Pidilite Industries Limited (PIDILITIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Pidilite Industries Limited Q2 FY '22 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Percy Panthaki from IIFL Securities. Thank you, and over to you.

Hi. Good evening, everyone. Thanks for joining in to this call. Pidilite has reported a very strong sales growth as markets have opened up post-COVID. And in this relatively very high cost inflation environment, they have managed their margins also very well. Without further ado, I would like to pass on the call to Mr. Bharat Puri from the management side, where we have Mr. Bharat Puri, Managing Director; and Mr. Pradip Menon, CFO. So they will take you through the result highlights, and then we'll open up for Q&A. Over to you, sir.

Yes. Many thanks, Percy. Good evening, everybody. This is Pradip here. Strong sales -- I'll start with a sort of opening set of commentary from our side, and then we can open up for Q&A. Strong sales volume and value growth was recorded, as the business witnessed improved consumer demand environment due to accelerated vaccination, reduced COVID infection and increased mobility. Growth was broad-based across Consumer and Bazaar and B2B segments, as well as urban and rural geography. Consumer and Bazaar reported growth across all categories, such as adhesives, construction chemical, and DIY portfolio. B2B growth led by continued momentum in industrial activities. I'll begin with a summary of the financial performance for the quarter and half year ended 30 September, 2021. On a consolidated basis, net sales at INR 2,613 crore for the quarter grew by 41%. Excluding the newly acquired Huntsman subsidiary, PAPL, it grew by 33%. This was led by 39.5% growth in C&B segment, and 41.2% growth in B2B segment. Gross margins have contracted on account of sharp escalation and volatility in input costs. Material cost as a percentage to net sales is higher by 1,027 basis points versus same quarter last year, and 375 basis points versus sequential quarter. Moderated price increases as well as sharp focus on operational efficiency has helped us to maintain EBITDA margins in our historic range. EBITDA before non-operating income at INR 550 crores grew by 7% over the same quarter last year. EBITDA for the half year ended stood at INR 907 crores, and grew by 56% over the same period last year. On a like-to-like basis, EBITDA in Q2 declined by 2% and grew by 44% for the half year. Profit before tax and exceptional items at INR 492 crores, grew by 3% over the same quarter last year. PBT for the half year ended stood at INR 781 crores and grew by 53% over the same period last year. Moving on to stand-alone financial performance. Stand-alone net sales at INR 2,200 crores grew by 36% over the same quarter last year, with underlying sales volume and mix growth of 25%. This was driven by a 25% sales volume mix in Consumer and Bazaar segment, and over 20% growth in sales and volume mix of B2B. Our key raw material, vinyl acetate monomer's procurement rates have increased over the month, from $930 in previous year fiscal to $2,000 per metric ton in April. Temporary softening in VAM procurement rates were observed between July to August '21, with a price range between $1,600 to $1,750, still much higher than our previous fiscal year. Current rates are at increased level of $2,300 to $2,400 per metric ton. Quarter 2 VAM consumption rates were at $2,071 per metric ton as against quarter 2 '21, which is 2021, that is last year, of $840 per metric ton, and quarter 1 '22, which is the previous quarter, which was $1,610 per metric ton. Material cost as a percentage to net sales for the quarter is higher by 1,102 basis points over the same quarter last year, and 372 basis points versus sequential quarter. EBITDA before non-operating income at INR 479 crores grew by 1% over the same quarter last year. EBITDA for the half year stood at INR 787 crores and grew by 38% over the same period last year. PBT at INR 442 crores declined by 3% over the same quarter last year. And again, for the half year, it was INR 797 crores, grew by 50% over the last year. About subsidiary performance, overseas subsidiaries, modest revenue growth in Asia on the back of long-term restrictions in many countries. Margins impacted on account of input cost inflation. And Americas revenue declined on a higher previous year base. During the previous year, sales were higher on account of pent-up demand as well as benefits passed by the government to consumers during COVID. Domestic subsidiaries in Consumer and Bazaar business returned to double-digit growth, led by higher sales in premium products. Subsidiaries in B2B business have improved sequentially on account of recovery in real estate and construction, chemical -- construction-related activity. However, margin recovery will take longer due to unabated commodity inflation. Pidilite Adhesives Private Limited achieved sales of INR 135.5 crores for the quarter, with EBITDA margins of 34.9%. Compared to previous quarter, margins have improved by 3.9% on account of price increases, to mitigate persistent steep inflation in input costs. We have also started selling, distributing Araldite in rural areas, using the benefit of wide Pidilite distribution network. Unabated commodity inflation and supply availability remains a significant challenge, and would require continued focus. Going forward, we remain cautiously optimistic on continuing robust demand conditions. Our focus remains on driving consistent profitable volume growth through investments in our brands, supply chain and people. With that, we come to the opening section of the discussion, and I now hand it over back to the host for opening for Q&A.

