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Asian Paints, Pidilite raise prices to beat cost inflation

 Managements of key paint companies had earlier indicated passing on the burden of increased costs to consumers to protect their margins. Photo: iStockphotoPremium
Managements of key paint companies had earlier indicated passing on the burden of increased costs to consumers to protect their margins. Photo: iStockphoto

  • Paint companies raised prices of emulsions by 3-4% in the first week of May and those of wood coatings by 6-9% in June. They also plan to raise prices of waterproofing products, economy emulsions and primers in July

Paint companies that had avoided price hikes till the March quarter of FY21, have started raising prices across sub-segments in the June quarter, showed a dealers channel check by ICICI Securities Ltd.

The companies raised prices of emulsions by 3-4% in the first week of May and those of wood coatings by 6-9% in June. They also plan to raise prices of waterproofing products, economy emulsions and primers in July, showed the dealers channel check.

Rising prices of key inputs such as titanium dioxide and crude-based monomers have been on an upswing in recent months, rising by around 15-20% on a year-on-year basis. Managements of key paint companies had earlier indicated passing on the burden of increased costs to consumers to protect their margins.

Leader in decorative paints segment Asian Paints Ltd has hiked prices of all products in the segment, media reports said. The company has hiked prices by 1.5-2% on average. Last month, it had taken a 6-8% price hike in its wood finishes segment. The company has also announced another price hike for its waterproofing products, said the reports.

Adhesives maker Pidilite Industries Ltd has also passed through 75% of cost inflation. At a recently held Edelweiss India CXO e-conference, the company's management said there has been no major correction in inflation and it would further hike prices if needed. Price of key input chemical vinyl acetate monomer (VAM) has surged from $925/tonne in Q4FY20 to $1,200/tonne in Q4FY21, and is currently around $2,000/tonne.

Analysts say, with the steep increase in raw material cost, this quantum of price increases may not be enough. With other costs making a comeback as business normalcy resumes, there could be near-term pressure on margins. While companies intend to raise prices further, the impact on volumes needs to be watched out for.

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