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00:00Hello and welcome. You are watching NDTV Profit. I am Mahima Vachrajani. Well, Axonobel
00:10came out with its Q1 FY25 earnings. Revenue is up 3.7%, EBITDA up around 4%, margins have
00:16improved a tad bit and net profit is up around 4.3%. But to break down these numbers further
00:23and to get an outlook on how FY25 is shaping up, we are joined by Mr. Rajiv Rajgopal, Chairman
00:29and MD at Axonobel. Welcome to NDTV Profit, Rajiv. My first question to you is that, you
00:38know, I believe that the quarter has been a bit subdued and this is on the back of,
00:43of course, elections and stuff. But I want you to break down how the quarter has been
00:47for you as per your expectations and overall, how has the demand played like?
00:54Good morning Mahima, good morning to you and all the viewers. Look, I think for us, our
00:59growth trajectory continued from a volume perspective. We got a, you know, double-digit
01:03growth. It split for the two verticals. Pains are high single-digit growth in volume and
01:09coatings are double-digit. Look, I think we are executing our strategy. For us, I think
01:15the key highlights were that some of our businesses, whether it's Marine Protective,
01:18whether it's Powder Coating or even in the decorative side, we continue to see sustained
01:23volume growth. Remember, the decorative side, the volume growth, while it's showing a high
01:27single-digit, it's almost double-digit. The reality is we had a 4% price correction at
01:32an industrial level at the beginning of the year. So, that's impeded and there was a bit
01:35of a mixed change because obviously, there are certain, you know, growths coming in from
01:39certain segments where obviously, you know, which has impacted value a bit. But I think
01:47that's, you know, largely in line with what we've seen. Compared to the industry, hence,
01:52we were also a bit surprised. We've done relatively better, but we've been really focused in executing
01:57our strategy. On our coating side, it was driving value shared of our existing customers
02:03and coming out with innovative products, particularly focused on sustainability and also where we
02:09can sort of give value back to our customers. So really, it's with better offerings, it's
02:14ensuring that we are understanding what customer problems are and trying to solve for them.
02:20Right, absolutely. And, you know, can you help me quantify that value versus volume
02:25growth in revenue? Yeah, so look, the blended 10 and 4 is largely
02:30because of decorative planes having a price correction in the early part of the year,
02:35which is almost about 4%. And then there is a mixed impact. So really, that's the gap
02:41between 10 and 4. So, you know, 10, 4, 2, you know, if you look at the price correction
02:47plus mix of 10 minus 6, you get approximately a 4, 3.64%. So that's the split. Look, I think
02:55from our perspective, you know, we are focused on really delivering the Vixit Bharat of tomorrow.
03:00And I mentioned this in my AGM yesterday. We believe that we've got very strong positions
03:05in coachings globally. We've got terrific products, you know, whether it's the international
03:11brand Interpon, you know, and Sikkens, Less and All. Even on our decorative planes, it's
03:16about saying how can we drive better value in Deluxe. In decorative, of course, our faster
03:22routes have come from categories like waterproofing, you know, and really, in the end of us, really,
03:28how do we dial up in the mid-tier and economy where we've got almost very low single-digit
03:33shares, you know, market shares. So that's really our strategy. We've had, I would say,
03:38a mutual growth in pains. The growth largely came from our codings business in value. I
03:45think we are focused in terms of delivering better value to customers and really focused
03:49on solving their problems. Okay, perfect. And can you, because, you know, a lot of your
03:55competitors have taken price hikes in the past one month. How much of a price hike have
04:00you taken? Because, you know, your products have always been priced a bit higher when
04:04it comes to the premium play. Yes, very good question. Look, I think what we are seeing
04:10is obviously the industry is also seeing a bit of an increase in the raw material costs
04:14in this quarter and next quarter. As you said, we are already at a bit of a premium. We don't
04:18want to lose competitiveness. So we've taken approximately about a 1.5% now, depending
04:23on different categories. But the blended is approximately about a 1.5% price increase
04:29that you would see. We've taken part of it in July and the balance we are taking it before
04:34the 12th of August. So that's really the phasing in which we've done and we'll see. You know,
04:39we believe that our focus is really dialing up our brand, dialing up our distribution,
04:44making sure we are competitive. We put some exquisite programs for our top dealers to
04:50make sure during this period of volatility, people are, you know, focused. And we are
04:55making sure that we are focused on a range completion and making sure that we are, you
05:00know, and let's be honest, I think the industry is, you will start seeing growth coming in
05:05from the Q3, Q4 with Diwali coming in, etc. And hopefully, you know, you would see that
05:11even for us, you'd see sustained growth for us. Okay. And, you know, Rajiv, how are you
05:16seeing competitions shaping up? Because, you know, Birla Oppus is coming in a big way.
