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Sector Focus : Paints

Paints: State of the industry (2000-01)

Paints: Tariffs

	Tariffs (per cent)
	Customs		Excise
	2000-01	2001-02	2000-01	2001-02
Paints	44.0	40.4	16.0	16.0
Dyes	44.0	40.4	16.0	16.0
Varnishes	44.0	40.4	16.0	16.0
Inks	44.0	40.4	16.0	16.0
Orthoxylene	21.2	19.6	16.0	16.0
PAN	44.0	40.4	16.0	16.0
Titanium dioxide	44.0	40.4	16.0	16.0

PAN: Phthalic anhydride

Source: CRIS INFAC

• Demand for paints is expected to increase by 9 per cent. Demand for decorative paints is expected to increase at 16-17 per cent. However, demand for industrial paint is expected to be adversely affected due to a slow-down in demand from the automobile sector.
• Supply is expected to remain stable, due to a marginal increase in capacity.
• Prices are expected to increase marginally, due to the stable demand-supply situation in the domestic market.
• The cost of production is expected to increase due to an expected increase of 9 per cent in the prices of titanium dioxide in 2000-01.
• In 2000-01, margins are expected to remain stable as the increase in prices is expected to be offset by an increase in raw material costs.

Paints: Budget impact

Impact factors

Company name	Impact	Impact factors
Asian Paints	Pos	A, B
(266.55, 269.00)
Berger Paints	Pos	A, B
(88.00, 92.80)
Goodlass Nerolac	Pos	A, B
(114.80, 113.90)
ICI India	Pos	A, B
(71.80, 75.50)
Jenson and Nicholson	Neut	A, B
(11.50, 11.50)

Note:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
pos= positive neg= negative neut= neutral.

Source: CRIS INFAC

A: The reduction in the customs duty on inputs, such as PAN and titanium dioxide, is expected to have a positive impact on the operating margins of paint manufacturers. Raw material costs account for approximately 65-70 per cent of the cost of production, and about 30 per cent of the raw materials consumed are imported. However, manufacturers who have a very low level of imports, such as Jenson & Nicholson, are not expected to benefit significantly.

B: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent, and the expected decline in interest rates, is expected to have a positive impact on producers.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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