India’s paint industry, grappling with an overall slowdown, anticipates rural demand to bolster growth over the next two to three quarters.
Industry Growth and Trends
In the first half of the fiscal year, the sector reported a 34% increase in volume growth, surpassing value growth.
Kansai Nerolac Paints MD and CEO Anuj Jain stated, “We expect similar growth in the second half. While urban demand remains muted, rural demand is gradually recovering”.
Berger Paints India MD and CEO Abhijit Roy highlighted the industry’s robust growth trajectory over the past five years, with volume growth reaching 13-14%.
However, he noted a slowdown in the third quarter, affecting not just paints but also other FMCG products in the discretionary category.
Contributing Factors to Slowdown
Roy identified three key reasons for the current slowdown:
*Price Corrections: A 5% price adjustment reduced value growth to 12%.
*Market Redistribution: New entrants have caused a 2-3% redistribution of market share.
*Decline in Discretionary Spending: Consumer spending on non-essential items has decreased.
Roy expressed optimism that expected tax breaks in the upcoming Union Budget could stimulate consumption demand.
Capacity Expansion Plans
Despite the slowdown, paint companies remain optimistic about long-term growth and are moving ahead with capacity expansion plans.
Birla Opus Paints Expands Operations
In November, the Aditya Birla Group inaugurated its fourth plant under Birla Opus Paints, a division of Grasim Industries, in Chamarajnagar, Mysore.
JSW Paints’ Ambitious Plans
JSW Paints, a relatively new player in the market, is investing ₹1,000 crore in capacity expansion.
Joint Managing Director and CEO Sundaresan AS mentioned, “We are exploring both organic and inorganic growth opportunities. While we are considering Akzo Nobel’s India stake, it’s too early to confirm any developments”.
Market Dynamics and Competition
Other paint makers are also reportedly vying to acquire Akzo Nobel’s India stake.
The Dutch multinational, owner of Dulux, is looking to divest its shareholding in Akzo Nobel India, sparking interest among industry players.
As reported by thehindubusinessline.com, with rural demand showing promise and strategic expansions underway, the paint industry is positioning itself for a rebound despite current challenges.
