Shalimar Paints hiked prices of industrial paints and decorative products last month by 2-3 percent, taking total FY14 price hike to 5-7 percent depending upon the product category, said Sameer Nagpal, MD & CEO, Shalimar Paints. Earlier in the day, sources said Asian Paints had hiked the price of industrial paints by 4 percent.
In the third quarter, most paint companies had seen an impact on profitability due to higher commodity or raw material prices. That impact is being passed on to consumers through the price increase, he said.
Also Read: Will see double-digit volume growth in Q4: Berger's Roy
Most paint companies had also reported margin pressure in the third quarter. Nagpal said though margins are a function of a number of things, this price rise will certainly help neutralise some of the dip seen in the third quarter.
Below is the verbatim transcript of Sameer Nagpal's interview with Reema Tendulkar and Ekta Batra of CNBC-TV18.
Reema: Any plans for you’ll to go ahead and up industrial paint prices?
A: We have undertaken some price hike last month which is in the range of 2-3 percent. They cover both industrial and decorative products.
Ekta: What is the reason for price hike? Is it raw material costs which are still plaguing?
A: You saw in quarter three all paint companies had their profitability impacted because of higher commodity and higher currency. Some of that impact is being passed on to the consumers through the price hike.
Reema: What kind of a positive impact will this have on your margins in the coming quarter because in the previous quarter your margins are nearly halved? So, what can we expect by way of a margin performance in this quarter; January to March?
A: Margins are functions of number of things. This price increase is only one of the elements which will help us neutralise some of the dip we saw in the last quarter.
Ekta: I wanted to focus on the demand scenario as well. How exactly is the demand scenario panning out in the industrial paint segment and will the price hike be absorbed easily?
A: From Shalimar's perspective in the industrial segment we operate in protective quoting segment that segment which is basically meant for protecting the infrastructure, we continue to see challenges because of the overall economy but over a period of last few months and last couple of quarters customers have come to terms with the fact that price hike has to happen because of the commodity and raw material prices which have gone up which are very visible.
Reema: Any discounts which have been offered to clients because of the volume slowdown?
A: These prices hikes are actually reflecting of the fact that all the companies are operating at a very thin margin levels and customers need to begin absorbing some of these cost so no discounts are on the cards.
Ekta: How much have you taken in terms of price hike in the financial year FY14 and how much more of a price hike do you envisage or is planned as of now in terms of the current visibility that you have?
A: These price increases vary by product category. The increase is in the range of 5-7 percent depending on the category. Now that we are in March of course there is no further increase in this financial year. We will review post March scenario or post election once things become clearer to take further call on this.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