[Operator Instructions] The first question is from the line of Avi Mehta from Macquarie.

Just had one question on essentially trying to understand the pricing change in the impact on gross margin. You highlighted that VAM has increased further from 2Q, but I would assume that the 10% realization growth that we are witnessing, some of it will continue to flow through. So could you help us understand how to look at gross margins as we go forward? And whether we need any further price increases?

Yes. Bharat, you want me to answer or [indiscernible]?

Go ahead. Go ahead, Pradip. Yes, go ahead.

Yes. Yes. So I think, as we've said in earlier calls as well, Avi, that we are -- what we are seeing is really an unprecedented situation. The prices are -- I mean, it's not just 20%, 30%, it's like 2.5x last year's prices. So obviously, in terms of pricing action, we have to take calibrated price increases and in a sensible manner, so that demand doesn't get impacted. So we have continued to do that over the last, almost, I would say, 8 to 9 months, and what you're seeing in the current quarter is the result of those actions. We have also been very, obviously, cautious on the way we manage our costs. And the fact that we have a momentum on demand is also helping in overall managing the EBITDA margins. As you also know that we are -- our intent is to manage the overall margins in the range of 20% to 24%. And therefore, whatever action is required to ensure -- which is required to be sort of to make sure that that range is maintained, will be done. What we have done in the first half of this fiscal is broadly cover about 70% of the inflation through pricing. And as we see the further increases coming, I mean, it is not just VAM. I mean, we just highlighted VAM as an example. But we've got input cost increases across a range of raw materials. We are also seeing significant increase in freight. All of these will need to be factored in while doing the pricing. We've just briefly talked about the recently acquired subsidiary PAPL, where, again, there is a huge amount of inflation coming through [indiscernible] epoxy. So we are doing the pricing category by category, product by product, with the intention to make sure that we pass on pricing in sort of reasonable chunks, without impacting demand, and overall, cover at least 75% of inflation. And we are planning pricing in the market for products going forward, as well as this trend continues. Bharat, you want to supplement these points?

No, I think you put it pretty well. The basic stance, Avi, remain -- we will be conservative on pricing. We will take a hard look, pass off only 70%, 75% and wait -- manage margin actively, because we believe that passing on all price is also a [indiscernible] of demand.

Okay. Okay. So the way I should kind of look at it is the focus would be on sustaining the demand rather than on -- and meeting the margin in the 20% to 24% range, more at the lower end. Is that a fair understanding?

As long -- yes, in the current situation, yes. It depends on how prices moderate, because it is also our belief that a large part of this is due to supply chain disruptions and not due to intrinsic demand having shot up. So we do believe it may take 3, 6 or 9 months before everything evens out. But we do -- at least in the current circumstances presume that there is more than adequate capacity. And therefore, these kind of rates will only sustain if a lot of this capacity was to go off permanently.

Okay. Okay. So -- and you said about 3 to 6 months. Is that the expectation? Sorry, that's the -- on input inflation coming up, right?

Yes. I'd say more 6 rather than 3.

[Operator Instructions] The next question is from the line of Abneesh Roy from Edelweiss.

