Smaller paint makers lose lustre on rising input costs
Small-scale paint units in the country are slowly turning pale in colour.
By TNN |
AHMEDABAD: Small-scale paint units in the country are slowly turning pale in colour. The recent hike in price of Mineral Turpentine Oil (MTO), an important petroleum-based solvent, is set to accelerate the closure of the existing 2,000-odd units which are currently operating well below their capacities.
���The price of MTO has been raised by about Rs 8,000 per kilolitre on June 3. This is the fifth hike this year,��� said D Sivaram, the president of Indian Small Scale Paint Association. ���Due to the increasing MTO prices, already 500 units in different parts of the country have downed their shutters in the last couple of months. And with this recent hike, the others left in the business will have no choice but to close down,��� he told ET from Bangalore.
After the recent hike, the prices of MTO have shot up to Rs 70,000 per kilolitre. Now the desperate association members are looking forward to their scheduled meeting with union petroleum minister Murli Deora next week at New Delhi. ���We will submit a memorandum to the minister and will demand a cut in customs and excise duties similar to that done for ATF (Aviation Turbine Fuel),��� Mr Sivaram remarked.
Triggered by the sky-rocketing crude oil rates, the prices of MTO have been hiked 10 times in the last one year. The prices shot up from Rs 27,100 in May, 2007 to Rs 70,000 for a kilolitre of MTO. This year, the paint industry witnessed one of the steepest hike in MTO prices. The costs have nearly doubled from Rs 34,800 in January 2008 to the current Rs 70,000 per kilolitre, forcing about 500 units to shut shop across the country.
Among the 500 closed units, Maharashtra ��� with 75 units ��� tops the list, followed by Gujarat and Tamil Nadu, where a total of 100 units have downed shutters. The smaller players have been unable to pass on the increased input costs as bigger players like Asian Paints, Berger and others have refused to hike the paint prices.
���These are bad times for small-scale paint manufacturers. For those small-scale units, which produce between 6,000-10,000 litres of paint every month, the requirement of MTO is about 8,000 litres. At the current MTO prices, paint manufacturing has become unviable,��� said Dr Pradip Desai, president of Gujarat Paints Raw Materials Suppliers Association (GUJPRAMSA).
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Apart from northward bound MTO, rising costs of pigments, resins and steel tins used for packaging have all added to the woes of these units. With the rising prices of steel, the cost of a ton of paint boxes have risen to Rs 52,000 from Rs 30,000. Similarly, the prices of both organic and inorganic pigments have risen by 10%. Start a SIP with as low as ₹500 with ET Money App!
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