Sirca Paints India : Transcript of Analysts/Institutional Investor Meet/Con. Call

05TH JUNE, 2022

TO,

LISTING DEPARTMENT

NATIONAL STOCK EXCHANGE OF INDIA LIMITED EXCHANGE PLAZA, 5TH FLOOR, PLOT NO. C/1 G-BLOCK,BANDRA-KURLA COMPLEX, BANDRA (E) MUMBAI-400051

SUB: TRANSCRIPT OF EARNINGS CALL FOR THE QUARTER AND FINANCIAL YEAR ENDED MARCH 31, 2022

SYMBOL- SIRCA

Dear Sir/Ma'am,

This is to inform you that in terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the transcript of the Conference Call held on May 30, 2022, post the announcement of the financial results of the Company for the quarter and year ended March 31, 2022, has been uploaded on our Company's website: https://www.sircapaints.com/wp-content/uploads/2022/06/Concall-SircaPaints-Q4FY22.pdf

A copy of the transcript is also enclosed.

This is for your information and records.

Thanks & Regards,

For SIRCA PAINTS INDIA LIMITED

Suraj Singh

Company secretary & Compliance officer

Place: Delhi

Encl: as above

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Moderator:Ladies and gentlemen good day and welcome to Sirca Paints India Limited Q4 FY22 earnings conference call hosted by TIL Advisors. As a reminder all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call please signal an operator by pressing '*' then '0' on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sayam Pokharna from TIL Advisors. Thank you and over to you sir.

Sayam Pokharna: Thank you Peter. Welcome everyone and thanks for joining the Q4 and FY22 earnings call of Sirca Paints India Limited. The investor updates have already been e-mailed to you and are also available on the website of the stock exchange and sircapaints.com. To take us through today's results and management today we have with us Mr. Sanjay Agarwal - Chairman and Managing Director, Mr. Apoorv Agarwal - Joint Managing Director, Mrs. Shallu Arora - Chief Financial Officer, Mr. Suraj Singh - Company and Compliance Officer. We will be starting with a brief overview of Q4 and FY22 performance followed by a Q&A. I want to remind you all that everything said on this call that represents any outlook for the future that can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that we face. Some of these risks and uncertainties have been mentioned in our prospectus and follow-up annual reports. I would now like to handover the call to Mr. Apoorv Agarwal. Over to you sir.

Apoorv Agarwal: Thank you Sayam. Good afternoon, everyone, and thanks for joining our earning call for Q4 and FY22. It is my absolute pleasure to be taking all of you this afternoon I would like to begin by expressing my gratitude to my team.

Moderator:Ladies and gentlemen unfortunately we've lost the connection for Mr. Apoorv Agarwal. Please stay connected. Ladies and gentlemen, we've got the line for Mr. Apoorv Agarwal connected again. Sir you can proceed.

Apoorv Agarwal: Thank you. I would like to begin by expressing my gratitude to my team, the investors and everyone associated with Sirca Paints India Limited for your continued faith and trust in us. I would like to quickly take you all through the performance of this quarter and the full year post which we can open the floor for questions.

I am pleased to present that we have reported another robust quarter despite some disturbance faced in the month of January 2022 especially in the Northern part of India due to partial lockdowns in the NCR region. This coupled with a temporary ban on spray paintings in NCR during the winter season that had an impact on our December 2021 sales as well which affected our performance to an extending Q3 FY22. Our Q4 sales at 54.10 crores grew by 13.7% year-on-year and were flattish quarter-on-quarter with a marginal increase of 1.7%. EBITDA

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margins for Q4 witnessed some compression which was majorly due to some additional year end dealer compensations coupled with marginally higher employment benefit expenses due to some new hiring's that we have done at new branches and studios and a slight reduction in the gross margins due to turbulence in the raw material market. I would like to mention that despite the inflationary environment, we are present in the…. currently your company has

been able to preserve its profitability. We would continue to do our best to keep our margins intact. If we look at the annual top line for FY22, our business has clearly changed its trajectory. We have reported our highest ever annual sales at 200 crores. This is a significant growth of about 40% over the previous year's 143.18 crores. The company has also come back strong on the profitability front in FY22 with the EBITDA margins of 18.9% during FY22 compared to 15.2% in the previous year. PAT for the year also stood at 27.73 crores, up by 67% year-on- year. Now I would like to share some operational highlights and developments.