Congrats on very good set of numbers. So my first question is on PAPL. When I compare a normal quarter Q4 to Q2, the sales has increased from INR 109 crores to INR 135 crores, which is a good growth. I want to understand, is this largely price led? You also mentioned good scale up, and rural areas you have expanded. So how is the current scale up, if I say total opportunity, say 100, where are we in terms of reaching out to more distribution, more rural area? And second, when I see the margins, it's fairly stable in the PAPL. It's broadly 34% margin. So fairly stable. So would it be fair to say that here, clearly, pricing par is much higher? And so it's basically cross-subsidizing some of the other segments?

See, absolutely not cross-subsidizing any of the segments. Basically, here, the price increases happened earlier and then have not continued to go up. In fact, they have gone up in the last 1 month. But otherwise, they haven't, and therefore, the margin has remained a lot more stable. Whereas given our large mix in the other places, there's been a lot more volatility in epoxy resin. And the number of raw materials is limited. Having said that, I would say the pricing power is probably the same between therefore, our strong trends in the core Pidilite business or Araldite. As far as scope for growth is concerned, while I won't put a percentage for it, we still believe, Abneesh, that we've still got a long runway for growth in terms of using the Pidilite sales and marketing muscle to take it to the next level. We just started it in some states, but we believe that we would treat Araldite as a whole category and not as a core category, though it is the leader, it has more than a 50% market share. The kind of growth rates we would want from it and push from it will be more what we'll look at from growth categories rather than the core category.

Yes. Sir, my second question is on your manufacturing capability. So currently, you've got 26 domestic plants and 30 co-makers. So you're also putting up 12 new projects in India. If I compare your capacity expansion past few years versus, say, Asian Paints, Asian Paints has been a bit more aggressive in terms of creating new capacity, maybe because of tax benefits, et cetera. Is there any change in your thought process next 3, 5 years, create more capacity upfront because your demand clearly is good? You are seeing real estate recovery. So if you could discuss in terms of capacity augmentation, what is the plan next 3, 5 years? In the past, you've said 4% to 6% of sales in CapEx, any change to that number?

See, again, my advice to you, Abneesh, would be, don't look at Asian Paints as a one-to-one, because all said and done, Asian Paints is 90% paints. In our case, we are across, at least, a minimum of 25 verticals, each of which has a distinct [indiscernible] line with distinct [ productibility ]. And therefore, the CapEx per ton and the way each looks at is -- because I'm familiar with that, is very different. I would say from a capacity perspective, our utilization of capacity vis-a-vis Asian Paints will be plus/minus 5. It's not that we are at 90% capacity if they are at 60%. We're at similar level. We have drawn up our plans for the next 5 years, which is why we have all this plant expansion, and you will see some more. Our CapEx, again, as we are going forward, the growth improvement will go from 4% to 6%, but we don't see a substantial increase.

Sure. My last question. So if I see your gross margin pressure 1,000 bps, so whenever we see such a sharp inflation in raw material in consumption, we see local and unorganized players lose market share. So if you could discuss across different segments, how much is the opportunity? Do you see good gains here happening? And have they also taken similar price hikes? Because for them, it becomes very difficult to manage the working capital and limited pricing power?

See, there is no doubt about the fact we said we're gaining market share in situations like this. This is for 2 reasons. One is, obviously, our ability to manage supplies and manage prices is, from a leverage point of view, far higher than their -- and therefore, in a lot of cases, they tend to struggle. And they will always have to follow our price. They can't precede our price. And therefore, I would definitely believe that over actually the whole COVID period, we have consistently kept gaining share. Very difficult to put it in percentage points, but I would say that at an overall level, we would have gained market share in most of our core segments and in our growth categories, largely from the unorganized strokes, small stroke regional players.

[Operator Instructions] The next question is from the line of Krishnan Sambamoorthy from Motilal Oswal AMC.

