PIDILITINDNSE31 January 2019

Pidilite Industries Limited has informed the Exchange regarding 'Transcript of Earnings Call'.

Pidilite Industries Limited

,dossomest.._ Pidilite

31st January, 2019

The Secretary BSE Ltd. Corporate Relationship Dept., 14th floor, P. J. Tower, Dalai Street, Fort Mumbai - 400 001 Stock Code — 500331

Sub: Transcript of the Earnings Call

Dear Sir,

The Secretary National Stock Exchange of India Ltd. Exchange Plaza, Plot no. C/1, G Block, Bandra-Kuria Complex, Bandra (E), Mumbai - 400 051 Stock Code - PIDILITIND

We enclose herewith, a transcript of the Earnings Call held with Analyst/Investors on 24u" January, 2019.

Thanking You,

Yours faithfully, For Pidilite Industries Limited

Manisha Shetty Additional Company Secretary & Compliance Officer

Encl: a/a

Regd. Office Regent Chambers, 7th Floor Jamnalal Bajaj Marg 208 Nariman Point Mumbai 400 021

Pidilite Industries Limited

Corporate Office Ramkrishna Mandir Road Andheri - E, Mumbai 400059, India

T + 91 22 2835 7000 2835 7952 / 2835 7365 F + 91 22 2830 4482 www,pidilite.com CIN:L24100MH1969PLC014336

,disinmooke, Pidilite

“Pidilite Industries Limited "Pidilite Industries Limited Q3 FY2019 Earnings Conference Call” Q3 FY2019 Earnings Conference Call"

January 24, 2019 January 24, 2019

ANALYST: ANALYST:

MR. NIMIT SHAH - RESEARCH ANALYST - ICICI MR. NIMIT SHAH - RESEARCH ANALYST - ICICI SECURITIES SECURITIES

MANAGEMENT: MR. APURVA N. PAREKH - EXECUTIVE DIRECTOR - MANAGEMENT: MR. APURVA N. PAREKH - EXECUTIVE DIRECTOR -

PIDILITE INDUSTRIES LIMITED PIDILITE INDUSTRIES LIMITED MR. P. GANESH – CHIEF FINANCIAL OFFICER - PIDILITE MR. P. GANESH - CHIEF FINANCIAL OFFICER - PIDILITE INDUSTRIES LIMITED INDUSTRIES LIMITED

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,4•206"Nftet, Pidilite

Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

Moderator: Moderator:

Good day, ladies and gentlemen, and a very warm welcome to the Pidilite Industries Limited Q3 Good day, ladies and gentlemen, and a very warm welcome to the Pidilite Industries Limited Q3

FY 2019 Earnings Conference Call, hosted by ICICI Securities. Please note that this conference is FY 2019 Earnings Conference Call, hosted by ICICI Securities. Please note that this conference is

being recorded. I now hand the conference over to Mr. Nimit Shah from ICICI Securities. Thank being recorded. I now hand the conference over to Mr. Nimit Shah from ICICI Securities. Thank

you, and over to you, Nimit! you, and over to you, Nimit!

Nimit Shah: Nimit Shah:

Good afternoon, everyone. We would like to thank the management of Pidilite Industries for Good afternoon, everyone. We would like to thank the management of Pidilite Industries for

giving us an opportunity to host this call. From the management side, we have Mr. Apurva giving us an opportunity to host this call. From the management side, we have Mr. Apurva

Parekh, Executive Director; and Mr. P. Ganesh, the Chief Financial Officer on the call. Thank Parekh, Executive Director; and Mr. P. Ganesh, the Chief Financial Officer on the call. Thank

you, and over to you, Sir! you, and over to you, Sir!

P. Ganesh: P. Ganesh:

Good afternoon, everyone. We have delivered another quarter of double-digit volume growth. Good afternoon, everyone. We have delivered another quarter of double-digit volume growth.

However, this quarter saw our gross margins being impacted substantially as a result of input cost However, this quarter saw our gross margins being impacted substantially as a result of input cost

inflation and rupee depreciation. Fortunately, input costs have moderated. Overall, we remain inflation and rupee depreciation. Fortunately, input costs have moderated. Overall, we remain

committed to our strategic agenda of delivering consistent, profitable volume-led growth. committed to our strategic agenda of delivering consistent, profitable volume-led growth.

I will begin with a summary of the financial performance for the quarter and 9 months ended I will begin with a summary of the financial performance for the quarter and 9 months ended

December 2018 for the standalone business. December 2018 for the standalone business.

Net sales at Rs.1580 Crores grew by 16% over the same quarter last year. The underlying sales Net sales at Rs.1580 Crores grew by 16% over the same quarter last year. The underlying sales

volume and mix grew by 11%, which is a double-digit volume plus mix growth for the 6 quarters volume and mix grew by 11%, which is a double-digit volume plus mix growth for the 6 quarters

running, though in the current quarter, price increase did play some role in sales growth. This was running, though in the current quarter, price increase did play some role in sales growth. This was

driven by a 13% growth in sales volume and mix of Consumer & Bazaar products and the decline driven by a 13% growth in sales volume and mix of Consumer & Bazaar products and the decline

of 2% in sales volume and mix of Industrial Products. All our key product categories registered of 2% in sales volume and mix of Industrial Products. All our key product categories registered

good sales growth. good sales growth.

Our IP sales during the quarter were impacted by competitor pressure and market conditions. Net Our IP sales during the quarter were impacted by competitor pressure and market conditions. Net

sales for YTD December 2018 stood at Rs.4681 Crores and grew by 16% after adjusting for GST sales for YTD December 2018 stood at Rs.4681 Crores and grew by 16% after adjusting for GST

impact over the same period last year. impact over the same period last year.

During the quarter, the gross margins contracted by over 500 basis points given the high input During the quarter, the gross margins contracted by over 500 basis points given the high input

cost. Major raw material cost remained high during the quarter on account of high input prices cost. Major raw material cost remained high during the quarter on account of high input prices

and a weak rupee. Fortunately, input prices have moderated. The current spot price of our major and a weak rupee. Fortunately, input prices have moderated. The current spot price of our major

raw material VAM is below $1000 at present, as compared to the Q3 consumption cost of over raw material VAM is below $1000 at present, as compared to the Q3 consumption cost of over

$1300. The price increases taken during the quarter, coupled with softening input prices, should $1300. The price increases taken during the quarter, coupled with softening input prices, should

aid in margins getting back to near-normal levels. aid in margins getting back to near-normal levels.

