Getting your house or building painted would soon become more expensive, with paint manufacturers across the country planning to raise prices by anywhere between three and five per cent. Dealers say the rise will be seen across categories in the commercial, domestic and automobile paint segments.
Market leader Asian Paints, which accounts for 70 per cent of all sales, declined to comment. But, sources say the company would increase prices of all its products with effect from next week.
“The prices are going to increase for sure, given the excise duty hike and the increase in prices of raw materials. But, no formal communication has been carried out with the dealers as of now,” said Hemant Somani, general manager, ICI Dulux, which has been taken over by global paint giant AkzoNobel. Norway’s Jotun has also planned to increase prices. “We may not have an immediate increase in prices as of now, as we are trying to absorb the increase in costs as much as we can, but in the future we may have to,” says Lopesh Dalal, marketing head, Jotun India.
The two per cent increase in excise duty, coupled with a rise in customs duties on crude oil by 2.24 per cent, is forcing the companies to raise prices of their products, since the by-products of crude oil are used as key raw materials in the manufacturing of paint.
Analysts believe it is the customer who will bear the ultimate brunt of this increase in prices, since retailers would not be able to absorb the hike. “The paint industry, particularly the domestic paint market, is very low on margins and has a fragmented distribution. Plus, the dealers are large in number but not big on capital, so they can’t absorb these costs,” explains Purnendu Kumar, senior analyst Technopak India.
Paint companies could, however, make up for the loss in margins during the festive season.“Though prices are going up, the main peak time for the paint industry in India is Diwali, and people will still get their houses painted just as much,” says Kumar.