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Linking crude prices directly to paint prices is bit overstated, says Indigo Paints' Hemant Jalan

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Price of crude as a raw material is not the only one that impact paint prices, there are other raw materials too that affect the prices said Hemant Jalan, managing director of Indigo Paints.

Hemant Jalan, managing director of Indigo Paints, said linking of crude prices directly to paint prices is a bit overstated because there are many other raw materials that impact paint prices. Jalan said many of the monomers used in making acrylic emulsion saw a huge price increase in the second half of last year, mainly due to plant outages, which have started moderating. Similarly, the prices of polypropylene used in making plastic containers for packaging the finished products are also declining.
With regards to hike in paint prices, he said the industry has more or less been able to pass on the raw material price increases to the customer. He added the industry has already announced price hikes in May and one would be coming in July.
On the business outlook, he said the EBITDA margins for the current year are expected to be better than last year’s 17 percent. This year they would be nearly 18.5 percent. According to him, the gross margins are also expected to remain steady.
Jalan, in an interview with CNBC-TV18, said the other driver for EBITDA growth would be reduction in advertising spends as a percentage of sales compared to last year. He said Ad spends as percentage of sales for the company were at 12.7 percent in FY20, nearly 10.5-11 percent in FY21 and would decline by another 1-1.5 percent in the coming year.
He mentioned the company has renewed the endorsement contract with MS Dhoni for another three years
Talking about demand for paint going forward, he said it is back to near normal that is about 90 percent of the pre-COVID levels as different states have started relaxing their lockdown restrictions.
According to Jalan, if one were to optimistically assume that there would be no third COVID wave in India then the topline growth of 30-35 percent would be par for the course.
For the full interview, watch the accompanying video.

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