Kansai Nerolac Paints' net profit dips 38.7% to Rs 125.3 cr, sales up 13.7%

Kansai Nerolac Paints Ltd on Tuesday reported a 38.7 per cent decline in its consolidated net profit to Rs 125.32 crore for the third quarter ended December 2021, on account of inflationary pressures on raw material inputs.

The company had posted a net profit of Rs 204.50 crore in the corresponding quarter last year, Kansai Nerolac said in a BSE filing.

However, its revenue from operations during October-December 2021 jumped 13.67 per cent to Rs 1,810.35, compared with Rs 1,592.55 crore in the year-ago period.

Kansai Nerolac's total expenses stood at Rs 1,648.39 crore, a jump of 23.65 per cent as against Rs 1,333.06 crore a year ago.

Kansai Nerolac Paints Vice-Chairman and Managing Director H M Bharuka said, "The quarter witnessed a good demand for decoratives. In auto, demand was muted on account of the semiconductor chips shortages."

He added that on raw material costs, the quarter continued to witness inflationary pressures along with volatility in crude and exchange rates. "Supply chain tightness continued during the quarter. The company has not been able to encash the full benefit of demand."

The company effected price increases in decorative, and cumulative price increase so far is over 20 per cent. Similarly, across all industrial segments, an average price increase of around 18 per cent has been implemented, Bharuka added.

"Effect of these increases will be reflected going forward. Material costs continue to rise, necessitating a further price increase to offset this cost increase. The judicious management of costs and overheads continued," he said.

Bharuka said that looking forward, it is expected that the impact of Omicron on demand will be limited.

Over the outlook of the Indian paint industry, Bharuka said: "The size of the domestic paint industry is estimated at around Rs 55,000 crore as of March 2021. The good growth in infrastructure, core sector, as well as automobile and real estate, is likely to have a positive effect on the overall demand of paint for the industry in the long run."

Shares of Kansai Nerolac Paints Ltd on Tuesday settled at Rs 559.55 apiece on the BSE, down 1.46 per cent from the previous close.