05:21So how do you see competition playing out? And do you think that this will overall affect
05:26your market share? Look, I think this may, the answer will be a bit boring because it's
05:30consistent. Look, firstly, you know, full credence, I think it's obviously a phenomenal
05:38business that is getting into the sector. So we take them very seriously. However, we
05:42believe that look, you know, you've got to dial up in brand and distribution and that
05:46takes a period of time. So in the near period, if you play on a bit of price, there will
05:51be a bit of instability from market perspective, which you will see on the margin side. So
05:55far, you haven't seen it really from our side or even from the other players who've just
05:59announced the results, right? So I think you'll have to wait and watch. I think you will see
06:03more of it in the, you know, towards the last quarter of the year, fiscal year or the first
06:09quarter of the next fiscal, right? But till then, I don't want to pronounce a word. What
06:13are we doing? We are focusing on our brand, our color expertise, dialing up our distribution
06:19and really saying, how can we make sure that we give unmatched quality? We've got a product
06:24program in the decorative paint side since the new entrants are largely on the decorative
06:28paint side to really call deluxe assurance where we are saying, you know, we guarantee
06:33the sort of quality and that's the sort of promise that we offer to our customers. We
06:38believe that we've got the best in class product quality and we continue to work on
06:42innovations, meaningful innovations from a customer and customer centric innovations
06:47from a customer viewpoint. Absolutely. So then Rajiv, I think I'll come back to you
06:51with this question post Q4 or Q1 FY26. You know, one last question on, you know, because
06:58you've mentioned in your con call saying that, you know, you're trying to improve your supply
07:03chain efficiencies overall. So I want to understand that what is the kind of strategy that you're,
07:09picking up in this area and what are the costs associated to this and how will it impact the
07:14margins overall? Look, two, three things. If you look at what has happened is what we
07:21are doing right now is we've got about 160 odd distributors in the length and breadth
07:25of the country. What we've done is something that many of the FMCGs have already done and
07:30I've sort of been part of, which is really dialing up things like distributor replenishment.
07:35So really moving now to an outlet level saying, focus on the offtake, look at what you sell in
07:40the outlet. How can you ensure that the entire supply chain right up to the factory? So your
07:44factory produces what you literally sell. Factory produces today what you sold yesterday. That's
07:49really the concept. And when you streamline and digitize the whole supply chain, there's a lot of
07:54efficiencies that come in, even in terms of productivity of your people who's driving it.
07:59So that's one, there's a huge value unlock, which is happening there. Second is sourcing
08:03efficiencies. We are a global company. We are looking at, we can scan the environment
08:08better than most players. And we believe that there is a lot of work which is happening on
08:13sourcing at a global level, which we are going to take leverage off. And we are going to look at what
08:18some of the best practices are in different parts of the world and see how we can bring it to India.
08:22So those are the two parameters that teams are working on. The reason we are doing it is we
08:28realize that the market is going to get heated. There is hyper competition and it's a part of
08:32our overall strategy of making sure we continue to be a relevant player and dial up our business
08:39in India significantly. Okay. One last quick question before I let you go, Rajiv. You've
08:44guided for increasing your outlets to that 30,000 mark in the next two to three years,
08:50and you've done 3,000 outlets in FY24 already. Does this target still hold or have you increased
08:58your target? No, I would first hold it because look, I think it's also about being meaningful.
09:03When a new player comes in, you are going to see a bit of a nutrition. So first, how do you be more
09:08relevant for the outlets in which you already are? How do you increase the value proposition for them?
09:13And then how do you make sure that you're able to add into the family? You don't want to be losing
09:18some of the family members as you keep adding by focusing on it. So we want to make sure that we
09:22are adding meaningful distribution as we move forward. And that's a part of the game plan
09:26and the strategy that we have, Mahima. Right. Okay. Well, Rajiv, thank you so much for giving
09:31us those insights on AxoNobel, which is also commonly known as Dedux. And thank you so much
09:37for taking our time and speaking with us at NDTV Profit. Thank you, Mahima. Thank you,
09:42and I look forward to the next introduction. Thank you so much. Absolutely.