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Paints Industry



Budget provisions

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    Reduction in the basic duty in titanium dioxide to 35% from 40% earlier.


    Budget impact


    The reduction in the duty of titanium dioxide, which is the raw material for the paint industry would definitely benefit the likes of Asian Paints and Goodlass Nerolac.

    The surcharge of 10% and the continued imposition of special additional duty of 4% imply a total duty of 42.5% which is 1.5% down from the earlier duty of 44%. This makes the duty on raw material equal to that of the end product.

    The continuation of sops for the housing sector will continue to propel the demand for housing and consequently for paints.


    Industry wish list

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    Mr. Ashwin Dani, Managing Director, Asian Paints Limited wishes for:

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    Rationalisation of customs duties

  • Reduced customs duty on titanium dioxide bringing it at least on par with paints

  • Further sops to the construction sector


    Key Positives

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    The impending boom in the housing sector is likely to boost demand in the decorative segment.

  • The industry has been a beneficiary of reduced excise duties over the last three budget. This has helped the organised sector to match the price of the unorganised sector.

  • The auto sector is on the upswing with passenger car sales up on an average by 30%. This is likely to lead to a big growth in volume terms for the automotive paint manufacturers.

    		  

    Key Negatives

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    Agriculture, which is where a lot of growth for the decorative segment materialises, has shown a negligible growth in the current year. This could spell out tough times in the coming year.

  • We have been witnessing a lot of competition amongst the car manufacturers, which is bound to lead to tough pricing norms for auto paint suppliers.

  • With crude oil prices going up titanium dioxide prices are also on the uptrend.


    Budget Impact:  Paints Sector Analysis for 2002
    Latest: Performance Of Paints Stocks | Paints Sector Report