Paint industry sees 10%-15% growth due to GST reduction

imagesThe Indian paint industry is projecting higher sales growth ranging between 10% and 15% in fiscal 2018-2019, compared with about 9% growth in the previous financial year. This follows the lowering of the Goods and Services Tax (GST) rates by 10 percentage points, an official said here on Tuesday.

“We expect 10-15% growth in sales in this fiscal, [in] the decorative paints segment. We have urged members to lower the MRP. The lowering of the rate is likely to boost [sales],” Indian Paint Association’s vice-president Mahesh Anand told presspersons after IPA’s 55th Annual General Meeting. However, he added that concerns remained on the input price front.

The industry has raised prices twice already in 2018, mainly on account of the rise in raw material costs which were linked to crude oil. In a recent report on FMCG companies, Kotak Securities had said that the GST rate cut may drive “a 10-15% earnings upside for the paints companies on an annualised basis; fiscal 2019 impact would be lower, given part-year benefits accrual,” it had said.

In a report, Edelweiss Securities had forecast an acceleration in paint volumes following the cut in GST rates from 28% to 18%.

In his address at the AGM, Mr. Anand said the Indian paint industry had been adversely affected in June and July 2017 due to a reduction in offtake by dealers on account of uncertainties and lack of familiarity in GST implementation.

Fluctuating crude prices and higher prices of raw materials such as titanium dioxide also adversely affected the industry, he said.



Source:  The Hindu
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