(Reuters) – India’s Kansai Nerolac Paints posted subdued quarterly earnings on Wednesday but said demand should improve on the back of the federal budget’s consumption-boosting proposals.
Indian paintmakers have been grappling with increased competition in the sector following Grasim Industries’ entry early last year.
Moreover, shoppers have been cutting back on discretionary spending as they choose cheaper private labels, which have pushed companies to dole out discounts to woo them back.
Kansai Nerolac’s outlook differs from that of its bigger rival Asian Paints, which forecasts weak short-term demand on continued weak consumption in urban areas.
“Demand in decorative (business) was impacted due… to lower spend on discretionary products,” Kansai Nerolac Managing Director Anuj Jain said.
The company’s third-quarter consolidated revenue was at 19.22 billion rupees ($220 million) in the three months ending Dec. 31, little changed from a year earlier and narrowly missing analysts’ average estimate, according to data compiled by LSEG.
Its profit before exceptional items and tax rose 2.8% to 2.14 billion rupees, as automotive demand helped cushion the impact of soft consumer spending.
The company flagged a “better than market” automotive growth, which helped it offset weakness in the decorative paints business.
Kansai Nerolac also made a one-time gain of 6.3 billion rupees during the quarter, mainly proceeds from a land parcel sale.
MD Jain will step down from his role and will be replaced by Pravin Chaudhari from April 1, the company said.
Chaudhari is currently an executive officer at the company’s Japanese parent Kansai Paint Co and has had a 5-year stint at ‘Fevicol’-parent Pidilite Industries.
($1 = 87.3770 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Mrigank Dhaniwala)