Hi, this is Krishnan from Motilal Oswal [indiscernible]. Congratulations on a great set of numbers. Bharat, my question is on the pioneer categories. We understood from various companies that scale-up in the newer businesses has been affected by the volatile environment. Could you just highlight the progress on brands like CIPY, on Roff, Tenax and Grupo Puma? Anything that has scaled up satisfactorily and wherever it lagged?

Thanks, Krishnan. Good to hear from you. I think that's a good question. See, there are 2 things. Actually, from a market perspective, the scale-up on a raw -- the B2B business -- so I'll first separate the two, where it is B2C, Roff, Tenax, Grupo Puma, these are more B2C. Where it is B2B, which is CIPY, Nina Percept, it's different. The scale-up has been more difficult in B2B largely because B2B has taken a lot more time to come back. And it's only now that we've had 1 quarter and hopefully, more quarters of normalcy. What is, however, got impacted in some of the pioneer categories like Roff or like Litokol actually is your capital plan, because of all of the delays around, a, first COVID, then shipping, et cetera. A lot of our projects are running 3 to 4 months late because of factors completely outside our control. But from a sales perspective, we're still continuing the scale-up. And for example, if you look at Litokol, it is -- we've now tested across 2 large markets, established a success model. We've now got permission for our plant. The plant construction has started. So it's got a little delayed as a result of COVID. From a sales -- [Audio Gap]

Excuse me, sir, we are unable to hear you.

Can you hear me now?

Yes, sir.

So do you want me to repeat the answer to the last question?

Yes, please...

I think, Bharat, you were talking about from a sales perspective, what's been the impact when we lost you.

Yes, from a sales perspective we are making great progress. I think as the more distributed manufacturing happens, this will obviously improve sales and margins further, and that's in process. That's got a little delayed because of largely COVID, and then the related -- shipping-related -- the supply chain disruptions across the world.

[Operator Instructions] The next question is from the line of Jaykumar Doshi from Kotak Securities.

My first question is on other expenses. If I look at your other expenses in this quarter, it's almost flat as compared to September 2019 quarter, while on a 2-year CAGR basis, your volume growth would be like, more like 14%, 15%. And there is a [indiscernible] acquisition also that you have done. So I want to understand what are the steps you have taken other than E&P cuts, which are understandable, that you've taken? And what should we think as a normalized run rate of other expenses?

Yes. So Pradip, I think you want to...

Yes, I'll try and answer that, and Bharat, you please supplement. So see, there are -- when you look at other expenses, there are some components which actually vary with volume, for example, certain expenses such as power, fuel. That -- there is a variation with the production and the volumes that you operate in. But then there are certain other expenses like travel, certain fixed costs, where things don't necessarily vary with the kind of volumes that you're talking about. So travel is a classic one where, of course, over a 2-year period, there has been number of actions that we have taken in terms of digital connect with end users as well. So some of those elements you are seeing coming through the sustainability of this, while you are seeing this in quarter 2, because in quarter 2 or in quarter 1, there were still certain restrictions on travel and so on and so forth. So how much of that will really sustain going forward is difficult to sort of -- even sort of even gather or even try to model. But suffice to say that there is some benefits which are creeping in because of the fact that certain fixed costs are not going to expand in the same proportion as the volume, and that scale benefits of productivity benefits is what you are seeing coming through. Again, very difficult to sort of model some of these things.

Understood. And would you be able to kind of give us some color in terms of what are your savings in terms of ANP spend or where it was as a percentage of sales? Normally, it's in 3% to 4% range. What is the kind of...

Yes. So typically, we operate in that range. It varies by -- it varies in one quarter versus another. So suffice to say that as far as this quarter is concerned, we have operated at a range, or in terms of absolute spend, at a spend higher than last year in terms of growth. Maybe in similar lines as top line. We have invested behind ANSP, but as a percentage of revenue, it has not really moved significantly higher. So that we will decide depending on how the various inflationary situation comes. So to answer your question, the ANSP is grown in proportion to sales versus last year, but in terms of the percentage of revenue, not a significant movement versus last year up.

