Mumbai: Asian Paints (India) Ltd today announced their results for the first quarter ended 30 June 2003.
The company's net sales and operating income increased by 9.9 per cent from Rs 3,448.18 million to Rs 3,788.56 million. Other income for the quarter grew by 54.6 per cent from Rs 28.44 million to Rs 43.96 million.
Profit before depreciation, interest and tax (PBDIT) declined by 4.4 per cent from Rs 603.84 million to Rs 577.04 million. The net profit of the company has remained nearly flat from Rs 288.30 million to Rs 287.91 million for the quarter ended 30 June 2003.
"Despite the sluggish demand environment, Asian Paints registered a good volume growth as all product categories posted growth," says Asian Paints' vice-chairman and managing director Ashwin Dani. "The company posted lower profits during the quarter primarily due to a lower contribution from the chemical business. Looking ahead, the company is optimistic about its performance in the remaining financial year, as the economy is showing signs of improvement and a good monsoon is expected."
Asian Paints' net sales increased by 9.9 per cent primarily due to the good growth achieved by the company in most product categories. The exterior segment continues to perform well and new products for the company have registered impressive growth rates. Profitability for the quarter was affected due to the high base of the corresponding quarter of the previous financial year, lower contributions from the chemicals business and increased material costs in the paints business.
For the corresponding quarter of the financial year ended 30 June 2002, the company's net sales grew by 16 per cent. PBDIT increased by 32 per cent and PBDIT margins expanded by around 2.1 per cent for the quarter, which is significant.
Further, for the quarter ended 30 June 2002, PBT increased by 47 per cent and the net profit by 36 per cent. Also, on a comparative basis for the past five financial years, the first quarter of the previous financial year had a larger contribution to the full year's performance of the company. For the current year, the company is optimistic of an improved performance as the economy is showing signs of improvement.
As indicated in the annual report for the last financial year, the company has adopted a cautious outlook towards the chemical business for the current financial year. It also stated that falling import duties will put pressure on margins and thus anticipated a fall in profitability from those exceptional levels for the chemicals business. But the company is still expecting an improved performance for the chemical business in the remaining part of the financial year.
As anticipated, the paints business has witnessed increased material cost for the quarter. To partly offset the increase in raw material prices which was around 9 per cent for the quarter, a price increase of 3 per cent was announced in the middle of May 2003. Thus, for the past three quarters (Q3-FY2003, Q4-FY2003 and Q1-FY2004), raw material prices increased by around 6 per cent in each quarter. The company now expects raw material prices to soften in the remaining financial year.
For the quarter ended 30 June 2003, paint revenues of the company grew by 11.3 per cent from Rs 3,188.60 million to Rs 3,548.34 million. Chemical revenues declined by 5.2 per cent from Rs 279.47 million to Rs 265.07 million for the quarter ended 30 June 2003.
International business unit
For the recently acquired units - Berger International Ltd, Singapore, and SCIB Chemical, Egypt - Asian Paints has concluded examination of the cost structures of these two companies and their subsidiaries. Due to implementation of some initiatives by Asian Paints, certain economies have been achieved. The company is also in the process of helping the acquired units understand the business culture of Asian Paints. Depending on each other's strengths, group policies and strategies are being laid down for improved performance.
Asian Paints is India's largest paint company with a turnover of Rs 18.84 billion (around $390 million) in 2002-03. After the acquisition of Berger International Ltd, Singapore, Asian Paints ranks among the top 10 decorative coatings companies in the world. It has joint ventures in 22 overseas countries. It has 28 paint manufacturing facilities spread across the world with a combined paint-manufacturing capacity of around 330 million litres annually. Asian Paints is the market leader in 10 countries including India.