Tariff/global-flows uncertainty (Q4 peak) gone by Q3.

Congratulations for the excellent performance and hitting the targeted market share. On the dealer counts, what would be at the exit of March '25? And how do you see that over the next 3 years reaching bigger counts?

Like we said, our objective was to hit 6,000-plus towns and try and track close to 50,000 dealers at the end of the first year. So, we are close to where we had targeted. And in terms of how we look at it in the next couple of years, there is scope for more numerical dealer addition, which we believe there are dealers who want to join us. There are also territories, which we have not covered. But also, along with that, we will consolidate on the dealer base that we have created and extract more counter share from them.

On the comment that 65% of the portfolio is on the premium and luxury side, could you just provide some insights into it? Are you saying that in the emulsion segment as well, the premium side? Or this also includes the waterproofing premium side or a good, finished premium?

So, the way we have structured our portfolio is that most of the products that we have are covered under three subbrands, one, which is the luxury brand Calista, which is premium and Style, which is the so-called economy brand. Now we have a branding philosophy where even our enamels are branded either Calista or a Style. So, when we say this is not addressing only emulsions, but this is addressing the premium and the luxury segment in all the categories where we play, where we have these subbrands leading them. So that's the clarification. It's not only for emulsions.

I have a couple of questions on cellulosic business. I remember there was some disruption in third quarter. However, fourth quarter volumes are still much lower versus Q2 levels. Can you please help us explain what's happening over there?

In terms of our volumes, the demand has been quite stable, except that in quarter 4, we have seen some minor drop in the demand in the Indian market. So, we had to increase our exports. So, we have not lost any capacity. It's more about diverting some of this capacity to export market. Plus, we also had increased certain specialty kind of product because of which there is a certain change in the productivity levels, changeovers, etc. So, there is no significant change in terms of our capacity utilization. Of course, there are certain machines that we take for maintenance on a periodic basis. So, on a quarter-to-quarter, you would see certain kind of variations in terms of volume.

I see that your Capex in the cellulosic business in fiscal '25 was much lower than what the management earlier targeted. How should we look at this for fiscal '26? And what kind of capacity can be unlocked by debottlenecking over the next couple of years?

Yes. One year, we, depending on how we do, at a Grasim level, how do we look at capex allocation, various businesses get different kinds of capex allocation. So, in terms of certain non-critical capex, we had been taken up this in FY '25. But I think we have major projects ongoing now. One, there is a Lyocell project setting up 55,000 tonnes per annum of capacity is being approved. So that project has started. But in terms of debottlenecking of pulp capacity in Harihar. There is a couple of other projects, which are happening in Vilayat and Nagda plant for debottlenecking. They are on course. And by end of H1, we would have a slight increase in the capacity of the viscose fibre. So, our capex plan, all of them are now going pretty well. While some of these capacities will get actualized later, but the projects have progressed well, and we will have a minor increase in the capacities in some of our existing lines by H1.

Can you give some flavor on what is the geographic mix and product segment mix? Among the 3 regions, relatively which one is stronger, weaker? And in the product segment, premium mid- and mass, where would you have relatively the best market share?

So, Percy, I think even in the last 2 calls, I have mentioned that Birla Opus is truly a national player. So, we don't have too much of variation between the best performing regions and the so-called bottom-performing regions. So, we are doing well in most of the regions. But like I said, the spread is not anything different from 80 to 120. On what is selling well, obviously, our emulsion portfolio. And that was also, if you see, over the last 12 months, we entered the market first with our emulsion portfolio and then we introduced waterproofing and enamel portfolio came a bit later in the day. Our overall emulsion portfolio has got a very solid response, and that includes both the luxury segment led by Birla Opus one and the economy segment led by style. We have excellent uptake in both the exterior and interior segment. All brand which is our waterproofing range, also has got excellent feedback and Wall roof, which is the flagship product, currently is also the waterproofing season. Our enamel entered the market 3 to 4 months after the emulsion business and took somewhat time because enamel comes multiple sizes and small packs. Nonetheless, our enamels are also picking up but trailing the emulsion business by a few months. We have designer finish, good finish, both the Italian range and the Indian range and the market acceptance of all that is excellent.

On the pricing - given the leader is taking market share, any action on the pricing that we have seen lately in the market? And how is your brand positioning versus the leader in terms of pricing today?

So, you see, there are two aspects of pricing. What is relevant for the consumer is what price he'll be paying to my Birla Opus, which means what price dealers are charging for customers, and wherein the dealers are charging the same price as the market leader. So, Birla Opus is able to charge the consumers ready with the same price. In terms of other aspects, yes, we have seen that maybe in the economy segment, some of the competitors have tried to drop some prices, etc, but those are all factored in the plan. We are giving great value to our customers. We are also having a unique proposition that on the 20-liter and 10-liter emulsions, anybody who buys it gets 10% free, which is going to the end users not to the dealer. That makes our value proposition very strong. So, from that point of view, we are well placed. And we anyway watch the market wherever we need to make any price differences.

Two questions on the chemical side. First, when we see two bigger players putting up their caustic chlorine plant for captive chlorine requirement and existing players also putting up the downstream chlorine plants, is it a possibility that industry dynamics would change over a period in terms of chlorine pricing improving? And, ex of pipeline, what is our chlorine consumption internally? How this ratio would look like once our CPVC and ECH plants are commissioned?