Understood. Second question is...

Just to add the -- add to what Pradip said. Jay, what we also do is, we don't manage ANSP on a quarter-wise basis. You would see it based on, for example, construction seasons, et cetera, et cetera, the marriage season and so on. And normally, we also tend to avoid as much as possible, advertising in the 1 month before Diwali, because that is the most -- singly the most crowded media environment. So over a period of time, actually -- as we speak, in quarter 3, et cetera, you will see some new campaigns, et cetera, from us, which are part of the plan, because, normally, we find post Diwali, actually, new construction et cetera sees a boom, and that's a far better time to advertise than during the festive season.

So the idea of asking was, see, normally, if you look at historically your other expenses has been in the range of 18% to 19% of sales. Now this quarter, it is 14%. And I can understand that ANP cannot give you more than 100 basis point leverage. Travel cannot give you more than 50, 70 basis point leverage. So there is a good 200 bps or 250 bps of cost savings that you've managed, which is very impressive. Part of it could be operating leverage, and some of the fixed costs do not change much. But the idea of asking this question is, have you taken some hard decisions which has reduced your cost structure from a structural perspective? And when the environment normalizes, would you sort of settle at lower other expenses as a percentage of sale?

I would say a mix of both. Very difficult to say. Pradip, you want to go?

Yes. I feel -- again, as I explained upfront, I think there is a very big impact of the volume leverage you get in a P&L. Like, if your volumes are growing, or your values are growing by 35%, then it is some of these costs don't grow in that same proportion, other than power, fuel and some of those variable kind of expenses like freight and so on so forth. So what we are seeing here is partly coming from the fact that we are able to do the same sales with similar spend like travel and so on and so forth. And in other cases, it is simply the fact that, you're getting a benefit of the larger value -- not that we're doing a deep cut in costs, or structurally we're changing the cost. That's maybe the answer to your question.

Understood. And a quick question, if I may, on demand. See, we tend to compare Pidilite's growth -- volume growth as well as revenue growth with paint companies, for the lack of other comparable peer. And our understanding is -- at least my understanding is that, in a good real estate cycle, some of the categories that you operate in benefit from new construction, whereas paint as an industry depends more on repainting. And after many quarters, for the first time we have seen that on a 2-year CAGR basis, your growth is almost matching up with the category leader in case of decorative paints. So from here on, as we think about the next 2, 3 quarters, do you think we are at a point where new construction is driving -- or the demand from that side of the -- that segment is fairly healthy, and your growth rates kind of should actuate the paint category? I mean, is that a way to think about it? Or...

See, I would advise you, Jay, not to think about it that way for 2 reasons. One is, paint is -- as you have rightly said, more than 2/3 of the demand comes out of repainting rather than out of fresh construction. We have a little greater multiplier from fresh construction. The other thing is, we go across a much broader spectrum than paint, and therefore, we don't tend to compare ourselves with paint, I mean, with -- due apologies, if you look at the paint companies over the last 4 quarters and you take out the volume that, in a sense, they have bought via puttys and low-priced products -- frankly, on premium products, our sales would -- we don't operate on those segments at all in our part of the market, and largely because we find those pure -- largely commodity segments. I just -- I think that -- while I know that there are no stiff, or there are no easy comparators of Pidilite largely because of its pioneer nature, I think, comparing us with paint is, in many ways, a disadvantage to both depending on the kind of quarter it is.

Understood. But do you see a better outlook for fresh construction cycle and the associated businesses than what you may have seen in the past 2, 3, 4 years?

See, there is no doubt about the fact that organized real estate has picked up in the last 6 months, and specifically in the last 3, we -- individual housing starts with -- individual, what you call the -- what we call IHB, the independent housing units, will they also pick up the next 3 to 6 months? We'll see. But it does appear that the consumers focus on home and getting the home to be, a, upgraded; b, renovated, seems to be greater than it was prior to COVID.

[Operator Instructions] The next question is from the line of Shirish Pardeshi from Centrum Capital.

