Home News Covid second wave is worrisome for paint manufacturers

Covid second wave is worrisome for paint manufacturers

It was a smooth ride for the paint manufacturers in the organised sector post lockdown relaxation in FY2021. Even Financial year 2022 looked better with most of the manufacturers hoping for 15% growth in the near term as the normalcy was returning in metro cities and growth momentum in tier 2 & 3 continued. However, emergence of Covid second wave and sudden lockdown announcement in some major cities like Mumbai and Bangalore may throw their calculations haywire. Though situation is not as bad as was in April 2020, it’s not as good as it was anticipated a couple of weeks ago either.

Along with the recovery in demand from Metro cities in the fourth quarter, demand from project sites too improved during the period. Though project demand accounts for just 10% of the overall demand, it has helped to sustain growth/improve momentum in the fourth quarter. Further, unorganised sector is struggling and players in the organised sector are eating away their market share.

Backed by continued strong demand and surging raw material prices, paint manufacturers have withdrawn schemes and also have raised prices selectively. For example, Indigo has raised paint prices by 3% and Kansai has raised prices by 2-3%. Akzo and Berger have also raised prices of some SKUs by 1-3%. Interestingly, the market leader Asian Paints has not yet raised selling prices.

Meanwhile, most of the raw material prices are going up which is a matter of concern for the paint manufacturers. While major raw material, TiO2, is up 10% YoY, packaging material prices are up 24-30% YoY.  Though the paint manufacturers pass on the raw material cost hike to the consumers through regular price hikes, if the price surge remains unabated it may impact the demand also.

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