Why Paint Companies In India Are Facing a Slump? Owing to adverse weather conditions, India's top two paint companies have witnesses a decline in profit in the second quarter of FY25

The extended monsoons, adverse weather and flooding in some key markets made this a tough quarter for paint companies. Recently, the net profit of Asian Paints dropped by 42.4 per cent in the second quarter of FY25 compared with the same quarter, the previous year. India's largest paint maker's profits declined to INR 694.64 crore and its decorative paints business (India) volumes declined at 0.5 per cent. Similarly, Berger Paints India declared its Q2 results reporting a significant decrease of 7.54 per cent in its profit compared to the same period last year.

During the quarter, the Asian Paints net sales stood at INR 8,003.02 crore and was down 5.3 per cent due to weak demand conditions. The company also said that its revenue was affected by price cuts taken last year. Industrial business registered decent growth supported by the general industrial, protective coatings and refinish segments and its international business registered a marginal value decline despite some challenging market conditions in Ethiopia and Bangladesh, a release said.

Amit Syngle, MD, & CEO of Asian Paints said in a release, "The paint industry faced a subdued demand environment during the quarter. Considering the past performance and revised business plans, we have taken a prudent assessment of our investments in White Teak and Weatherseal and taken an impairment loss in their investment value during the quarter." The company's domestic decorative coatings segment volumes declined marginally while overall domestic coatings revenue declined by 5.5 per cent for the quarter impacted by muted consumer sentiments and extended rains and floods in some parts of the country.

Berger Paints too witnessed a slump. The operating income of Berger Paints decreased by 20.68 per cent on a quarter-over-quarter basis and by 11.66 per cent year-over-year, indicating challenges in maintaining operational efficiency. However, the company implemented a product price increase and enhanced its product-mix, which helped in strong performance from premium and luxury segments. Additionally, the protective and infrastructure segment achieved solid growth during the quarter.

"The extended monsoons, adverse weather and flooding in some key markets made this a tough quarter although we saw strong traction towards the quarter end. This resulted in an almost flat quarterly revenue performance and moderate single digit growth on volume terms. On the profitability front this quarter saw one of the highest levels of gross margins in the last ten quarters and our operating margin remained within guidance levels in spite of the continued investments that the company made in branding, advertisement and manpower to strengthen our market presence. Though the quarter numbers were muted, we expect that the second half of the year will be better in terms of revenue and profitability," said the company's CEO.