So, a couple of things. India is a country with a very strong domestic consumption growth. So, you can do a calculation roughly 700 to 1,000 TPD per year is the organic growth of the industry as far as caustic is concerned. So domestic growth in India is going to grow strong. So, I think the first point is whatever excess capacity or new capacity comes into India will be absorbed by the Indian market through its natural growth. Second point, the capacity is coming in essentially are PVC capacities. India is importing PVC. So, PVC demand is not going to increase just because there are 2 large plants in India. So somewhere, the higher cost plants, my guess is those would not be in India, would have to reduce their operating rates because caustic is their byproduct. So from that perspective, while we may face 1 or 2 years of choppy waters, it is unlikely that there is going to be a longer-term structural impact. On integration - we basically look at overall integration which is after completion of our existing projects going to go from 65% to 70%. And we are reasonably happy with that level of integration. Because the newer capacities which are coming in related to PVC will be fully chlorine integrated. And chlorine demand typically grows 3% or so faster than caustic demand. So over time, you will see the result of the PVC capacity additions will mean that the net chlorine available to the Indian market is reduced. And to that extent, the negative chlorine will also start becoming less negative.

On CSF - how is global demand/supply now? There has been pressure on CSF prices. At the same time, pulp prices are also coming down. Does it mean that all the benefits are being passed on by global players also because of weak demand situation?

So, the demand in terms of operable demand globally, it is muted. It's not growing big time, but China has seen a dip in the demand and because from mid-April onwards because of tariff uncertainty, there is some kind of a wait-and-watch approach being taken by the value chain player, which is getting a little better now. So, I think the price correction will be around two counts, one is because there has been, China demand has slowed down. And of course, China has a large capacity, so they determine how international prices play out. Two, yes, pulp prices have significantly come down in the last 2 to 3 months. So yes, part of that is also helping contain in terms of margins. So obviously, when the pulp prices drop, there is also an effect on the pricing in the market. So, let's say, you're right on both counts.

On paint sector - in FY'26, given the current demand scenario and competitive landscape, how do you see FY'26 panning out from a growth perspective? And is there a need for us to embrace higher discounting this year versus what we have done last year?

Sheela, if you look at it from a year which has gone by point of view, if you exclude Birla Opus, then the market has actually been negative. And if you add Birla Opus, then the market has been positive in low single-digit numbers. What we see today is that the market is still slow. And while it will be difficult to predict how FY '26 would go, but it could be that FY '26 remains a low single-digit growth here. Obviously, the basis for last year is also low, so that could be slightly different. Now whether you need to do price discount is a strategy which I think the other players also have to decide what to do because usually when you do a price discount, it leads to more price discounting by all the players in the market. What ultimately is needed is that the end consumer, who is using, should get the product at a lower cost, which is not usually guaranteed. So, we will have to watch in terms of how the price evolves in the market. As far as we are concerned, we are giving good value, and we will continue to do what we are doing. But yes, the market seemingly at the moment seems to be on the same track as it was, say, in the last quarter.

When you talked about luxury premium segment to be 65% of revenues, is there any market flavor which you can add as to which markets are accepting these kinds of products?

So, luxury and premium products sell across India. While yes, there are certain markets which sell, for example, Kerala sells a very high proportion of exterior luxury, Gujarat sells very high proportion of interior luxury. There are definitive markets, up North, Punjab, they sell a lot of high-value good finish. So, the market behaviour for us from a luxury premium, our products have acceptance in all the geographies. And because we've done a lot of work with contractors and contractors are able to appreciate the quality of products, so from our point of view, there are markets where these categories are already big. But as we are still a single share player, we have found acceptance everywhere in all regions and all over. Himanshu Kapania added: in aspiration, consumers today want to upgrade their quality of paints. And we are a little surprised that the industry has been downgrading their products by offering larger scheme at the lower end while the consumer aspiration is more at the medium and the upper end. There is more demand for a 10-year plus products. The same applies to emulsion products, both interior and exterior. And even in wood finish, clearly demand is more on the luxury and premium side of the products. So there is an overall trend change. While there is a slowdown, I believe the slowdown was more led by over focus of industry by downgrading their products. As the price stabilization happens, the industry will come back to its natural double-digit demand. So, volume was not the slowdown. The issue was primarily on the value primarily. And once the overall industry focuses on the mid- to higher end of the product categories across all business categories, we will find the industry should come back to double-digit growth. Rakshit Hargave added: we have done a lot of research before launching. And it was very clear that even the so-called lower LSM or lower FCC consumer was of the opinion that if I'm going to paint my house once in 5, 6 years, I actually want something which is good in quality. And hence, focusing on the higher value and quality products, if the industry works from that line, it will be beneficial for everyone.

On the chlor-alkali business. Given that chlorine will be captively consumed for PVC by new players and there will be long on caustic side, what's your perspective in terms of ECUs - whether structurally ECUs will be closer to 30-plus prices or there is a possibility that current kind of ECUs and slightly improving trend, we will be able to see even after those capacities come in?

Your question is very similar to the question that Nirav had asked. So, I'll give a similar reply. Remember, the pricing of caustic in India is set by import parity. Similarly, pricing of PVC in India is set by import parity. Now when these large PVC players come in, it's not going to change India's demand significantly. There will be a substitution potentially of imported PVC by Indian PVC. Correspondingly, PVC operating rates outside of India will come under pressure. If you study the markets in North Asia, you will realize which are the higher cost PVC producers. Correspondingly, supply of caustic in the international market will also come under pressure. And ultimately, it's a big market. Caustic is a very big market. There are many moving parts than only the PVC capacity that is coming into India. So, we don't feel that structurally, over the long term, it will have a negative impact on caustic prices. However, there will be certain quarters where there will be demand-supply mismatches, price dislocations will happen. So, there will be more volatility for sure. But it's not like there is going to be a structural issue in the industry. At least that's not what our thesis is.