us. In general, we see a continued mild softening of raw material prices that is happening, mainly on emulsion monomers, a little bit on things that are linked to crude oil like alkyd resins and turpentine, and a few other additives, et cetera. I think plastic container prices have been more or less steady. Titanium has been more or less steady. So it's a small reduction in raw material prices, but any small reduction is helpful in improving the margins.

That's an very helpful answer, sir. Just one follow-up question on growth trajectory. You mentioned that demand has been improving. And in that context, can you give us some indication on how you're seeing the year playing out? Can we go back to double-digit kind of revenue growth, or does that look a bit challenging?

No, I don't think it looks challenging at all, Aditya. I think that as the demand improves, we will get back to double-digit growth. Whether that will happen in Q1 or Q2 is very difficult for us to predict because, as I said, month-on-month, we are just taking it 1 month at a time, and each month is looking marginally better than the preceding month on a Y-on-Y basis. Now, frankly speaking, I was hopeful of very high growth coming in May. Now, 2 things have happened to slightly disrupt that. As you know, the monsoons have hit India 10 days earlier than scheduled. Now that has some impact because the moment monsoon hits, as you know, painting activities take a little drop. So normally, monsoon hits in the first week of June. This time, it is held 10 days earlier. So that will have some impact as far as May demand is concerned. Also, what has happened in another part of India, which is the northern part of India, which were close to the Pakistan border, and I'm specifically calling out states like Jammu and Kashmir, Punjab, Haryana and to a lesser extent, states like Delhi, Himachal and the northern part of Rajasthan. Now because of that 3-day war that we had and those drones attacking those places, although no damage has happened on the Indian side, but what it does to the sentiment is that all migrant labor which is responsible for painting activities in a very, very large way, they tend to get scared and they run back to their native villages. So their going back is instantaneous. Their return to work takes a little longer. And therefore, that part of India has also been adversely affected in the last 15 days for want of painting labor. I mean, these are temporary blips that get made up once things get back to normal. But I do hope that the growth for Q1 will be significantly better than Q4. And as I mentioned earlier, I do expect that by the time Q2 happens, if things continue to improve the way they are, we will be back to significantly higher double-digit value growth.

Thank you. In the interest of time, that was the last question. I now hand the conference over to the management for their closing comments. Thank you, and over to you, sir.

Thank you, and thank you all for your patience hearing. And I sincerely hope that we come back a quarter later with much happier tidings and much better news on growth, not only for ourselves, but hopefully, for the entire paint industry, because we are not immune to what happens to the industry at large. Hopefully, the paint industry will bounce back in the quarters to come, and we'll get back to our whole story of very high growth rates, which the industry has been accustomed to in the last 25 years. And thanks to the ICICI Securities team for hosting this call, and I look forward to meeting you all again in 3 months' time. Thank you.

Thank you. On behalf of ICICI Securities Limited, that conclude this conference. Thank you for joining us, and you may now disconnect your lines.