The Rs 11,500 crore domestic paints industry is likely to get a much needed boost on account of cuts in home loan rates. The industry has been reeling under production cuts and a slump in the automobile sector. In any country, the paints industry has been a barometer of economic activity. The demand goes up in a boom as people buy more homes and cars, and businessmen put up more commercial space and factories.
The paint industry has two segments namely decorative (used in houses and commercial buildings) and industrial. The growth in the decorative segment came down to 15 per cent from 18 per cent in the last one year whereas the growth in the industrial segment dropped to just 3-4 per cent from 15 per cent.
To deal with this, the industry has decided to lower production in order to check the pile-up of inventory. Some have put their expansion plans on hold and still others are figuring out if their stocks can be exported. On the other hand, those who had bet on high-end paints, as consumers moved rapidly up the value chain, now find no takers.
The market leader Asian Paints had to temporarily close its chemical plant in Gujarat that makes phthalic anhydride (PAN), a component used in paint making, for its own use as well as for other paint makers. Besides this, the paint manufacturers now find it difficult to roll-back prices because of the depreciation in the rupee. Naturally, they are eyeing the real estate sector to bail them out of the situation.
The automobile industry that accounts for almost 90 per cent of the demand for industrial paint is also facing its worst ever crisis. The industry witnessed the worst decline in sales in 8 years this November, according to the Society of Indian Automobile Manufacturers, as buyers stayed away on account of tight liquidity.
The paint industry has two segments namely decorative (used in houses and commercial buildings) and industrial. The growth in the decorative segment came down to 15 per cent from 18 per cent in the last one year whereas the growth in the industrial segment dropped to just 3-4 per cent from 15 per cent.
To deal with this, the industry has decided to lower production in order to check the pile-up of inventory. Some have put their expansion plans on hold and still others are figuring out if their stocks can be exported. On the other hand, those who had bet on high-end paints, as consumers moved rapidly up the value chain, now find no takers.
The market leader Asian Paints had to temporarily close its chemical plant in Gujarat that makes phthalic anhydride (PAN), a component used in paint making, for its own use as well as for other paint makers. Besides this, the paint manufacturers now find it difficult to roll-back prices because of the depreciation in the rupee. Naturally, they are eyeing the real estate sector to bail them out of the situation.
The automobile industry that accounts for almost 90 per cent of the demand for industrial paint is also facing its worst ever crisis. The industry witnessed the worst decline in sales in 8 years this November, according to the Society of Indian Automobile Manufacturers, as buyers stayed away on account of tight liquidity.
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