The market had a disappointing day yesterday and the Q1 numbers of Asian Paints only further added to this disappointment. Marketmen were expecting consolidated net profit for the quarter to be in the region of Rs.300 crore and it came in at Rs.275 crore, down 4.5% (YoY). This was despite the 11% rise in net sales at Rs.2818 crore. And even its raw material cost fell 108 bps during the quarter. Yet its EBIDTA margins fell from 17.57% to 16.49%.  Rupee depreciation played spoilt sport. Employee costs rose 31% and depreciation was up 81%. Total operating costs thus rose 14%. Tax expense also rose, it was up 10%.

The company has stated in the Press Release stated that industrial paints segment was affected due to overall slowdown in the economy. The demand in auto sector was also down due to lower demand in the auto sector. This company’s performance too is a victim of the external environment. It remains a strong company, being India’s largest paint manufacturer for past four decades and among top 10 decorative coatings companies in the world. It operates in the decorative and industrial coatings segments across India and internationally across 17 countries, having 24 manufacturing facilities globally, which service consumers in over 65 countries through Berger International, SCI Egypt, Asian Paints, Apco Coatings and Taubmans. Its industrial paints plant is located at Taloja in Maharashtra, while it makes products such as phthalic anhydride at Gujarat and pentaerythritol at Tamil Nadu, which are used in the paint manufacturing process. About 50% of these products are consumed internally, giving it backward integration and cost competitiveness.