Confident of future as a lot of new demand has come in June: Asian Paints

We saw a lot of secondary demand come up across the cities and that has boosted our confidence that a lot of new demand has come in areas of painting, waterproofing and so on, says Amit Syngle, MD & CEO.

Asia Paints has seen a degrowth which comes as no surprise because this was a lockdown quarter but you still did much better than what the Street was estimating. However, this double digit growth that you are pointing out in June -- how much was it due to pent up demand? April was a washout quarter. In May also, sales may have been very few and far between. So, how much of this was just pent up demand?
We have been closed from 20th of March to end of April due to the lockdown. The entire month of April was an absolute washout. We really opened up only in May. In May, we saw a lot of pent up demand because the markets were closed for so long and people had to look at some of those real pent up maintenance issues. Therefore, in May, there was very satisfying pent up demand across the country. However, a good part of it was seen in June, triggered by our safe painting campaign which gave people confidence that it was safe to get a set of painters to get your house painted.

We saw a lot of secondary demand come up across the cities and that has boosted our confidence that it was not only the pent up demand which we saw in May but a lot of new demand which came in both in the area of painting, waterproofing and so on. This was also led by another campaign which we did with terrace waterproofing. We feel a lot of demand which has come in the June is new paint demand and that has boosted our confidence in terms in the market.

How confident are you of this new paint trend continuing? How sustainable ithe this double digit growth momentum you are seeing in July?
As we look at the months to come, the month of July has been more challenging in terms of the sporadic lockdown across various states. But till now, the indications have been good in terms of looking at how the paint demand is coming and we feel that today the trend is changing.

Some of the tier one-tier two cities which were slow to kind of recover are recovering at a higher rate and to that extent and we find that the surge was possibly shown at the smaller cities which were the tier three, tier four cities. That might be slowing down a little as Covid is spreading more into the hinterland but there is a balancing which is happening with respect to that and therefore the current indications are that volumes are still looking decent.

In which segments do you see higher demand? Has premium decoratives taken a backseat in the midst of this lockdown?
Some products are at the luxury and premium end. These are also solutions based. For instance, we have Royal Health Shield which is our health and hygiene product which is antibacterial. It is right in the luxury zone and we find that today if people are looking at that kind of an antibacterial protection for their homes. It is still value for money coming at the luxury end. But in general, we see there is a little bit of downtrading where people are coming down from the luxury end and looking at more premium products and upgrading far more strongly. A lot of discretionary spend is happening in terms of maintenance rather than absolutely décor. Therefore I would say that a part of this painting has come in because people would like healthy and hygienic homes, fairly clean and beautiful homes.

You have taken some price cuts and also doled out some discounts as raw material prices continue to remain volatile. What will be your pricing strategy in this environment?
Overall, we have been very cautious. So,today we are looking at ways and means in terms of how we can look at better material costs, we are looking at our sourcing efficiencies, formulation efficiency but as of now, there is a little bit of neutrality coming because there is a rupee which has depreciated.

Raw material prices are going up as demand comes back. Volatility will continue and we will be more focussed in terms of our internal efficiencies in terms of what we are able to bring in and as we go ahead, we do not see any changes in terms of prices till the time there is a stability in terms of the environment we are in.