New Delhi, Jul 15 (PTI) Asian Paints sees the near term outlook as 'bleak' following COVID-19 disruption, but going forward it is optimistic and is focusing on medium to long term prospects, according to the company's annual report.
Paint being a discretionary spend item, there is a likelihood of customers putting their paint requirements on hold. Moreover, the real estate market is unlikely to recover soon and hence the industry would be looking for increased focus from the government in pushing infrastructure investments, Asian Paints said in its annual report for 2019-20.
'The outlook in the near term looks bleak due to the spread of COVID-19 affecting our operations across units. However, as we focus on the medium to long term, we are optimistic that our units now have the intrinsic strength and scale to withstand the storm and emerge stronger to launch into a new trajectory in the coming year,' Asian Paints said.
The domestic paint industry, which consists of - decorative and industrial paint - segment is estimated at Rs 50,000 crore.
The decorative paint segment comprising categories such as exterior wall paints, interior wall paints, wood finishes, enamels, undercoats such as primers, putties among others constitutes more than 75 per cent of the paint market.
While the rest 25 per cent is from the industrial paint segment, which comprises of automotive coatings, marine coatings, packaging coatings, powder coatings, protective coatings, floor coatings and other general industrial coatings, it said.
The company said that the overall demand conditions remained challenging during the course of FY 2019-20 due to the tough operating environment experienced by a large part of the domestic economy.
'In general, paint demand mirrors the overall GDP growth in the economy. Hence, as soon as the overall demand in the economy improves, the demand conditions for the paint industry would also witness improvement,” it said.
The paint industry would also have to wait for the return of the migrant workforce to support the demand-generating sectors such as real estate and infrastructure development, it said.
'The government's push on infrastructure development will be critical to spur the demand from these segments. At the same time, given the overall uncertainty in business conditions, raw material prices, as well as exchange rates, are expected to exhibit increased volatility. They would need to be critically monitored to cushion the impact on profitability,' it added.
In FY 2019-20, Asian Paints reported a standalone net sales of Rs 17,194.1 crore registering a growth of 4.9 per cent.
Besides India, Asian Paints has operations in 14 countries across four regions of the world – South Asia and Indonesia, the Middle East, South Pacific and Africa.
The company's products and services are sold under seven corporate brands, namely Asian Paints, SCIB Paints, Apco Coatings, Asian Paints Berger, Taubmans, Causeway Paints and Kadisco Asian Paints. PTI KRH RKL DRR DRR