The country’s paint industry, which has been witnessing an overall slowdown, expects rural demands to drive the growth in the next two-three quarters going forward.

“In the first half of this fiscal, the industry grew by 3-4 per cent in volume, which is ahead of value. We expect a similar growth in the second half. The urban demand is expected to remain muted. But, we are seeing a gradual recovery in rural demand,” Kansai Nerolac Paints MD & CEO Anuj Jain said during the 32nd biennial Indian paint conference of the Indian Paint Association (IPA) in Kolkata on Friday.

Speaking during the event, Abhijit Roy, MD & CEO, Berger Paints India, said in the last five years the paint industry grew 13-14 per cent in terms of volume. “But, in the third quarter, we saw a slowdown in demand. It was not just for paints, but all FMCG, especially in the discretionary category,” Roy pointed out.

Factors contributing to slowdown

According to him, there were primarily three factors contributing to the overall slowdown for the sector. “The industry has taken a price correction of around 5 per cent so far. As a result, the value growth was only 1-2 per cent. There were also new entrants in the market, and there was an impact of 2-3 per cent on the redistribution of market share. Finally, there is also an overall slowdown in discretionary spending,” Roy observed.

He hoped the consumption demand would get a leg up with expected tax breaks in the upcoming Union Budget. According to him, all the players in the industry are going ahead with capacity expansion as they are hoping that consumption would be good in the long-run.

Birla Opus Paints

The Aditya Birla Group in November last year unveiled the fourth plant of Birla Opus Paints, a division of Grasim Industries, at Chamarajnagar in Mysore.

JSW Paints, which is a new entrant in the country’s paints industry, is also planning to expand capacity. For capacity expansion, the company is looking at both organic and inorganic routes. “We will be investing around ₹1,000 crore in the next few years for capacity expansion. As a group we are looking at opportunities for inorganic growth. We will certainly look at Akzo. But it is too early and nothing definitive has emerged so far,” said JSW Paints Joint Managing Director & CEO Sundaresan AS.

Other paint makers are also reportedly in the race to buy Akzo Nobel’s India stake. The Dutch paints and coatings major, owner of Dulux, is reportedly looking to offload its shareholding in Akzo Nobel India.