Firstly, we are pleased to announce that the company is adding a resin manufacturing line at its existing Sonipat facility in the same premises where our Unico products are manufactured. As you all know resins are the key starting raw material for wood coating industry. It is the single biggest sector affecting the quality at our end product. Of late we are noticing some inconsistencies in the quality of resins available locally thus as a strategic move the company decided to manufacture all these key resins in-house. These resins will be used to manufacture our Unico range of products, all the product kitty from NC melamine and the mass market of Indian PU. We also expect this project to contribute to better margins. The extent of the benefit will be known post commercialization of the project. Secondly, we have postponed our south Indian wood coatings facility by a couple of quarters. First, we would like to have a superior distribution and some aggressive marketing activities in our target market post which we will go ahead with the plan as communicated earlier. Till that time our Sonipat facility is going to cater to these markets.

I am also pleased to report that in our efforts of optimizing debtor days, channel financing has been successfully introduced with couple of big distributors and dealers onboard initially, the company plans to add about 50 dealers and all its distributors in the coming few quarters. We have received good response from the dealers and the distributors we have on board so far.

On the product portfolio side Unico has fared well during the last quarter, we expect Unico to increase its revenue contribution in the coming quarters and the financial years. We are also receiving an exceptional response on our wall-paint category which has performed well in the year gone by, including our premium category textures, finishes from San Marco. For Durante

• Vivan our plan is to launch these products in a couple of upcoming trade shows and exhibition. As communicated earlier our first priority move its the flagship product categories that is hot melt in our existing OEM channel. With this I would like to open the floor for that question. Thank you everyone.

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Moderator:	Thank you very much. We will now begin the question-and-answer session. Our first question
	is from line of Mohit Kanjwani an Investor.
Mohit Kanjwani:	My first question was how we are planning for the future competition given the fact that JSW
	has entered the space and in 1-2 years Grasim have plans like they have set aside a target of
	10,000 crores of entering the paint business. And my second question was like when can we
	see significant contribution from like our adhesive glue business and the Marco paint business?
Apoorv Agarwal:	To answer your first question, JSW and Grasim as of now is not a big question of competition
	for us reason being that their target product is the decorative which is the wall paint. For now,
	Sirca Paints India Limited is focused mainly on the PU products, the wood coating products and
	our more than 95% of our turnover comes from the wood products. As of now JSW and Grasim
	have not announced their key entry in the wood care products or the polyurethane coating.
	So, for now I mean we are seeing it more as an opportunity because the market is going to
	open up in the decorative segment and going forward it is not a serious area of concern for us
	or a threat, reason being that we don't see any announcement yet of their entry in the wood
	coating segment. Answering your second question, for Durante & Vivan we are launching our
	glue in the trade fair called Indiawood which is happening in the Bangalore from 2nd June to 6th
	June. So officially the launch of Durante & Vivan is happening there where we are looking for
	the channel partners and the distributors and the product will be launched in the market by
	end of July. As mentioned during my speech the first product that we are launching are the
	hot-melt and urea-formaldehyde glues used majorly in the furniture industry. And for San
	Marco the sales have already started. We are working with almost four distributors and six
	dealers currently for the Marco sales and the product has shown a decent momentum starting
	the third quarter of last financial year. We are expecting very good numbers in this year from
	San Marco marketing products.
Mohit Kanjwani:	Also, is there any plans for Sirca Italy to increase the shareholding in the company as talked
	earlier?
Apoorv Agarwal:	Yes absolutely. Their visit happened in month of May with the primary objective of increasing
	their shareholding here. Hopefully we should hear from news in the coming quarter. The major
	reason for current delay was the situation with the Russia because for Sirca Italy, Russia is a
	very big market, and they are trying to resolve certain remittance and certain product issues
	with Russia which is their main area of concern as of now. Hopefully once they are able to
	resolve all their pendency with Russia the focus towards increasing their shareholding in India
	should happen.
Moderator:	Our next question is from the line of Akshay Mahtur, an Investor.
Akshay Mathur:	So, my first question is, if you can help us better understand as in how tricky it is to manufacture
	resin as against what we've been doing like manufacturing wood coatings. Secondly if you can

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