Kansai Nerolac sees faster growth in FY17 on Modi’s housing push

HM BHARUKA, Managing Director, Kansai Nerolac

The paint industry has been a major beneficiary of the fall in crude oil prices and the Centre’s housing and infrastructure push. After slashing prices thrice in FY16, Kansai Nerolac is optimistic of accelerating growth in FY17 on the back of very aggressive pricing and marketing strategy. In an interview to Bloomberg TV India, Kansai Nerolac Managing Director HM Bharuka says he expects double-digit growth to continue. Excerpts:

Kansai Nerolac is charting out an aggressive marketing strategy. Is it a prelude to a revival in the construction and industrial sector?

For the paint sector, the industry has been doing well for the last 25 years, and we were having a double-digit growth. Even in 2008, the industry continued to do well. In fact, 2017 appears to be better, with government policies that are more pro-active and expectations of a better monsoon.

New policies like Smart Cities and ‘Make in India’ will help the paint industry. The Pay Commission mandate and OROP disbursals which is getting distributed will also help spur demand.

Have you passed on the benefit of low input costs to consumers by cutting prices?

We were the only company which felt that we have to pass on this reduction to consumers. We believe that when there was an increase in our raw material prices, we had increased our prices. Now we are duty-bound to reduce prices when the benefit of falling input prices actually come to us.

And how much was the price reduction?

It is ranged from about 2-3 per cent, depending on the product mix of the product.

While sales growth is not an area of concern, how is demand panning out? The price cuts are coming at a time when crude prices are firming up. Does this indicate a lack of demand? How do you plan to cope up?

I do not know why people get the feeling that demand is low. We had a double-digit volume growth, even in FY16. In the last four years, there has been inflation. If you look at the top line, the industry has been looking at 14-15 per cent growth.

But that was partly because of inflation. In the current year, there is no inflation. There is in fact price reduction.

So if we look at the real growth, it is a double-digit growth. The growth of FY16 was not lower than FY15 in any way.

Partially, it is possible that automobile sector or general industrial sector may not have done that well. But overall, if you look at different sectors, it has done better than the previous year. So, I do not see demand being low.

Published on April 04, 2016
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