Paint majors plan to unveil growth story
With input costs for the paints industry coming down following a reduction in peak customs duty from 12.5% to 10%, domestic paint majors have set an ambitious growth target of 15-20 % in 2007-08 .
By Team ET, TNN |
With input costs for the paints industry coming down following a reduction in peak customs duty from 12.5% to 10%, domestic paint majors like Asian Paints, Kansai Nerolac, ICI India among others have set an ambitious growth target of 15-20 % in 2007-08 . A section also feels reduction in customs duty should be passed on to consumers , which in turn, would give a further fillip to the Rs 10,000-crore domestic paints industry.
Talking to ET, Mr Arvind Bhasin, managing director of Akross Synthetics said: “Paint industry imports titanium oxide, which constitutes 30% of our input cost. With the duty reduction, the cost of production will come down by Rs 2-2 .50 per kg. Moreover, reduction in central sales tax from 4% to 3% will also help paint producers bring down costs. The industry may pass this on to consumers.” However, companies like Asian Paints and Kansai Nerolac are yet to take a decision on the price front. “The Union Budget has been just tabled and we haven’t worked on the price front,” they said.
Mr Ashwin Dani, vice-chairman and managing director , Asian Paints said: “The budget augurs well for the paints sector. By continuing with favourable policies for the construction industry, the finance minister has lent impetus to the housing sector. This, in turn, will help the paint industry grow.”
The paints industry, which is mostly urban centric, is firming up plans to spread across to the rural areas and tier-two cities. Mr Bhasin said, “The budget is expected to boost the rural economy. Therefore, rural India will contribute to the growth of the paint sector,” he added.
Decorative paints is expected to drive growth of paints sector in 2007-08 . Mr H.M Bharuka, managing director of Kansai Nerolac said: Nothing has been announced for the automobile sector, which will alter the current trend in automobile paints consumption. Increase in the housing loan limit is likely to boost demand in the decotaive segment.”
Mr Bhoruka further pointed out that reduction in duty on crude oil by 15% and an additional exemption of CV duty of 4% will positively affect the paint industry. ICI India, however, feels growth will come if the economy is able to contain inflation. Mr Rajiv Jain, managing director of ICI India said: “The dollar is appreciating against rupee. This should be addressed first so that the paint manufacturers get full benefit of reduction in peak customs.”
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