Paint industry sees a faded festival

Chennai: The festival season is here and homes are being spruced up and painted bright. Still, the paint industry isn’t celebrating. Chances are that the industry would wind up the second half of the year with low single-digit growth. While the industrial paint segment is already bruised by the slowdown in the automotive sector, the decorative paints too might get hit by the gloomy consumer sentiments and the sluggish real estate offtake.

Some paint companies had recorded double-digit volume growth in the June quarter. Asian Paints and Berger Paints clocked 16 per cent and 12 per cent volume growth, respectively, in the last quarter. This, according to ICICI Securities, was mainly because the companies were filling up stocks at the dealer level. The sales at the retail level are still a concern, the brokerage said.

“The sales growth at the retail-end has come down by 10-12 per cent in the past three to four months. Going ahead, in the second half of the year, we might see a low single-digit growth. The volume growth might be slightly better but still in single digits,” said Mahesh S Anand, President, Decorative Division, Nippon Paint India.

In the decorative segment, 40 per cent of the sales is dependent on the prospects of housing sales and the real estate sector is already reeling under the pressure of unsold inventory. The remaining 60 per cent is the repainting market. Consumption in this segment could get affected by the weak consumer sentiments. Volumes could be slightly better than revenues as the weak sentiments would force consumers to opt for mid- to low-end products.

Further, the growth in the second half could be slower due to the higher base of last year. The industry sales had grown by over 15 per cent last year after the government reduced the GST for paints from 28 per cent to 18 per cent.

The industrial paint segment is already suffering from the slowdown in the automotive segment and the manufacturing segment.