Kansai Nerolac net jumps 28% on lower crude prices

Kansai Nerolac Paints today reported 28.5% increase in net profit at Rs 84.4 crore for the three months to December on lower input cost.

The company reported a net profit of Rs 65.66 crore in third quarter of 2014-15 fiscal.

Gross sales during December quarter stood at Rs 1,177.3 crore, up 11.3% from the year-ago period.

The bottomline was impacted due to the rupee fall and higher prices of the inputs, primarily of the crude on the derivatives market, coupled with higher tax outgo which rose to Rs 38.9 crore from Rs 27.1 crore, the company said.

Commenting on the numbers managing director HM Bharuka said the company saw high double digit volume and value growth in the decorative segment, however industrial demand was subdued and in single digit, due to the sluggishness in automotive demand, especially in two-wheelers.

While the quarter saw a softening in crude oil prices, it is not significantly reflected in derivatives. Volatility in the exchange rate and depreciation of the rupee compounded this problem further, he said.

Going forward, the larger global sentiment and slowdown in China along with currency volatility is likely to impact consumer sentiment in the short to medium term. While there is visibility of double digit growth in the decorative segment, situation with respect to industrial in the near future remains a challenge, he warned.

The size of domestic paint industry stood at Rs 35,500 crore as of March 2015.

Kansai Nerolac is the second largest paint company in the country and is the leader in the industrial segment. It has five manufacturing units and a strong dealer network through which it sells a diversified range of products including decorative coatings for homes, offices, hospitals and hotels to sophisticated industrial coatings.