EBITDA before non-operating income stood at Rs.327 Crores and declined by 9% over the same EBITDA before non-operating income stood at Rs.327 Crores and declined by 9% over the same

quarter last year. EBITDA margin for the quarter stood at 20.7%. The year 2014-2015 had quarter last year. EBITDA margin for the quarter stood at 20.7%. The year 2014-2015 had

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Regd. Office: Regent Chambers, 7th Floor Jamnalal Bajaj Marg, 208, Nariman Point, Mumbai – 400 021. Regd. Office: Regent Chambers, 7th Floor Jamnalal Bajaj Marg, 208, Nariman Point, Mumbai — 400 021. Investor Relations - investor.relations@pidilite.co.in Investor Relations - investor.relations@pidilite.co.in CIN: L24100MH1969PLC014336 CIN: L24100MH1969PLC014336

,..000•11"%24.., Pidilite

Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

witnessed input cost similar to the levels seen during the current quarter. The EBITDA margins witnessed input cost similar to the levels seen during the current quarter. The EBITDA margins

during that year was at about 17%. during that year was at about 17%.

EBITDA for YTD December 2018 stood at Rs.1035 Crores and was flat over the same period last EBITDA for YTD December 2018 stood at Rs.1035 Crores and was flat over the same period last

year, given the input cost-led contraction in gross margins by over 300 basis points and higher year, given the input cost-led contraction in gross margins by over 300 basis points and higher

A&SP spends. A&SP spends.

Profit after tax stood at Rs.225 Crores and declined by 6% over the same quarter last year. Profit Profit after tax stood at Rs.225 Crores and declined by 6% over the same quarter last year. Profit

after tax of YTD December 2018 stood at Rs.736 Crores and grew by 3% over the same period after tax of YTD December 2018 stood at Rs.736 Crores and grew by 3% over the same period

last year. last year.

Now I will move to a summary of the financial performance for the quarter and 9 months ended Now I will move to a summary of the financial performance for the quarter and 9 months ended

December 2018 for the consolidated business. Net sales at Rs.1838 Crores grew by 20% over the December 2018 for the consolidated business. Net sales at Rs.1838 Crores grew by 20% over the

same quarter last year. Net sales for YTD December 2018 stood at Rs.5404 Crores and grew by same quarter last year. Net sales for YTD December 2018 stood at Rs.5404 Crores and grew by

20%, adjusting for GST impact and after excluding the sales of Cyclo division of Pidilite USA, 20%, adjusting for GST impact and after excluding the sales of Cyclo division of Pidilite USA,

which was divested by Pidilite USA Inc. in June 2017 over the same period last year. which was divested by Pidilite USA Inc. in June 2017 over the same period last year.

EBITDA before non-operating income stood at Rs.337 Crores and declined by 9% over the same EBITDA before non-operating income stood at Rs.337 Crores and declined by 9% over the same

quarter last year, given the input cost-led contraction in gross margins by over 600 basis points. quarter last year, given the input cost-led contraction in gross margins by over 600 basis points.

EBITDA for YTD December 2018 stood at Rs.1091 Crores and grew by 2% over the same period EBITDA for YTD December 2018 stood at Rs.1091 Crores and grew by 2% over the same period

last year, given the input cost-led contraction in gross margins by over 400 basis points and higher last year, given the input cost-led contraction in gross margins by over 400 basis points and higher

A&SP spends. A&SP spends.

Profit after tax at Rs.220 Crores declined by 8% over the same quarter last year. For YTD Profit after tax at Rs.220 Crores declined by 8% over the same quarter last year. For YTD

December 2018, profit after tax at Rs.692 Crores declined by 4% over the same period last year. December 2018, profit after tax at Rs.692 Crores declined by 4% over the same period last year.

Moving on to our subsidiaries’ performance. Our domestic subsidiaries recorded a growth of Moving on to our subsidiaries' performance. Our domestic subsidiaries recorded a growth of

47.6% on a like-for-like basis, while international subsidiaries grew by 1% during the quarter. 47.6% on a like-for-like basis, while international subsidiaries grew by 1% during the quarter.

Nina, Percept, ICA Pidilite and Cipy, which are our domestic subsidiaries, reported strong sales Nina, Percept, ICA Pidilite and Cipy, which are our domestic subsidiaries, reported strong sales

numbers. numbers.

Nina's EBITDA for the quarter was impacted on account of a provision of Rs.4.4 Crores made Nina’s EBITDA for the quarter was impacted on account of a provision of Rs.4.4 Crores made

against an FD of Rs.8.8 Crores placed by the company Nina with the IL&FS group. against an FD of Rs.8.8 Crores placed by the company Nina with the IL&FS group.

Many of our focus international geographies, including Sri Lanka and Bangladesh, have also Many of our focus international geographies, including Sri Lanka and Bangladesh, have also

reported reasonably good sales growth. EBITDA across some of the international subsidiaries was reported reasonably good sales growth. EBITDA across some of the international subsidiaries was

impacted by high input cost and foreign exchange fluctuations. We continue to remain focused on impacted by high input cost and foreign exchange fluctuations. We continue to remain focused on

SAARC, Middle East and Africa markets in our international business as our growth drivers. SAARC, Middle East and Africa markets in our international business as our growth drivers.

We can now open the floor for questions. We can now open the floor for questions.

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Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

Moderator: Moderator:

Thank you. Ladies and gentlemen will now begin with the question and answer session. The first Thank you. Ladies and gentlemen will now begin with the question and answer session. The first

question is from the line of Avi Mehta from IIFL. Please go ahead. question is from the line of Avi Mehta from IIFL. Please go ahead.

Avi Mehta: Avi Mehta:

Congratulations on a good sales good performance. Just wanted to understand, have these demand Congratulations on a good sales good performance. Just wanted to understand, have these demand

trends that you witnessed in 3Q, have they sustained? Or are there any risks that you think we trends that you witnessed in 3Q, have they sustained? Or are there any risks that you think we

should be concerned about on demand? should be concerned about on demand?

Apurva Parekh: Apurva Parekh:

See, as you have seen, Avi that we have had almost now 6 quarters of consistent double-digit See, as you have seen, Avi that we have had almost now 6 quarters of consistent double-digit

volume growth. So again, we continue to remain cautiously optimistic. It is difficult to say volume growth. So again, we continue to remain cautiously optimistic. It is difficult to say

whether there are some external or macro factors, which can impact the growth so it is difficult to whether there are some external or macro factors, which can impact the growth so it is difficult to

forecast. But based on our recent performance, we remain cautiously optimistic. forecast. But based on our recent performance, we remain cautiously optimistic.

Avi Mehta: Avi Mehta:

Sir, no, I was just understanding the caution reason because, I mean, now it is as you rightly said, Sir, no, I was just understanding the caution reason because, I mean, now it is as you rightly said,

6 quarters of great performance? 6 quarters of great performance?

