With the reduced GST rates, the paint industry is about to witness a growth between 10% to 15% in FY 2018-19, as compared to 9% growth in the FY 2017-18. This is due to lowered GST rates by 10 percentage points, as mentioned by an official.
Mahesh Anand, vice-president, Indian Paint Association said in a press conference during IPA’s 55th Annual General Meeting, “We expect 10-15% growth in sales in this fiscal, [in] the decorative paints segment. We have urged members to lower the MRP. The lowering of the rate is likely to boost [sales].” Although, he mentioned that the input cost always the concern when it comes to MRP.
The paint industry has increased the prices two times in 2018, because of the increasing cost of raw material which is related to crude oil. Kotak Securities has also mentioned in a report on FMCG companies that GST rate reduction may impact positively with 10-15% growth in earnings for the paints firms on a yearly basis, fiscal 2019 will see a lower impact, provided part-year profits gradual increase.
Mr Anand has mentioned in a statement while addressing at the AGM that the Indian paint industry witnessed fall in June-July 2017 period because of reduced take of goods by dealers in consideration of unpredictability and less knowledge about GST implementation provisions.
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Further, increased raw material costs such as titanium dioxide and varying crude oil prices as well as contrary affected the paint industry’s cost.
Edelweiss Securities mentioned in a report that the volumes of paint orders will increase significantly following the reduced GST rates from 28% to 18%.
