Paint companies’ revenue to fall for first time in 10 years: Crisil

Our Bureau Mumbai | Updated on September 30, 2020 Published on September 30, 2020

For the first time in a decade, paint companies are expected to register 8-10 per cent fall in revenue as the Covid pandemic has suppressed demand drastically and marked slowdown in real estate projects.

The steady demand from the rural and semi-urban markets will help cushion the impact of low urban sales of decorative paints and curb the segment’s revenue decline to 6-8 per cent. However, the industrial segment will see a sharper fall of 14-16 per cent due to the second consecutive fiscal of slack demand.

The paint industry, which logged a revenue of ₹51,000 crore last fiscal, has seen a compound annual growth rate of 13 per cent since FY’11 and FY’20.

About 75 per cent of the sector’s revenue comes from the decorative segment and the rest from the industrial segment. Within decorative, repainting accounts for 70 per cent of revenue.

More than two-thirds of the consumers of decorative paints are in the rural and semi-urban areas where consumption drivers are better poised compared with the urban areas, said Crisil Ratings report.

Semi-urban markets

While improved sentiment due to good harvest and rise in income levels are supporting rural demand, semi-urban markets are benefiting from better availability of painters compared with urban centres. On the other hand, urban demand for decorative paints remains dull given safety concerns, social distancing, and low demand for real estate.

Sameer Charania, Director, Crisil Ratings, said overall revenues of paint makers were under severe pressure in the first quarter of the current fiscal and fell 45-60 per cent.

“We are seeing a gradual recovery now, with utilisation levels rising to 70-80 per cent from 50 per cent in the first quarter. With more people working from home and festival season approaching, sales of decorative paints will see increased traction in the near term,” he said.


Moreover, opportune diversifications into hand sanitisers and adhesives should help paint companies partially offset the impact of tepid sales of industrial paints, on overall revenues.

Industrial paints are bearing the brunt of the second fiscal of weak automotive sales and closure of automotive service centres in the initial 3-4 months of this fiscal. Postponement of demand from manufacturing and marine sectors has also affected sales of protective, powder and performance coatings.

Discounts being offered in certain decorative segments such as enamel paints and higher share of economy and premium paints in rural consumption are likely to impact operating profitability.

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Published on September 30, 2020
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