Kansai Nerolac Paints, which came out with slightly disappointing fourth quarter result, may hike the prices of its decorative paints to cover increase in the cost of raw materials. Last year, the company had hiked the prices of its decorative paints by 2%.
The company is also planning to hike the price of industrial paints too but that may happen gradually as it mainly involves institutional sales. Industrial paints form about 43-44% of revenue for the company. It is learnt from various sources that the company has been gradually negotiating with its institutional clients in industrial paints for price increases to mitigate the impact of higher raw material prices.
Supply disruption of key raw material from China (due to its blue skies policies) was a key reason for higher titanium di-oxide and monomer prices in Q4FY18. This has affected all the paint manufacturers in the country.
Kansai has become aggressive in increasing its distribution reach during the last two years. The multi paint distribution of the company currently stands at about 20,500 and has colour dispensing machines in 65% of these multi paint outlets.
The company is also planning to increase its dealer margins as part of its marketing strategy. In India dealers and retailers make lesser margins at 2-5% and 8-10% respectively as compared to the global average of 15-20%. The company is planning to bring up its dealer and retailer margins to match the global standards gradually.
Further, the company has planned 2 green field projects in Amritsar (Punjab) and Vizag (Andhra Pradesh) between FY18-20E, which will take the total capacity of the company to 544,000 kilo litres.