It’s been a colourful quarter for Kansai Nerolac Paints as exceptional gain has boosted profits 10-fold. Speaking to Bloomberg TV India , Kansai Nerolac Managing Director Harishchandra Meghraj Bharuka says decorative has been growing at a brisk pace, but auto has been a drag. The uptick in crude oil prices and anti-dumping duties are increasing input costs for the paint industry, he said.

How has been the Q4 performance? What has driven the growth and which segment remains a drag?

The Q4 numbers have turned out quite well for us. Overall growth is about 11 per cent, mainly driven by decorative, which has grown considerably well. Of course, the industry has seen a sluggish growth throughout the year, which continued in Q4 as well. If you take our cumulative numbers, we have had a growth of about 9.5 per cent mainly driven by decorative. Auto numbers have been sluggish.

Going forward, what’s your outlook looking like for decorative, auto and industrial in FY17?

I think decorative would still continue to have a double-digit growth, whereas auto numbers will continue to remain sluggish at least in the first half. All of us are banking on a very good monsoon. If monsoon is good, the numbers will revive. But in the first half at least, we feel numbers will not be very good for the auto, but I think the decorative would continue to do well.

Can you tell us what’s your outlook on crude oil price and the input costs for the fiscal year? Do you see commodity and oil prices firming up and how will it affect the input costs and on your product prices in general?

Crude oil price, according to me, is at its lowest. I don’t think they would go below what it is right now. In fact, from $30 a barrel, it has risen to $45 already. So, we are expecting it to remain at these levels. Of course, it will depend upon the geo-political situation, on what agreement is reached. But certainly, we are not expecting it to go below $30 level again. Unfortunately, it is very volatile. It will be between $40 and $60 a barrel. We don’t expect it to go beyond $60 because there is a global slowdown. We would be happy to have a stable crude oil price rather than a volatile price. It also has an effect on other commodity prices and exchange rates. This uncertainty is actually putting lot of headwind on the industry. On top of that, there are a lot of items on which the government has put anti-dumping duty. So, suddenly it is affecting us in terms of overall cost. Maybe it is going to be higher than what it is now.

How long do you see this uncertainty lasting?

I don’t think it is right on my part to comment on the global scenario. It is not getting stabilised. If you look at Japan, China, Europe or even the US, everyone is talking about growth concerns. There is still not a full-bloom growth. So until commodity prices get stabilised, we would not see growth coming in. So, maybe I would say global uncertainty will continue for another 12-24 months and that is going to have an effect on the industry.

With the government giving huge impetus to housing and smart cities, do you see a revival in consumer demand?

Yes. Actually, that should have happened given the interest rates have also gone down. But despite this, if you look at real estate, the prices are not going down. So, we are yet to see a pickup in demand in the real estate segment. The government is of course doing its bit. But all that need to translate into reality and it would perhaps take a year or two to see its foot on the ground.

Related Topics
comment COMMENT NOW