Paint-maker AkzoNobel India, amongst the top four players in the country, has seen demand hit in the last week of April and May, because of localised lockdowns and closures. Demand recovery is expected from July-August onwards, as phase-wise re-opening happens and the decorative paints market witnesses a pick-up.

Demand is expected to significantly improve during the festival season (September-October) onwards, persisting “well into the first few months of next fiscal” unless a third wave of infections hit the country.

According to Rajiv Rajgopal, Managing Director, AkzoNobel India, individuals have postponed home repairs and renovating requirements with Covid-cases going-up; but, the pent-up demand is expected to be back in the latter half of this fiscal. Construction works across project sites are still going-on.

While surging Covid cases in upcountry regions have been a worry and impacted demand across paint companies, AkzoNobel has a relatively less presence there. Being amongst the premium brands (Dulux), its demand concentration is primarily in metros, Tier-I and Tier-II markets.

Hit by lockdowns

“Nearly 90 per cent of the demand in May has been hit with lockdowns. But supply chains and factories are operational. People have postponed repair work. Pent up demand will be coming back towards the later half of the year, may be around the festive season. Yes, the pick-up or recoveries may not be as sharp as last year. But, we feel that the demand will space out over more quarters and well into the first few months of FY23. All this is presuming, there is no third wave and vaccination picks up,” he told BusinessLine .

The Indian arm of Dutch company AkzoNobel – listed on bourses here and headquartered out of Kolkata – has put on hold new launches. The company expanded distribution network to 19,000+ outlets and 14,000 tinting machines covering 4000 towns of the country, strengthened its presence in mass segment with the Dulux Promise Choice launch and focused on brand building initiatives such as Dulux Assurance, in FY21. The phase-II of its expansion plans includes reaching out to 7000 towns.

Coatings and powder segments – catering primarily to the automobiles, industrial and aerospace segments – continue to do well at the moment. The OEM market is “witnessing strong bookings”.

“The coatings segment is a little less impacted than the B2C. Factories are working. Construction has not been impacted. The refinished market will mirror the behavior of the decorative markets,” Rajgopal said.

Outlook for FY22

According to Lakshay Kataria, CFO, AkzoNobel India, the company is eyeing “double digit” growth for FY22 while expecting “healthy margins”. Price rise has also been taken to the tune of three per cent in May and five per cent in June in view of the rising raw material prices. Another set of hike is expected in July.

Crude derivates like titanium dioxide and monomers and packaging materials have now seen a 15-20 per cent rise in cost over the last few quarters. Shift in consumer preferences, from unorganized to organized sector is also being witnessed.

“We are confident of healthy double digit profitable growth. In terms of margins, we stick to our outlook of sustained double-digit numbers for FY’22,” Rajgopal said.

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