Business Standard

Q&A: P M Murty, Asian Paints

'We will continue to witness 16% volume growth'

Image

Business Standard

Mumbai-headquartered Asian Paints Ltd recently restarted operations in Egypt after shutting two plants there following anti-government protests. Egypt is an important market for Asian Paints, says the company’s Managing Director and Chief Executive Officer, P M Murty. He talks to Business Standard about his company's international operations and what he expects from the Budget. Edited excerpts:

Operations in Egypt have begun. Are you satisfied with the way things are moving there?
We entered Egypt in 2002 and are happy with the progress made till now. When we acquired SCIB Chemicals, it had one manufacturing plant. We expanded it, and last October, a second plant was commissioned, not very far from the existing one. We have a good team and have seen very good growth there.

 

I am told that sales and orders have resumed after the recent political unrest. The government has changed hands and there is some uncertainty. We will see how the situation unfolds, but we are confident we will have good growth in the future.

What are your expectations of growth from international operations as a whole. As we speak, Bahrain, where you are present, is witnessing anti-government protests?
International operations have had some challenges, but you can't paint all geographies with the same brush. We are present in South Asia, that is, Nepal, Bangladesh and Sri Lanka, which have in the recent past seen growth which is excellent. In fact, growth there is ahead of India as far as this financial year is concerned. Egypt was doing well until now. But we are hopeful that the situation there will improve.

We have operations in Bahrain, UAE and Oman, which have been going through challenging times of late because of macro conditions prevailing there. Likewise, the Caribbean, too, has been going through challenging times following the 2008 financial crisis since they they depend heavily on tourist inflows. On the whole, international growth at the moment is lower than growth in India.

Is volume growth of about 15-16 per cent, that most paint firms have seen this year, sustainable?
We have been witnessing this growth for the last five years. I don't see why we cannot continue on this path in the future as well. This kind of volume growth is sustainable. There are many drivers for this. The principlal driver is the Indian economy. If the economy is growing at a certain rate, then the paint industry grows close to two times that number. That has been our observation. So, as long as we believe in the India story, we should enjoy the demand that comes with it.

Second, urbanisation is taking place at a phenomenal rate in India. Not only are the big cities expanding, but so are the small towns, which are, in fact, witnessing a higher rate of growth. Will all of this come to a halt in the near term? I don't think so.

In an inflationary scenario a slowdown in auto and real estate cannot be ruled out, which means an impact on paints...
There are a couple of worries. One is the commodity inflation we are seeing, and hence the need to raise prices. This year, there have been a series of price rises that most firms have taken to mitigate input cost pressures. The concern is, whether we will continue to see raw material inflation in the future. The other issue is that interest rates are going up, and hence what is the likely impact on auto and real estate? We are keeping a close watch on the situation.

What are your expectations from the Budget? Many are expecting a two per cent rollback in excise duty. Will you pass that to consumers?
We will take a look at pricing once the Budget is out. We will have to take into account any change in the financial levy and its impact on pricing. Our approach will be balanced.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Feb 18 2011 | 12:27 AM IST

Explore News