After diamond and textile industry,paint companies feel meltdown heat

Huge reduction in prices of raw material,high inventory costs and a slump in demand,meltdown has affected the paint industry greatly.

Written by Express News Service | Vadodara | Published: February 10, 2009 3:43 am

Slump in demand and low material costs cited as main reasons of downturn in the industry

Huge reduction in prices of raw material,high inventory costs and a slump in demand,meltdown has affected the paint industry greatly. So much so that the major paint companies have reduced prices across the board in the last few months.

Apart from the slump in prices of raw materials,the fall in demand has mainly prompted the companies to reduce its product prices.

“The price reduction is about 25 to 30 per cent across the board. This is mainly due to two reasons. Slump in demand and low raw material costs,” said Dr Pradip Desai,president of the Gujarat Paint Raw Material Suppliers’ Association.

The three major players —Asian Paints India Ltd,Berger Paints and Nerolac — are also in the process of reducing their prices.

Experts feel that the companies are being forced to reduce prices because of huge inventory built up when crude oil prices were at their peak.

“A lot of paint companies have bought solvents and chemicals at high prices. Several reports had shown that the crude price would go up to 200 dollars. However,the crude price suddenly crashed. This led to a situation where the paint companies were confused what to do,” said a company official.

“The prices of chemicals have gone down significantly. For instance,Sulphuric acid was at Rs 44 per litre six months ago and now it is Rs 3.50 per litre. Some of the raw material suppliers are transporting the chemicals to the companies free of cost,” he added.

The industry is also suffering,as there is a significant drop in export demand that has gone down with the global slowdown. Even domestic demand is under pressure,as the infrastructure projects are being delayed,” Desai said.

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