Apurva Parekh: Apurva Parekh:

It is like do we foresee anything? We cannot foresee anything of that nature. However, it is It is like do we foresee anything? We cannot foresee anything of that nature. However, it is

always good to be cautiously optimistic. That is just the way we think. always good to be cautiously optimistic. That is just the way we think

Avi Mehta: Avi Mehta:

Fair enough. Sir, lastly, just on the gross margin front. I am a little confused about the Q-o-Q Fair enough. Sir, lastly, just on the gross margin front. I am a little confused about the Q-o-Q

contraction. Now we saw price increases that you had clearly announced in the 2Q call as well, contraction. Now we saw price increases that you had clearly announced in the 2Q call as well,

and you had highlighted that VAM prices also had started to moderate now from USD/INR terms and you had highlighted that VAM prices also had started to moderate now from USD/INR terms

as well. Could you highlight what exactly is the reason for this moderation, because there seems as well. Could you highlight what exactly is the reason for this moderation, because there seems

to be a sharp Q-o-Q moderation and just correspondingly, a question, have now the price increase to be a sharp Q-o-Q moderation and just correspondingly, a question, have now the price increase

has taken? Are they enough for where the VAM prices stand right now? Or do you need more has taken? Are they enough for where the VAM prices stand right now? Or do you need more

pricing? pricing?

P. Ganesh: P. Ganesh:

You are right. On a Q-o-Q basis, the gross margins have contracted by about 200 basis points. You are right. On a Q-o-Q basis, the gross margins have contracted by about 200 basis points.

And what we also need to bear in mind is that the input cost scenario continued to be high in Q3, And what we also need to bear in mind is that the input cost scenario continued to be high in Q3,

also to some extent, impacted by high-cost inventory, which we are holding. And also, the rupee- also to some extent, impacted by high-cost inventory, which we are holding. And also, the rupee-

dollar exchange rate had also deteriorated during the quarter when compared to Q2. While VAM dollar exchange rate had also deteriorated during the quarter when compared to Q2. While VAM

is taken as a yardstick given that it is the single largest raw material, there are other raw materials is taken as a yardstick given that it is the single largest raw material, there are other raw materials

also which have seen an increase. So, all of this put together meant that there was a contraction as also which have seen an increase. So, all of this put together meant that there was a contraction as

far as gross margins on a Q-o-Q basis is concerned. Of course, on a Y-o-Y basis, the contraction far as gross margins on a Q-o-Q basis is concerned. Of course, on a Y-o-Y basis, the contraction

is much higher at more than 500 basis points. So, we have taken some more price increases in Q3 is much higher at more than 500 basis points. So, we have taken some more price increases in Q3

as well. Now with the softening of VAM prices, generally, the input prices and the VAM being as well. Now with the softening of VAM prices, generally, the input prices and the VAM being

the major one for us, while the average consumption cost was upwards of $1300 for us in Q3, the the major one for us, while the average consumption cost was upwards of $1300 for us in Q3, the

current spot prices are less than $1000. So, with the softening of input costs coming in; with the current spot prices are less than $1000. So, with the softening of input costs coming in; with the

rupee-dollar also seeming to stabilize at relatively lower levels but of course, it is too early to rupee-dollar also seeming to stabilize at relatively lower levels but of course, it is too early to

predict anything in terms of which way the rupee-dollar will go; and also, the full impact of price predict anything in terms of which way the rupee-dollar will go; and also, the full impact of price

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Alegoinwee Pidilite

Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

increases which we have taken will be seen in Q4, all of these things put together, we should see increases which we have taken will be seen in Q4, all of these things put together, we should see

ourselves getting back to somewhere close to normal levels as far as gross margins go. ourselves getting back to somewhere close to normal levels as far as gross margins go.

Avi Mehta: Avi Mehta:

Sir, as far as the gross margin or is it the EBITDA margin? Because you had indicated your last Sir, as far as the gross margin or is it the EBITDA margin? Because you had indicated your last

quarter, I do not know if that is correct, my understanding was that normal EBITDA levels is 22% quarter, I do not know if that is correct, my understanding was that normal EBITDA levels is 22%

to 23%. Is that what you mean? to 23%. Is that what you mean?

P. Ganesh: P. Ganesh:

Absolutely yes. Absolutely yes.

Apurva Parekh: Apurva Parekh:

EBITDA levels will also depend on what sales growth we achieved, advertising and promotion EBITDA levels will also depend on what sales growth we achieved, advertising and promotion

expense. So, in a quarter-to-quarter basis, that number can fluctuate a bit. And it will also vary expense. So, in a quarter-to-quarter basis, that number can fluctuate a bit. And it will also vary

greatly depending on the topline growth and the advertising and promotional expense in that greatly depending on the topline growth and the advertising and promotional expense in that

quarter, along with the gross margin. So, you need to see both in conjunction. Also, if you see, quarter, along with the gross margin. So, you need to see both in conjunction. Also, if you see,

last quarter for us, every year, the gross EBITDA margins are lower because the sales base is also last quarter for us, every year, the gross EBITDA margins are lower because the sales base is also

lower. So, this is just to add, on a quarter-to-quarter basis, you see then the sales growth and other lower. So, this is just to add, on a quarter-to-quarter basis, you see then the sales growth and other

expenses will also have an impact on the EBITDA margin. expenses will also have an impact on the EBITDA margin.

P. Ganesh: P. Ganesh:

Yes, because leverage comes into play when you look at EBITDA. Yes, because leverage comes into play when you look at EBITDA.

Avi Mehta: Avi Mehta:

I think gross margin is what you are talking about, then EBITDA will depend on how the leverage I think gross margin is what you are talking about, then EBITDA will depend on how the leverage

plays out. And Sir, lastly, what did you say in the first remarks; some sales got impacted by plays out. And Sir, lastly, what did you say in the first remarks; some sales got impacted by

competitive pressures and market conditions? Was that YTD sales? Or what was that, Sir? competitive pressures and market conditions? Was that YTD sales? Or what was that, Sir?

P. Ganesh: P. Ganesh:

No, that is for our IP division. No, that is for our IP division.

Apurva Parekh: Apurva Parekh:

See, our IP division, I would just like to add, first of all, our IP division is made up of lot of See, our IP division, I would just like to add, first of all, our IP division is made up of lot of

different verticals serving lot of different type of end consumer, both in India and outside of India. different verticals serving lot of different type of end consumer, both in India and outside of India.

So, some of the product segments like leather, footwear and some textile business got impacted So, some of the product segments like leather, footwear and some textile business got impacted

because of demand scenario. In some overseas countries, the demand conditions were not so because of demand scenario. In some overseas countries, the demand conditions were not so

great. So that was the reason. And in addition to that, in a rising raw material scenario, the great. So that was the reason. And in addition to that, in a rising raw material scenario, the

competition is significant on price, and hence, also, that causes some impact on the market share. competition is significant on price, and hence, also, that causes some impact on the market share.

So, this was about IP business. The comment was regarding the low growth of IP business. So, this was about IP business. The comment was regarding the low growth of IP business.

Avi Mehta: Avi Mehta:

Thank you. I will come back in the queue for further questions. Thank you. I will come back in the queue for further questions.

Moderator: Moderator:

Thank you. The next question is from the line of Abneesh Roy from Edelweiss. Please go ahead. Thank you. The next question is from the line of Abneesh Roy from Edelweiss. Please go ahead.

