Kansai Focus on Decorative Paints Market
For Kansai Nerolac Ltd, the industrial paints segment contributes as much as 45% to its revenues. The demand slump caused pain in their earnings. In a post-earnings conference call, the management said industrial paints volumes fell 80-85% year-on-year (y-o-y) in Q1FY21.
This decline was led by automobile paints, which is a major contributor to industrial paints revenues. It is not surprising considering the current state of the Indian passenger vehicle industry. While volumes jumped in July, it may be due to pent-up demand, and may not sustain, said analysts.
On the other hand, the decorative paints segment is expected to see faster recovery driven by demand in tier-2 and tier-3 cities. Smaller towns are said to be less affected by the crisis. It is increasing focus on decorative paints and related products. In the June quarter, the double-digit volume growth in Kansai’s decorative paints segment was led by low-end products such as enamel, putty and primer. Kansai has launched new products in the low-end category, as it expects them to perform better than premium products, the management said.