The country's second largest paints maker Kansai Nerolac Paints today reported an over 33 per cent rise in net profit at Rs 80.43 crore for the March quarter, driven by higher margins following cheaper input costs.
Including a one-time income of over Rs 537 crore, net income rose to a record high of Rs 615.77 crore. The exceptional gains came from sale of an old factory land in Chennai.
For the fourth quarter ended March 31, the leader in industrial paints segment with over 40 per cent market share reported a sales growth of 10.6 per cent to Rs 1,062.88 crore.
For the full fiscal (2015-16), sales rose 9.3 per cent to Rs 4,604.36 crore, while net profit rose to Rs 1,064.71 crore, which was driven by the sale of the factory land.
Managing Director H M Bharuka attributed lower sales, despite cheaper inputs and the resultant prices corrections in the market, to the poor show by the automobile industry, which is the single largest market segment for his company.
"Within the auto space, only passenger cars performed reasonably well with 7 per cent growth. But this was negated by the poor show by the two-wheeler and three-wheeler segments as also to some extent the commercial vehicles space," Bharuka told PTI.
If the monsoon is at normal levels, there can be a pick-up in overall demand, he added.
"Recent hardening in crude prices will put pressure on the bottom line. I also see a visibility of double-digit growth in the decorative segment, while situation with respect to industrial segment in the near future remains a challenge," he said.
Since almost 75 per cent of the Rs 39,000-crore domestic paint industry is dominated by the decorative segment, a good growth in infrastructure, core sector as well as automobiles and real estate will have a positive effect on the overall demand for paints, he said.
Bharuka said the company's Rs 650-crore capacity expansion, under which it is setting up two new plants in Gujarat and Punjab, will increase production by 17 per cent to 4.2 lakh tonnes from the present 3.70 lakh tonnes.
These plants will be commissioned by September 2017.
Kansai, a zero debt company, has over Rs 1,000 crore in cash reserves.
It has four manufacturing units which make products ranging from decorative paints for homes, offices, hospitals and hotels to sophisticated industrial coatings.