Abneesh Roy: Abneesh Roy:

Sir, my question is on the IL&FS exposure. So, one is, is this in the IL&FS subsidiary? Second, Sir, my question is on the IL&FS exposure. So, one is, is this in the IL&FS subsidiary? Second,

when was this done? And apart from this Rs.8.8 Crores, is there any more exposure in any when was this done? And apart from this Rs.8.8 Crores, is there any more exposure in any

subsidiary and/or at the parent level? subsidiary and/or at the parent level?

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Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

P. Ganesh: P. Ganesh:

Yes. So, the total exposure at Pidilite Group is Rs.8.8 Crores, and it is entirely in our subsidiary, Yes. So, the total exposure at Pidilite Group is Rs.8.8 Crores, and it is entirely in our subsidiary,

Nina. And this exposure was taken more than three years back. And at this point in time, we have Nina. And this exposure was taken more than three years back. And at this point in time, we have

made the provision of 50% of the amount, given that there is uncertainty in terms of where this is made the provision of 50% of the amount, given that there is uncertainty in terms of where this is

headed. And therefore, as a conservative measure, we have provided for half the amount. headed. And therefore, as a conservative measure, we have provided for half the amount.

Apurva Parekh: Apurva Parekh:

This was done in very early days of Nina. At that time, the management invested based on the This was done in very early days of Nina. At that time, the management invested based on the

rating. But this was done at very early stage of Nina’s integration with Pidilite. rating. But this was done at very early stage of Nina's integration with Pidilite.

P. Ganesh: P. Ganesh:

Other than this, we do not have any other exposure to the IL&FS group. Other than this, we do not have any other exposure to the IL&FS group.

Abneesh Roy: Abneesh Roy:

And this exposure is to IL&FS parent or the subsidiary? And this exposure is to IL&FS parent or the subsidiary?

P. Ganesh: P. Ganesh:

Partly to parent and partly to subsidiary. Partly to parent and partly to subsidiary.

Abneesh Roy: Abneesh Roy:

And why was it not taken write off as in, in the previous quarter? A lot of companies took in the And why was it not taken write off as in, in the previous quarter? A lot of companies took in the

Q2. Q2.

P. Ganesh: P. Ganesh:

So, this is something, which we will review on a quarter-by-quarter basis. And given that clarity So, this is something, which we will review on a quarter-by-quarter basis. And given that clarity

has not emerged as yet is why we have taken this provision. has not emerged as yet is why we have taken this provision.

Abneesh Roy: Abneesh Roy:

Sir, coming to the business side, if you see paint companies, the results whatever has come. They Sir, coming to the business side, if you see paint companies, the results whatever has come. They

managed their margins much better. And this is something this is not only this year. Every time managed their margins much better. And this is something this is not only this year. Every time

we see high volatility, Pidilite’s margins are more volatile. Now my question is why not change we see high volatility, Pidilite's margins are more volatile. Now my question is why not change

it? And going ahead, do we see the price hikes becoming more frequent? You have much more it? And going ahead, do we see the price hikes becoming more frequent? You have much more

market share in your key categories versus the paint companies, so why you do not want to take market share in your key categories versus the paint companies, so why you do not want to take

more frequent price hikes if warranted? more frequent price hikes if warranted?

Apurva Parekh: Apurva Parekh:

No, I think, see, first of all, paint business and our business is very different. So, it is not No, I think, see, first of all, paint business and our business is very different. So, it is not

comparable, number one. Second thing is if you look at our overall margin, they are significantly comparable, number one. Second thing is if you look at our overall margin, they are significantly

higher than paint companies, including Asian Paints. So, we have a different approach of higher than paint companies, including Asian Paints. So, we have a different approach of

managing our margin. As we have always said, we like to operate in a margin band. And when I managing our margin. As we have always said, we like to operate in a margin band. And when I

say like to operate, it does not mean every quarter. Generally, on a year-to-year basis, we like to say like to operate, it does not mean every quarter. Generally, on a year-to-year basis, we like to

operate in a margin band. Now if you really see in last 3 years the way our margin have shot up, operate in a margin band. Now if you really see in last 3 years the way our margin have shot up,

we have been consistently saying that some correction is possible. Now this correction greatly we have been consistently saying that some correction is possible. Now this correction greatly

depends on the sudden changes that can happen in prices of key raw material and dollar. Now we depends on the sudden changes that can happen in prices of key raw material and dollar. Now we

as a company do not believe that we should respond quarter-to-quarter. To maintain very, very as a company do not believe that we should respond quarter-to-quarter. To maintain very, very

strong market position, we need to be judicious about making the price increases. But as you have strong market position, we need to be judicious about making the price increases. But as you have

seen over a very medium- to long-term period, that we consistently are able to get back to the seen over a very medium- to long-term period, that we consistently are able to get back to the

right kind of margin level, even though we may have an impact for a short period of time. So, our right kind of margin level, even though we may have an impact for a short period of time. So, our

approach is to follow in a particular manner. Plus, we are into large number of diverse segment approach is to follow in a particular manner. Plus, we are into large number of diverse segment

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Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

and for us to continue kind of a price increase we believe it is not the most judicious way to and for us to continue kind of a price increase we believe it is not the most judicious way to

manage the business. So, we have our approach and we believe our approach is doing quite well. manage the business. So, we have our approach and we believe our approach is doing quite well.

But once in a while, this can happen, if there is such a sudden sharp increase in the price of VAM But once in a while, this can happen, if there is such a sudden sharp increase in the price of VAM

and some of the other raw materials. and some of the other raw materials.

Abneesh Roy: Abneesh Roy:

Sir, last quarter, your Y-o-Y price hike was 3.5%, and you mentioned to Avi that further price Sir, last quarter, your Y-o-Y price hike was 3.5%, and you mentioned to Avi that further price

hike has happened. Now how much is the portfolio hike? hike has happened. Now how much is the portfolio hike?

Apurva Parekh: Apurva Parekh:

See, we have not done price increase in all the categories. But if you see many of the major See, we have not done price increase in all the categories. But if you see many of the major

product categories the price increase is in the order of about 5%. product categories the price increase is in the order of about 5%.

Abneesh Roy: Abneesh Roy:

So, from 3.5%, further 1.5% has been added. So, from 3.5%, further 1.5% has been added.

Apurva Parekh: Apurva Parekh:

1.5%, 2%. In some products, a bit more as well. 1.5%, 2%. In some products, a bit more as well.

P. Ganesh: P. Ganesh:

Yes, that is right. Yes, that is right.

Abneesh Roy: Abneesh Roy:

Sir, coming to the international part of the business, if you could elaborate Brazil, more Sir, coming to the international part of the business, if you could elaborate Brazil, more

competition. Is it short term? What are key players, is it the market leader? And in the U.S., the competition. Is it short term? What are key players, is it the market leader? And in the U.S., the

adult coloring, what is the issue here? We, Sir, keep seeing this issue coming back again and adult coloring, what is the issue here? We, Sir, keep seeing this issue coming back again and

again. So, what is the solution, long term? again. So, what is the solution, long term?

