 "Cheap oil not to bring down paint prices")
"We import many raw materials and they are already in the pipeline. There cannot be an immediate decision on price," said KBS Anand, managing director and chief executive officer of Asian Paints.
Analysts expected that the fall in crude oil prices would benefit paint companies, which use crude oil derivatives as inputs, and hence prices would be reduced because paints was a competitive industry.
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"We are seeing the price of solvent going down. Price decisions will depend on the quantity of oil-based products in a company's portfolio," said Abhijit Roy, chief executive officer of Berger Paints India. He added most of a major paint company's products were water-based and there would be no major decisions on pricing.
"This is a competitive industry, prices will drop as soon as one company decides to do it. As the inventory of raw materials is exhausted, it will happen," he said.
Since the benefit of a drop in input prices is not being passed on to customers immediately, analysts expect an expansion of margins of paint companies. "The gains are unlikely to come in the December quarter since we carry an inventory of two months but they will start reflecting in the fourth quarter if crude oil prices stay low," said an executive with a paint company on condition of anonymity.
The industry also expects a boost from an economic revival and the government's policies like the 100 smart cities project.
The Indian Paints Association expects the industry will grow in the double digits to reach a valuation of Rs 50,000 crore in the next four years from Rs 30,000 crore now.
"But that also depends on the implementation of projects the government has announced," said Anand.
"The interest rate and economic factors will affect the automobile industry, which will reflect in industrial paint demand," said Jalaj Dani, vice-president of the Indian Paints Association.