Just one quick question from the previous participant. The construction business is showing. But is that -- if I extend the thought, are you really witnessing on ground -- I'm not saying, per se, what is the growth in the month of October and early part of November. But are you seeing these factors are panning out for your business, especially into B2B part of the business?

First sign, yes, but too early to say. A lot of this will get cleared in the next 3 to 6 months, on whether it's a longer-term secular trend. And there's also, remember, a fair amount of pent-up demand as things have opened, whether it be tourism, and therefore, hotels and restaurants, shopping malls and shops in shopping malls. There has been a fair amount of pent-up demand that has also got fulfilled. So it will be good to see whether the new construction continues at the same rate over the next 6 months.

And my second and last question, if I take a cue from the quarter 2 numbers, there is a large amount of volume-led growth, which has come and you -- such a way -- alluding that our demand has been very, very cautious, and that's why you are not aggressively taking price increase. That could be a good strategy. But is that -- understanding is correct that, at this point of time, the primary focus of the company is more on a volume led growth, and then maybe later on if demand stabilizes, we will take price increase, or whatever price increases has happened is yet to get implemented and seem full effect in the P&L?

We have always maintained that our focus is profitable volume-led growth. We want to operate within our margin band as an organization, but focus strongly on volume growth. Because when you're a leader in the -- and we are leaders in pretty much most of the categories we operate in, then the thing that sticks the best is our ability to grow volume aggressively, because that, in a sense, helps us create categories and gives us greater leverage. I mean, the fact -- if you look at this over a longer 10-year period, and you see the improvement in our operating margins, one of the reasons is because the volumes and the leverage we now have, is far greater than we had 5 years back, and far greater than we had 10 years back.

My last question, Bharat, on the waterproofing and construction chemical business. Although this -- what we found from the trade that this is -- last -- over 5, 6 quarters, growing fast. But would you provide some qualitative comment why such a large growth, higher of 40%, 50%, which we are witnessing in the industry, is that purely because of the old construction is coming up for refurbishment? Or is it because the new demand which is really driving?

See, there are 2 things happening. One is, traditionally, the quality of construction in India has been poor, and there has been little or no waterproofing. The fact even now is, an independent housing -- it is only about 4 out of 10 homes that do any form of formal waterproofing. So therefore -- and if you look at waterproofing vis-a-vis, for example, paint, vis-a-vis develop -- other developing markets. I'm not talking of the U.S. and the U.K., but I'm talking of the Thailand and the Brazil. Our waterproofing market is much, much smaller, which is why also you have so many people rushing to get into waterproofing, because everybody believes there is a scope, rightly so. The fact of the matter is that, yes, there is a large runway for growth. But it -- whenever you have to create categories, you have to do 3 things. You have to: a, educate the consumer; b, you have to create a brand; and c, see you have to provide service. And over the period, whoever does that best is going to continue to win, and hopefully, we will continue to do that.

[Operator Instructions] Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments.

Right. So just wanted to thank everybody for joining the call, and on behalf of the company and the management, just wanted to convey all the best wishes for the year ahead, and belated Diwali greetings. Bharat? You want to say something?

Yes. I -- Firstly, thank you all. Thank you all for being there. A very Happy Diwali also to everybody on the call. I thought I'll just spend 2 minutes mentioning a lot of time. We spent a lot of time on the hard numbers and what is the -- behind the numbers, a lot of the -- I'd like to spend 5 minutes on why we also believe in Pidilite where we have momentum. The work that we have done, for example, in digital, the work that we have done in rural stroke emerging markets, the investment that we have made, obviously, in supply chain, and finally, the way we have managed the whole culture and people agenda, there are whole steps, and I'm obviously not going to go into each of these. But one of the reasons why we believe, as an organization, we have momentum is that, we are spending a lot more time strengthening the enabler and not just the numbers. And therefore, when we take a step back, whether it be the investment in supply chain, it be the investment in digital, there is probably a 1-hour presentation that we can do to you -- do for you in digital, which is about how it is now carpenters, plumbers, masons are all digitally connected with us. They're actually now being educated digitally. Dealers -- we've now got over 100,000 dealers actually ordering on our Pidilite Genie app, which does not involve either a salesman or anybody. The extent of our distributor computerization is now pretty much complete amongst large amounts of the population, and therefore, it's all on auto replenishment. The cultural piece around an organization -- that it's a great place to work for, which is what we've been voted now on a regular basis. So there's a lot more happening beneath the surface in the enablers, which we are focusing on, which continuously keeps strengthening us, and hopefully, not directly, but actually enables the numbers a lot more, and at any point of time, I'd be happy to answer any questions or any observations on that. Pradip, would you like to add anything?