Apurva Parekh: Apurva Parekh:

Brazil, the key competitor is Saint-Gobain. Saint-Gobain has acquired a business in Brazil. And Brazil, the key competitor is Saint-Gobain. Saint-Gobain has acquired a business in Brazil. And

Henkel is the second company. So, these two are the major competitors in the segment in which Henkel is the second company. So, these two are the major competitors in the segment in which

we operate. Brazil economy, as you know, has been going through difficult period, and hence, we operate. Brazil economy, as you know, has been going through difficult period, and hence,

people have been fighting for share in that kind of market. And hence, it is competitive from the people have been fighting for share in that kind of market. And hence, it is competitive from the

view of pricing and margins. While we as a company took a call few years ago, we want to make view of pricing and margins. While we as a company took a call few years ago, we want to make

sure that we do not lose money and it is important that we do not do the kind of pricing strategy sure that we do not lose money and it is important that we do not do the kind of pricing strategy

which may result into losses. And hence, we have been conservative with a focus that, “Let us which may result into losses. And hence, we have been conservative with a focus that, "Let us

maintain the business, and let us make sure that we do not incur losses.” So, with this approach, maintain the business, and let us make sure that we do not incur losses." So, with this approach,

some businesses we have to let go, where the price competition and intensity has been more. Now some businesses we have to let go, where the price competition and intensity has been more. Now

we have taken lot of effort in terms of cutting our costs and improving our efficiency and which is we have taken lot of effort in terms of cutting our costs and improving our efficiency and which is

allowing us to maintain a breakeven or a little better than that. But however, long-term, we are allowing us to maintain a breakeven or a little better than that. But however, long-term, we are

evaluating various options. In terms of economy that was fairly bad, we are seeing some signs of evaluating various options. In terms of economy that was fairly bad, we are seeing some signs of

improvement as the new government has come in. And we have taken some initiatives further in improvement as the new government has come in. And we have taken some initiatives further in

terms of sourcing and cost reduction. So, we will now closely see what goes forward. But terms of sourcing and cost reduction. So, we will now closely see what goes forward. But

compared to what were the situation three or four years back, we are in a better position. As far as compared to what were the situation three or four years back, we are in a better position. As far as

U.S.A. goes, in U.S.A., if you recall two three years ago, this adult coloring trend had very U.S.A. goes, in U.S.A., if you recall two three years ago, this adult coloring trend had very

significantly taken up and the sales growth was very high for couple of years. Now that trend has significantly taken up and the sales growth was very high for couple of years. Now that trend has

moderated significantly, and hence, we are seeing the carry forward impact of that, which will moderated significantly, and hence, we are seeing the carry forward impact of that, which will

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continue. Hopefully, now going forward, the impact may not be much. But that was an impact continue. Hopefully, now going forward, the impact may not be much. But that was an impact

that we saw because of very sudden growth in sales because of this new trend, which on that we saw because of very sudden growth in sales because of this new trend, which on

moderation, is now resulting into reduction in sale. Now again we run in an efficient manner, moderation, is now resulting into reduction in sale. Now again we run in an efficient manner,

whereby we are making some profit while evaluating the strategic options. So as far as overall whereby we are making some profit while evaluating the strategic options. So as far as overall

strategic objective, we are not investing more money in both of the subsidiaries. We are trying to strategic objective, we are not investing more money in both of the subsidiaries. We are trying to

manage them efficiently till we will find some way to have more strategic options evaluated. manage them efficiently till we will find some way to have more strategic options evaluated.

Abneesh Roy: Abneesh Roy:

Sir, the last question, volume growth was quite strong in domestic. So, in region-specific, do you Sir, the last question, volume growth was quite strong in domestic. So, in region-specific, do you

want to highlight something? Kerala, was it much stronger in terms of volume growth? want to highlight something? Kerala, was it much stronger in terms of volume growth?

Apurva Parekh: Apurva Parekh:

Kerala may have been better than all India, but it is not that anything there has had created a big Kerala may have been better than all India, but it is not that anything there has had created a big

impact on the all India growth. We saw that in our main product categories like adhesives and impact on the all India growth. We saw that in our main product categories like adhesives and

sealants and construction chemicals, there has been good growth across most of the markets. So, sealants and construction chemicals, there has been good growth across most of the markets. So,

most of our brands in this portfolio across most of the markets, they have done well. most of our brands in this portfolio across most of the markets, they have done well.

Abneesh Roy: Abneesh Roy:

And competitive intensity in Fevikwik remains are not a big concern, right, from the other And competitive intensity in Fevikwik remains are not a big concern, right, from the other

organized player? organized player?

Apurva Parekh: Apurva Parekh:

We do not believe it has created an impact on our share. So as of now it is like that, but we watch We do not believe it has created an impact on our share. So as of now it is like that, but we watch

everybody very closely. But we do not believe it has had material impact on our share. everybody very closely. But we do not believe it has had material impact on our share.

Abneesh Roy: Abneesh Roy:

Thank you, Thank you,

Moderator: Moderator:

Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead. Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead.

Anand Shah: Anand Shah:

Thanks for the opportunity. Sir, just a few questions on the top line growth. So firstly, is there any Thanks for the opportunity. Sir, just a few questions on the top line growth. So firstly, is there any

element of festive timing shift that would have propelled the growth a little bit higher, like it element of festive timing shift that would have propelled the growth a little bit higher, like it

happened in paints? happened in paints?

Apurva Parekh: Apurva Parekh:

Small impact. We are not as linked to paint, but some impact would have been there. But we are Small impact. We are not as linked to paint, but some impact would have been there. But we are

not that closely linked to paint cycle or to the Diwali cycle. However, as Ganesh mentioned not that closely linked to paint cycle or to the Diwali cycle. However, as Ganesh mentioned

earlier, there will be some impact because we had some price increases in some key product earlier, there will be some impact because we had some price increases in some key product

towards end of December, and hence, the channel may have bought a bit more inventory ahead of towards end of December, and hence, the channel may have bought a bit more inventory ahead of

the price increase. So that would have played some role in the growth. the price increase. So that would have played some role in the growth.

Anand Shah: Anand Shah:

Okay. So, you are saying marginal upstocking would happen ahead of price hikes? Okay. So, you are saying marginal upstocking would happen ahead of price hikes?

Apurva Parekh: Apurva Parekh:

Yes. Upstocking would have happened, yes. Yes. Upstocking would have happened, yes.

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Anand Shah: Anand Shah:

Okay. And are you seeing underlying demand trend picking up in general? I mean, we are seeing Okay. And are you seeing underlying demand trend picking up in general? I mean, we are seeing

this across building materials. Any comments that you can add? this across building materials. Any comments that you can add?

Apurva Parekh: Apurva Parekh:

See, we do not have any comment except to say that we are seeing steady, consistent demand See, we do not have any comment except to say that we are seeing steady, consistent demand

across many parts of India. But I do not have any comment beyond that. Anything, Ganesh, across many parts of India. But I do not have any comment beyond that. Anything, Ganesh,

would you like to add? would you like to add?

P. Ganesh: P. Ganesh:

So, across our categories, we have seen fairly good growth. So, across our categories, we have seen fairly good growth.

