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    Our predictions should be fruitful, we'll see double-digit growth, says Asian Paints CEO

    Synopsis

    "The way I see it there should be a lot of pent up demand from April and May still in the system, part of it came in June but it will still be there, which will start coming as we look at Q2 and Q3, going forward," says Amit Syngle, MD & CEO of Asian Paints.

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    In an interview with ET Now, Asian Paints MD and CEO, Amit Syngle, talks about his company's strong growth in the last quarter and their predictions for the future. Edited excerpts:

    Let us start off with that volume growth figure, quite a strong one at that. Do you anticipate strong demand to continue?
    When we look at Q1, I think the overall volume and value numbers have been quite stellar in terms of what we have been able to achieve. What we see very clearly is that the months of April and the months of July have been good in the quarter, which has helped us in getting to these numbers. The good thing is that the story of strong consistent growth continues, both from the top line and bottom line perspective. Overall all businesses, by and large, have done quite well whether it is Indian businesses or international businesses, despite the tough conditions because of the second wave.

    A large part of this has been because of pent-up demand. Do you think that is now behind you? A majority of your demand will only have to come in from fresh sales and fresh demand now?
    What we see very clearly is that - if you look at the month of April - till about 15th to 20th April, going was quite good. Then the second wave really picked up and lockdowns started happening across the country. In May it was absolutely closed, it was only in June that we saw a resurgence, given that the country was opening up. The way I see it there should be a lot of pent up demand from April and May still in the system, part of it came in June but it will still be there, which will start coming as we look at Q2 and Q3, going forward.

    It's always hazardous to guess at this juncture but what is the estimate for the volume growth for the current financial year; how do you expect to reach more than double digit growth?
    The way it is going I think the environment is looking good - in terms of demand conditions - and there has been good monsoon, which really fructifies in agrarian growth. We feel the rural sector will really pick up. We are also seeing good inflation as far as projects and large institutional businesses going on to that extent. It is also a long Diwali this year, so I think all predictions will be fruitful, it should be a good double digit number.

    Margins were impacted in Q1, evidently. Have you taken a price hike to work on that in the current quarter?
    What we saw near the end of Q3 was that the inflation has started quite a bit and there was almost a 10% inflation at the end of Q3. As we got into Q4 and Q1 I think inflation only increased to levels of beyond 20% overall. We have taken price increases in the market in Q1 and these have been to the tune of about 3%, 3.1% in terms of what we have taken for the full quarter. We have announced some price increases for the coming quarter as well. We believe that overall we will have more increases coming in the following quarters which are there to take care of some deficits. We also expect some softening of prices which might start happening, as we go ahead. To that extent we will take a balanced call in terms of increasing more prices as we go ahead, because there is a deficit of about 6% to 7% which still remains.

    But do you sense that these price hikes could have an impact on your demand and thereby volumes or do you not foresee such a scenario in the near future?
    Overall, paint buying elasticity is there and we feel that in any month if it is 2% to 3%, the customer takes that in stride. Anything which we do beyond that starts impacting the purchasing power and therefore people start downgrading in terms of products. I think we need to be very clear that it has to be a reasonable increase. It basically aligns with the overall demand and does not disrupt it too much to that extent and going forward we think a 3-3.5% kind of increase is something which customers would not mind, given the overall inflation in the environment.


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