Asian Paints to commence new units in FY 2019

Asian Paints to commence new units in FY 2019

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Asian Paints will spend Rs 1200 crore capex on its various units. The company will spend Rs 800 crore capex on Mysore and Vizag plants.   Management expects to commission the first phase of both plants during the current financial year. While the Mysore plant will go on stream in September, Vizag will commence operations in January 2019. Both the plants will manufacture high-margin water-based plants. Also, commencement of operations in these units will result in lesser logistics costs for the company. It will take at least 2.5-3.0 years for plants to run at full capacity.

During 1QFY19, Asian Paints hiked the prices by 3%.  The price increase of 1.4% and 1.9% on 1 March 2018 and 1 May 2018, respectively, in addition to the partial carry forward of 2.7% price increase in May 2017, has offset the impact of higher raw material prices.  However, the company has witnessed an input cost inflation of about 10% over the average raw material cost of the previous year.

As a strategy, the company will more focus on tier 2 & 3 cities in the coming months to achieve higher growth. At present, the company has a dealer network of 52,000 and the company is adding 3,000 new dealers every year.