Anand Shah: Anand Shah:

Okay. And what about art materials, specifically? I mean, has that stabilized and is back on Okay. And what about art materials, specifically? I mean, has that stabilized and is back on

growth trajectory? growth trajectory?

Apurva Parekh: Apurva Parekh:

Art materials, so hobby and craft. Our hobby coloring business is stable and that is doing okay. Art materials, so hobby and craft. Our hobby coloring business is stable and that is doing okay.

Maybe the question that you are asking is about our handicraft adhesive portfolio, which had seen Maybe the question that you are asking is about our handicraft adhesive portfolio, which had seen

difficulties in last couple of years. So that segment is still facing some headwinds in terms of the difficulties in last couple of years. So that segment is still facing some headwinds in terms of the

way in which the handicraft segments should have picked up. We do not see that level of growth. way in which the handicraft segments should have picked up. We do not see that level of growth.

But overall, at the company level, the contribution of this business is fairly small. But we are not But overall, at the company level, the contribution of this business is fairly small. But we are not

seeing significant improvement, maybe some improvement, but not significant. seeing significant improvement, maybe some improvement, but not significant.

Anand Shah: Anand Shah:

Okay. And on this, the international business, obviously, the volatility in INR would have Okay. And on this, the international business, obviously, the volatility in INR would have

impacted the margins and there would be a lag in price hikes and all as well earlier. And now, impacted the margins and there would be a lag in price hikes and all as well earlier. And now,

given that both crude and INR have reversed to an extent, do you see that margin stabilizing or given that both crude and INR have reversed to an extent, do you see that margin stabilizing or

improving a bit in the next few quarters? improving a bit in the next few quarters?

Apurva Parekh: Apurva Parekh:

So some of the subsidiaries like Bangladesh and Sri Lanka will see clear, immediate So some of the subsidiaries like Bangladesh and Sri Lanka will see clear, immediate

improvement. Egypt will also see some improvement because they all consume good level of improvement. Egypt will also see some improvement because they all consume good level of

VAM. So their margin should certainly improve. VAM. So their margin should certainly improve.

P. Ganesh: P. Ganesh:

And as regards to currency, while the rupee has now stabilized, the Sri Lankan rupee, for And as regards to currency, while the rupee has now stabilized, the Sri Lankan rupee, for

example, has deteriorated. example, has deteriorated.

Apurva Parekh: Apurva Parekh:

Right. Right.

P. Ganesh: P. Ganesh:

So country-to-country currency impact, we will need to wait and watch. So country-to-country currency impact, we will need to wait and watch.

Anand Shah: Anand Shah:

And then just lastly, on the domestic subsidiaries, I mean, they are doing quite well. And And then just lastly, on the domestic subsidiaries, I mean, they are doing quite well. And

specifically, on ICA, I mean that piece is now completely stabilized and back on growth specifically, on ICA, I mean that piece is now completely stabilized and back on growth

trajectory? trajectory?

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Apurva Parekh: Apurva Parekh:

But on ICA, we must add one point there. Last year, we had some supply disruption in December, But on ICA, we must add one point there. Last year, we had some supply disruption in December,

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and hence, the sales growth is a bit higher because of the lower sale in December of last year. But and hence, the sales growth is a bit higher because of the lower sale in December of last year. But

having said that, the business is stabilizing well. We have commissioned a new manufacturing having said that, the business is stabilizing well. We have commissioned a new manufacturing

plant in Gujarat, so now we will be making these products in India. Many of those were imported plant in Gujarat, so now we will be making these products in India. Many of those were imported

earlier. So that it is a big step forward. But these businesses have stabilized well, all of them: earlier. So that it is a big step forward. But these businesses have stabilized well, all of them:

Nina, Percept, ICA and now even Cipy, which has been the most recent acquisitions. So, we Nina, Percept, ICA and now even Cipy, which has been the most recent acquisitions. So, we

believe that the domestic subsidiaries are on right track. Of course, there is a lot of work to do believe that the domestic subsidiaries are on right track. Of course, there is a lot of work to do

there, but they have sort of the initial start has been good. there, but they have sort of the initial start has been good.

Anand Shah: Anand Shah:

Okay. And post the commencement of this manufacturing facility for ICA, you do see margins Okay. And post the commencement of this manufacturing facility for ICA, you do see margins

also improving for ICA? also improving for ICA?

P. Ganesh: P. Ganesh:

Yes. So, as we ramp up manufacturing, we should start seeing margins improve. Yes. So, as we ramp up manufacturing, we should start seeing margins improve.

Anand Shah: Anand Shah:

So FY2020 and 2021 onwards, you at least over the next four quarters or so, you should start So FY2020 and 2021 onwards, you at least over the next four quarters or so, you should start

seeing better margins in ICA? seeing better margins in ICA?

Apurva Parekh: Apurva Parekh:

Yes. Yes.

Anand Shah: Anand Shah:

Thank you. Thank you.

Moderator: Moderator:

Thank you. The next question is from the line of Kartik Mehta from IDFC Mutual Fund. Please Thank you. The next question is from the line of Kartik Mehta from IDFC Mutual Fund. Please

go ahead. go ahead.

Kartik Mehta: Kartik Mehta:

Thanks a lot for the opportunity. Sir, my question is pertaining to the price hike. What we have Thanks a lot for the opportunity. Sir, my question is pertaining to the price hike. What we have

taken was considering the VAM prices of $1300? Or we actually took the price hike a little lesser taken was considering the VAM prices of $1300? Or we actually took the price hike a little lesser

than what was required, and now the crude has corrected so we are balancing out? than what was required, and now the crude has corrected so we are balancing out?

Apurva Parekh: Apurva Parekh:

I think it depends on both dollar and crude. The price hike we had done was not to fully mitigate I think it depends on both dollar and crude. The price hike we had done was not to fully mitigate

the impact of $1300-plus VAM and dollar at Rs.73, Rs.74, but it would have mitigated lot of cost the impact of $1300-plus VAM and dollar at Rs.73, Rs.74, but it would have mitigated lot of cost

increase. But now the cost has come down substantially, as we said earlier. increase. But now the cost has come down substantially, as we said earlier.

Moderator: Moderator:

Thank you. The next question is from the line of Tejash Shah from Spark Capital. Please go Thank you. The next question is from the line of Tejash Shah from Spark Capital. Please go

ahead. ahead.

Tejash Shah: Tejash Shah:

Sir, the kind of growth we have been witnessing for last six quarters, is it a fair assumption that Sir, the kind of growth we have been witnessing for last six quarters, is it a fair assumption that

we must be gaining market share in a large chunk of our portfolio, because industry growth we must be gaining market share in a large chunk of our portfolio, because industry growth

cannot be this high for this long? cannot be this high for this long?

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Apurva Parekh: Apurva Parekh:

It is possible that we would have gained share, yes. In some of our product categories, we would It is possible that we would have gained share, yes. In some of our product categories, we would

have gained market share, yes. have gained market share, yes.

