Fall in crude to boost earnings power of cos: Asian Paints

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26 Aug, 2025 12:21

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From the sidelines of the World Economic Forum at Davos, KBS Anand, MD & CEO of Asian Paints spoke to CNBC-TV18's Menaka Doshi on the impact of lower crude prices and growth outlook for the company and industry going forward.According to him FY16 is likely to show improvement in topline if government follows through with the reforms. So the growth in FY16 could be incrementally better than FY15, said Anand. While, FY15 growth would be similar to that of FY14, he addedWith regards to the fall in commodity prices, he said they would help increase earnings power of companies overall. "So when the economy grows faster, I think all consumer companies will do better, demand will increase and as a result we should do better," he said.

Below is the transcript of his interview to CNBC-TV18Q: What is the impact of lower crude prices on Asian Paints?A: The fall in crude prices and commodity prices will definitely increase the earning power of companies and people across the country. Hopefully that should have a gross domestic product (GDP) multiplier effect. So when the economy grows faster, I think all consumer companies will do better, demand will increase and as a result we should do better. On the other side, commodity prices especially crude coming down definitely helps our bottomline and our profitability improves. But in a competitive scenario in the long run, you have to probably handover some of it to the consumers.Q: What is the year 2015 or FY16 however you choose to pick it looking like in terms of consumer demand in India?A: Everybody is hoping for ‘Acche Din’ because with the government moving everybody is optimistic and Indians are probably the most optimistic people in the world.Q: So does it look like ‘Acche Din’ will come your way in 2015 or are you gauging that consumer demand is a little bit more tepid than anticipated?A: It is going to take time for any action by the government to translate down to the ground level but the stock markets definitely indicate that the consumer demand is going up.Q: You have an ear closer to the ground than the stock market does.A: I am in a quiet period.Q: I am not asking you for a quarterly number, I am not even asking you to quantify this specific growth number for me but give me a sense, is this year either the calendar year or FY16 going to look like a big improvement in topline versus the year that has just gone by?A: It should show an improvement in the topline if the government carries out half the things they say they are going to.Q: Single digit improvement, double digit improvement for topline growth?A: We have been having double digit growth for the last decade and a half.Q: Will growth be dramatically better or will it be just incrementally better?A: I think it will take time to be dramatically better.Q: So incrementally better in 2015 the calendar year and equally in FY16 so to speak, right?A: 2015 maybe similar to 2014 if we are talking of the financial year.Q: 2015 financial year - we are in the last quarter now.A: So probably if you see the first half yearly results, they are very similar to what was there the previous year. So it is more or less on similar lines.Q: In the years FY09 to FY14 and I was reading a research report in anticipation of this interview, you moved your profitability, your margin up by almost 300-400 basis points this even at a time when inflation posed a big problem, now that seems to be a less of a problem, we may have seen the beginning of a rate down cycle so to speak given the RBI’s recent actions, you have got this big cut in crude prices that is overwhelming all of this. So I am trying to gauge whether profitability that is your margins will grow by substantially more in the next five years to come?A: Competition won’t allow that. We are in a fairly competitive scenario; all the leading paint companies of the world are there in India, so margins will increase a bit but I don’t think they will shoot up or down. Anyway, we play for a more consistent long-term scenario, we are looking at long-term growths over the next decade or so, so we aren’t very worried about one-year shoot up or shoot down.