Asian Paints, which is investing around Rs 5,000 crore as part of expansion plans, said it sees some signs of recovery and is hopeful of better demand conditions in the second half after a challenging first six months of FY18.
"There are signs of some recovery towards the latter part of FY18. Coupled with a good monsoon and settling down of the trade channel from the initial hiccups of GST rollout, we are hopeful of better demand conditions in the second half of current FY 18," the company said in its investor presentation.
Decorative paints business in the country registered a high single digit volume growth in Q2 FY18.
The company has, however, witnessed subdued demand in the auto OEM and general industrial business segment. Even the auto refinish segment continued to witness challenging conditions in the market during the quarter ended on September 2017.
"Raw material prices continue to remain higher and we will need to monitor this trend very carefully and take necessary action to protect margins. Forex situation in the international markets such as Egypt and Ethiopia is a key cause of concern," it said.
The company is investing around Rs 5,000 crore towards its expansion plans. Total capex at the standalone level for FY18 is estimated to be about Rs 1,200 crore.
It is setting up a 5,00,000 KL/annum plant at Visakhapatnam at an investment of Rs 1,785 crore and 6,00,000 KL/annum plant at Mysuru, Karnataka at an investment of Rs 2,300 crore.
The company is on track to commission the first phase of both the plants in FY 2018-19.
The company said that its international business, which contributed about 13 per cent to the group's turnover of Rs 17,000 crore in FY17, now focuses on establishing presence and growing in high growth emerging markets and also looking for expansion in key markets of Africa and South East Asia.
The paints major inaugurated the first paint plant at Indonesia in September 2017 with an initial capacity of 5,000 MT/year on a single shift basis.
It has also completed the divestment of the companys entire stake in the Caribbean region (Jamaica, Barbados, Trinidad & Tobago) effective July this year.
Units in Nepal, Bangladesh and Oman and Bahrain witnessed good top-line growth.
However, currency devaluation in Egypt and forex unavailability in Ethiopia, impacted the overall performance of the International operations in Q2 FY 18, the company added.
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