Tejash Shah: Tejash Shah:

But this is against organized players? Or this is unorganized players losing market share? But this is against organized players? Or this is unorganized players losing market share?

Apurva Parekh: Apurva Parekh:

I would say it would be mix of both. I would say it would be mix of both.

P. Ganesh: P. Ganesh:

And again, this is what we estimate could be the position, because we also need to bear in mind And again, this is what we estimate could be the position, because we also need to bear in mind

that we do not have authentic market share data like in AC Nielsen, for example. But having said that we do not have authentic market share data like in AC Nielsen, for example. But having said

that, with this kind of growth, yes, it is possible that we could have gained market share. that, with this kind of growth, yes, it is possible that we could have gained market share.

Apurva Parekh: Apurva Parekh:

In many of the markets, we see that we probably have gained share. But there is not any firm, In many of the markets, we see that we probably have gained share. But there is not any firm,

accurate data to support our position, so we hesitate to say. accurate data to support our position, so we hesitate to say.

P. Ganesh: P. Ganesh:

And also, in some of our key categories like construction chemicals, for example, it is more about And also, in some of our key categories like construction chemicals, for example, it is more about

creating the market and driving consumption than so much about market share. creating the market and driving consumption than so much about market share.

Tejash Shah: Tejash Shah:

Sure. So which are categories, if you can call out, where you are at least based on your anecdotal Sure. So which are categories, if you can call out, where you are at least based on your anecdotal

understanding, you believe that you would have gained market share? Or top three categories, just understanding, you believe that you would have gained market share? Or top three categories, just

to give some colour? to give some colour?

Apurva Parekh: Apurva Parekh:

See, the two big categories, adhesives and sealants and construction chemicals. Now within there, See, the two big categories, adhesives and sealants and construction chemicals. Now within there,

there are subcategories and other detail. But our two broad categories, the large categories, are there are subcategories and other detail. But our two broad categories, the large categories, are

adhesives and sealants and construction chemicals. adhesives and sealants and construction chemicals.

Tejash Shah: Tejash Shah:

Okay. So you are saying overall categories, you would have gained market share. But Okay. So you are saying overall categories, you would have gained market share. But

subcategories, you are not sure whether how to approach that? subcategories, you are not sure whether how to approach that?

Apurva Parekh: Apurva Parekh:

We have some general idea, but I would not like to sort of share it because the reliable, accurate We have some general idea, but I would not like to sort of share it because the reliable, accurate

data is not there. But we generally are positive about the sales development that has happened data is not there. But we generally are positive about the sales development that has happened

over last six quarters. We have made good progress and we have certainly gained share in some over last six quarters. We have made good progress and we have certainly gained share in some

of our product categories. of our product categories.

Tejash Shah: Tejash Shah:

Sure. Sir, secondly, there is a lot of thrust in the last two years on NPD pipeline and we have been Sure. Sir, secondly, there is a lot of thrust in the last two years on NPD pipeline and we have been

talking about this emerging portfolio or core versus the growth portfolio. So what will be the talking about this emerging portfolio or core versus the growth portfolio. So what will be the

share of this new portfolio in last two, three quarters? And has the share been increasing as we are share of this new portfolio in last two, three quarters? And has the share been increasing as we are

going along on that? going along on that?

Apurva Parekh: Apurva Parekh:

See, the products introduced in the last two to three quarters will not have any meaningful See, the products introduced in the last two to three quarters will not have any meaningful

contribution if that is what you are asking. Generally, in our kind of product category, the contribution if that is what you are asking. Generally, in our kind of product category, the

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gestation period is fairly long. Because you must understand, it takes years for changing habits gestation period is fairly long. Because you must understand, it takes years for changing habits

of, majorly, craftsmen. So these are craftsmen who are using products for years together and it of, majorly, craftsmen. So these are craftsmen who are using products for years together and it

takes lot of effort to convert them. There is a long gestation period. But once the change takes lot of effort to convert them. There is a long gestation period. But once the change

happens, then they remain with you for a long period of time. But to give you an example of happens, then they remain with you for a long period of time. But to give you an example of

some of the products that we have been sort of trying to increase the sale, there is this product some of the products that we have been sort of trying to increase the sale, there is this product

that I call Fevicol Hi-Per, which is an advanced anti-bubble type of Fevicol. This product is that I call Fevicol Hi-Per, which is an advanced anti-bubble type of Fevicol. This product is

now doing really well. There is another product called Fevicol HeatX, which is a fast-setting now doing really well. There is another product called Fevicol HeatX, which is a fast-setting

Fevicol but with the heat resistance property. That product is also doing very well. We brought Fevicol but with the heat resistance property. That product is also doing very well. We brought

a sprayable Fevicol, which we advertised on television called Fevicol Ezee Spray.That is also a sprayable Fevicol, which we advertised on television called Fevicol Ezee Spray.That is also

doing very well. So these are examples of product that we have introduced, which are doing doing very well. So these are examples of product that we have introduced, which are doing

well in their respective segments. But some of them have been introduced three years ago, four well in their respective segments. But some of them have been introduced three years ago, four

years ago, and two years ago. So in our case, the gestation periods are a bit longer and it does years ago, and two years ago. So in our case, the gestation periods are a bit longer and it does

take a little bit of time to grow. We have launched a set of tile and stone products, which are take a little bit of time to grow. We have launched a set of tile and stone products, which are

doing well. So in each of our product end category, we have introduced products, and some of doing well. So in each of our product end category, we have introduced products, and some of

that are doing well, but they take few years to really start changing the habit and achieving that are doing well, but they take few years to really start changing the habit and achieving

some kind of sales. some kind of sales.

Tejash Shah: Tejash Shah:

Sure. And Sir, any update on Parivartan project? You were talking about putting up factories and Sure. And Sir, any update on Parivartan project? You were talking about putting up factories and

focusing on cost efficiency in mines. So I just wanted to know. focusing on cost efficiency in mines. So I just wanted to know.

Apurva Parekh: Apurva Parekh:

So regarding Parivartan project, we have identified and we are going to open a new So regarding Parivartan project, we have identified and we are going to open a new

manufacturing plant in South of India. So there was lot of work done on the network design, and manufacturing plant in South of India. So there was lot of work done on the network design, and

coming out of that, we are going to set up a manufacturing plant in South of India. And in coming out of that, we are going to set up a manufacturing plant in South of India. And in

addition to that, Parivartan project was also about identifying other cost-saving opportunities in addition to that, Parivartan project was also about identifying other cost-saving opportunities in

packing material, raw material, manufacturing process, etc., So in many of those identified areas, packing material, raw material, manufacturing process, etc., So in many of those identified areas,

we have made progress and implemented some of the initiatives. we have made progress and implemented some of the initiatives.

