Earnings Call Transcript - discussion between Management and Analysts for Q3FY20
Opening Remarks
The Paint industry continued to be impacted by adverse macroeconomic conditions in the domestic economy as well as adverse impact of extended monsoon till almost October end. Demand conditions have been weak and in an economy with a large domestic consumption sector, this is getting reflected in the multi-year low GDP growth rates. These adverse factors coupled with some preponement of sales to the second quarter given an early Diwali this year as compared to the previous year, had an impact on our domestic decorative business with volume growth in low double digits.
As stated during the second quarter result call, we continue to focus on our strategy to grow the bottom of the pyramid with large push on the economy range of products which continue to grow at a much faster rate than the premium range of products. The Smartcare waterproofing and Adhesives product range also grew well. Focus on Décor through the Paint Total service continues to be pushed forward. Material prices remained benign in the quarter and we took one more round of price reduction in a few solvent based products, amounting to a price reduction of 0.25% at the portfolio level. This takes the cumulative price reduction during the year to slightly above 1% at the portfolio level.
The persistent slowdown experienced by the automotive industry continued to adversely impact the Automotive coatings JV (PPG-AP). The Industrial coatings JV (AP-PPG) saw a demand improvement on a sequential basis as compared to the first two quarters of the financial year particularly supported by demand in the Protective coatings segment. Both the JVs registered improvement in profitability on the back of lower material prices and contained growth in overhead costs.
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