No, Bharat. I think you've covered all the points. Yes. We can -- we'll take any questions, if there are any. Yes.

Perfect. Fair.

Yes. Percy here. Am I audible?

Yes, sir, you are.

Just a couple of questions from my side, couple of data points, actually. How much -- what's the quantum of price increase in Q2 this year versus Q2 last year?

Pradip, do you want to go there?

Yes. I didn't get that. You're saying this year versus last year, is it?

Yes, over the last 12 months.

Q2 was...

What is the price increase?

Yes. So that's a -- it's a bit -- sort of a difficult question to answer, because it varies by category and by product. So suffice to say, as we said that, broadly, we are covering up 70% of the inflation with the pricing that you are seeing. That's really the -- we vary, and we have been taking pricing -- some of the B2B categories, for example, the pricing has been almost 100% with the inflation. Whereas in the case of some of the Consumer and Bazaar business, it's more a proportion of the pricing. So...

I'm just -- what I'm trying to do is, just this 40% Y-o-Y growth -- I just wanted to understand how much of it would be...

Okay. That way. Okay, that is clear enough. So if you look at what we have published, we have published a set of numbers where you said year-on-year, the growth is essentially about 35%. And the average -- the volume kind of growth, which is sitting inside that is 25%.

That is on a stand-alone.

Stand-alone. I'm talking about stand-alone.

Probably the same proportion would exist on a consolidated basis also.

Yes.

Understood. Understood. And one more question. I know there was already a question about CapEx. But if you could just give a guidance as to -- in terms of rupees crore, how much of CapEx you would be doing in FY '22 and FY '23?

See, last year, we spent close to almost INR 400 crores as a company on CapEx. I think that's a similar set of number that we would expect. Again, as we said all the time, it varies typically between -- somewhere between 4% to 6% of revenue. So that's the kind of number you can expect.

Okay. And one more, in terms of growth that you have witnessed, and this is not just this quarter, but even, let's say, in normal times, I mean, over the last 5 years or so, how much difference would you have in between your growth in the large town, let's say, the top 20 cities versus rest of India? Is there a big difference in the growth? Or it's almost at the same level?

I would say, over the last 3 years or so the growth in the small towns and rural will probably be 1.5x that of the large towns.

And this is just because you are actually penetrating those areas and getting the growth from there, and that's what is driving the growth, right?

A, penetrating and more importantly, in our categories, Percy, what you also have to do is -- we've actually -- ever since we created this division called Emerging India, which also has a whole demand generating sales force -- when you've done that, automatically, therefore, the growth rates have gone up because we are doing a lot more work on the users and consumers now in these towns which we were not doing earlier. So it is not only distribution penetration, it is also obviously consumer penetration.

Right. And how much is the revenue split between these 2? Like your top 20 towns versus the rest of India? What would be the revenue split currently?

I won't go to top 20. I'll say, what we define as rural versus the rest of India -- rural India tends to be close to 30% -- rural and small town India tends to be 30%. 70% is the rest of India. But it's not 20 towns. It will probably be the top, I presume, 50 or 60 towns.

Okay. Understood. Yes. That's all from me. I think, Jenice, we can close the call now.

Thank you very much. Ladies and gentlemen, on behalf of IIFL Securities Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.