Tejash Shah: Tejash Shah:

Sure. Sir, lastly, based on some of the previous questions also, looking at where VAM prices have Sure. Sir, lastly, based on some of the previous questions also, looking at where VAM prices have

stabilized Q-o-Q and dollar has also moved in our favour, and with all the cost-efficiency stabilized Q-o-Q and dollar has also moved in our favour, and with all the cost-efficiency

program that we have been undertaking, do you think that the upper side of your guidance on program that we have been undertaking, do you think that the upper side of your guidance on

margins can be revisited further on the positive direction? Or you believe that you will reinvest margins can be revisited further on the positive direction? Or you believe that you will reinvest

anything above that threshold number? anything above that threshold number?

Apurva Parekh: Apurva Parekh:

See, if you look at the three years that we saw, that 2015-2016, 2016-2017, 2017-2018, if you See, if you look at the three years that we saw, that 2015-2016, 2016-2017, 2017-2018, if you

really look at that kind of range, that is an upper end of our margins. So if, really, we start going really look at that kind of range, that is an upper end of our margins. So if, really, we start going

above that, we would certainly like to invest to accelerate sales growth. But those three years, the above that, we would certainly like to invest to accelerate sales growth. But those three years, the

kind of margin that we had is towards the upper end. And we would like to invest more if we are kind of margin that we had is towards the upper end. And we would like to invest more if we are

really able to have higher gross margins. really able to have higher gross margins.

Tejash Shah: Tejash Shah:

Thank you. All the best Sir. Thank you. All the best Sir.

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Moderator: Moderator:

Thank you. The next question is from the line of Avi Mehta from IIFL. Please go ahead. Thank you. The next question is from the line of Avi Mehta from IIFL. Please go ahead.

Avi Mehta: Avi Mehta:

Sir, I had a question on the Nina project. Now what we do understand from the market is that the Sir, I had a question on the Nina project. Now what we do understand from the market is that the

pricing was revisited. I am not sure if that was across the board. But I was told that there is a pricing was revisited. I am not sure if that was across the board. But I was told that there is a

revisit on the pricing, which has aided growth. Now clearly, that has kind of borne fruit for us. Is revisit on the pricing, which has aided growth. Now clearly, that has kind of borne fruit for us. Is

that understanding correct and if you could help clarify that for us, Sir? that understanding correct and if you could help clarify that for us, Sir?

Apurva Parekh: Apurva Parekh:

I am not clear exactly what you are referring to. But maybe, there were a couple of strategy in I am not clear exactly what you are referring to. But maybe, there were a couple of strategy in

Nina. One is, of course, we take a close look at the margin and the way we are doing business so Nina. One is, of course, we take a close look at the margin and the way we are doing business so

that we do not end up doing lot of projects, which are at the very, very low margin. So there is an that we do not end up doing lot of projects, which are at the very, very low margin. So there is an

increased focus on managing our margin better. That is clearly there. In addition to that, we want increased focus on managing our margin better. That is clearly there. In addition to that, we want

to also focus on sectors, which are, other than real estate, large buildings. So we want to look at to also focus on sectors, which are, other than real estate, large buildings. So we want to look at

manufacturing plants, commercial projects and lot of other type of construction project, where manufacturing plants, commercial projects and lot of other type of construction project, where

also, again, the margin profile could be better. So overall, in this type of businesses, we need to also, again, the margin profile could be better. So overall, in this type of businesses, we need to

have a proper financial management. And the team has been creating the framework to be able to have a proper financial management. And the team has been creating the framework to be able to

do so. Other than that, I am not sure what exactly are you referring to about pricing. do so. Other than that, I am not sure what exactly are you referring to about pricing.

Avi Mehta: Avi Mehta:

Sir, then maybe there is a margin moderation that we have seen versus last year adjusted for, Sir, then maybe there is a margin moderation that we have seen versus last year adjusted for,

obviously, that is not the case and if that is the case or is that just more one-off. obviously, that is not the case and if that is the case or is that just more one-off.

Apurva Parekh: Apurva Parekh:

No, there has been some margin moderation because they have also faced a cost increase. They as No, there has been some margin moderation because they have also faced a cost increase. They as

a company use both material and labor to do a job. So they have also faced the cost increase. And a company use both material and labor to do a job. So they have also faced the cost increase. And

also, it is a challenge, as I said, to manage a proper margin mix in this. So some of when you have also, it is a challenge, as I said, to manage a proper margin mix in this. So some of when you have

an accelerated sales growth, it is possible that some of the orders are at the lower end of the an accelerated sales growth, it is possible that some of the orders are at the lower end of the

margin. margin.

P. Ganesh: P. Ganesh:

And they have also taken certain fast-track projects, which are at relatively lower margin. So it is And they have also taken certain fast-track projects, which are at relatively lower margin. So it is

a combination of things. a combination of things.

Apurva Parekh: Apurva Parekh:

However, we are very conscious of the fact that we want to make sure that we continuously work However, we are very conscious of the fact that we want to make sure that we continuously work

towards improving our margin. So that is clearly a focus. And it is not that we just want to grow towards improving our margin. So that is clearly a focus. And it is not that we just want to grow

without earning reasonable margins. without earning reasonable margins.

Avi Mehta: Avi Mehta:

And Sir, even the Percept subsidiary, the moderation is obviously sharper over there. Is that also And Sir, even the Percept subsidiary, the moderation is obviously sharper over there. Is that also

got to do with input cost only? Or is there also something, which has got to do with mix? got to do with input cost only? Or is there also something, which has got to do with mix?

Apurva Parekh: Apurva Parekh:

Look, for the size of company, it is mix, and it could be some one-off carry forward from quarter- Look, for the size of company, it is mix, and it could be some one-off carry forward from quarter-

to-quarter. Because for this sized business, quarter-to-quarter is not a reliable indicator at all. to-quarter. Because for this sized business, quarter-to-quarter is not a reliable indicator at all.

P. Ganesh: P. Ganesh:

So if you look at what YTD December and compare it with FY2018, it is not a significant dip. So if you look at what YTD December and compare it with FY2018, it is not a significant dip.

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4000•0fteezt.., Pidilite

Pidilite Industries Limited Pidilite Industries Limited January 24, 2019 January 24, 2019

Avi Mehta: Avi Mehta:

That clarifies. That is it from my side. Thank you very much. That clarifies. That is it from my side. Thank you very much.

Moderator: Moderator:

Thank you. As there are no further questions, I now hand the conference over to the management Thank you. As there are no further questions, I now hand the conference over to the management for their closing comments. Please go ahead. for their closing comments. Please go ahead.

P. Ganesh: P. Ganesh:

I would like to thank everyone for coming on the call. Thank you. I would like to thank everyone for coming on the call. Thank you.

Apurva Parekh: Apurva Parekh:

Thank you, everybody. Thank you, everybody.

Moderator: Moderator:

Thank you very much. Ladies and gentlemen, on behalf of ICICI Securities Limited, that Thank you very much. Ladies and gentlemen, on behalf of ICICI Securities Limited, that

concludes this conference call for today. Thank you for joining us. You may now disconnect your concludes this conference call for today. Thank you for joining us. You may now disconnect your lines. lines.

(This document has been edited for readability purposes) (This document has been edited for readability purposes)

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