Decorative biz spurs paint makers to expand capacity
Published on Mon, Nov 23, 2009 at 17:33 | Source : Reuters
Updated at Mon, Nov 23, 2009 at 18:46
Like this story, share it with millions of investors on M3
0
Like this story, share it with millions of investors on M3
Decorative biz spurs paint makers to expand capacity
India's top paint makers are expanding capacity to tap growing demand in decorative and automotive segments, but rising input costs and an uncertain monsoon may cap the growth, officials and analysts said.
A weak monsoon may result in a volume dip and rising input costs will put pressure on margins, industry players said.
"Agricultural GDP might be adversely impacted due to poor rains. However, extent of negative impact is expected to be cushioned by industrial growth. This can impact growth as small towns have been growth drivers," the Asian Paints presentation said.
"The second half will be weaker in terms of margins for Asian Paints as cost index is going up and post monsoon volumes may also start shrinking," said Pritesh Chheda, analyst with Emkay Share.
"Input costs are hardening with crude prices hovering around USD 70-80. Margins will be under pressure," ICI's Sopory said.
Crude prices, which were hovering around USD 50 a barrel in the start of April, have risen about 60% to USD 80 as of now. The paints industry uses some by-products of crude as input.
"In the next half input costs will be more than first half. The first half had a very good reduction compared to the last year. So raw material costs will be more than in first half," Kansai Nerolac's Bharuka said.
