Paint cos eye strong March finish even as price war persists

Indian paint makers are optimistic that the pick-up in demand in November and December will continue in the current quarter, leading to high single-digit volume growth year-on-year even as competitive intensity is likely to remain elevated.

Extended monsoon rains and an early festive period had impacted demand in the first few weeks of the December quarter when key players recorded 6-9% volume growth. However, the growth in value was markedly lower.

“If you see in the last three quarters, the trajectory has been strong and resilient which possibly, going ahead, we should be able to maintain,” Amit Syngle, chief executive officer of Asian Paints, told analysts after the company’s latest quarterly earnings.


The country’s largest paint maker had a volume growth of nearly 8% in the December quarter and 11% in the September quarter, which was preceded by less than 5% growth in the previous four quarters.

Syngle said a volume growth of 8-10% is good under the current circumstances.

Abhijit Roy, CEO of Kolkata-based Berger Paints, said there is a gradual improvement. “October was negative, November slightly positive, December more positive, January slightly more positive than December, so it's improving month on month,” he said.

Berger Paints commands about a fifth of the Indian decorative paints market.

Pravin Chaudhari, managing director of Kansai Nerolac, too, said post Diwali, “we have seen changes happening in the demand pattern, and we have seen the recovery in core paint as well.”

Competition

Meanwhile, the competition is expected to remain intense with Birla Opus gradually ramping up its production and JSW Paints buying out Akzo Nobel India.

“The competitive intensity is still very strong in the market in terms of what you see,” Syngle said. “We have obviously newer competition; we have also seen amalgamation of two players which is kind of coming in the market.”

Berger Paints, in fact, conceded that they, along with another market player, have lost market share to Birla Opus.

The Aditya Birla Group-owned Birla Opus, meanwhile, said they have expanded their revenue market share by more than 300 basis points year-on-year during the December quarter, based on internal estimates and announced results of listed paints majors.