According to some leading dealers, decorative paints segment has seen decent growth of 10-15% during the first quarter of the current fiscal. They are also hopeful of retail demand picking up in the coming months, especially after the Monsoon and just before the beginning of the festival season. Though there was some improvement in demand from large builders, dealers believe that there was nothing to indicate change in trend.
However, dealers were of the opinion that early onset of Monsoon has affected the demand to an extent. This year Monsoon started its journey slightly early – in Southern region it was started in late May while in Western parts it entered early June. This affected the demand for exterior paints. However, as exterior paints account for small portion of the decorative paints, overall demand scenario remained positive.
It may be noted that paint demand registered a healthy growth despite some major paint manufacturers raising the price during the quarter. In May, both Asian Paints and Berger Paints raised the price by 2% to pass on the increased cost of raw materials. On the other hand, another major manufacturer, Kansai Nerolac, hiked the price for water-based paints on 1st June and for oil-based paints on 15th June.
There is near unanimity among the major paint manufacturers that threat from Nippon Paints which tied up with the Chennai Super Kings team for IPL 2018, is for the real and need to be taken seriously. It is reported that Nippon Paints has become too aggressive in widening its dealer network and believed to be offering free tinting machines subject to minimum offtake commitment and better margins. Other paint manufacturers may soon come out with some different strategy to counter this move.