What contributed to more than 30% growth in the decorative segment this time? Did you see recovery in areas that were lagging before?
It has been a great quarter with 32% volume growth in the Indian decorative sector. Overall, there were three-four factors which we have not seen in the other quarters. One was festive demand coupled with the marriage demand. These two factors really gave us a strong upsurge, especially in October and November.
Secondly, a lot of metro, T1, T2 cities which were not growing earlier, sprang back very strongly in the second and third quarters, which for us was a big change. The third factor which contributed was a huge amount of construction activities with real estate picking up and that gave us some boost with respect to our projects in the institutional segment.
These were some factors, which apart from pent-up demand coming up from Q1 and Q2, contributed to some levels of growth in Q3.
Are metro cities still doing well because a large part of it was all the pent-up demand. Cities took time to come back. Are they still doing well?
We feel that the growth with respect to the metros, T1, T2 would continue in Q4 because customer paranoia is over and now customers are stepping outside the home and letting people inside their homes to do home renovations or fresh paintings. That will continue with vaccination coming, the cases having come down and therefore a positive sentiment is coming through.
Second, today the metros and T1, T2 cities contribute to a large number of luxury and premium demand and this is one of the areas where we have done well. Moreover, people in the rural areas are also spending on premium and luxury products. People are upgrading to premium and luxury products.
Do you think that a part of the growth, post COVID, has come from Asian Paints gaining market share from the unorganised segment? It is almost 30% of the market.
We are the fastest growing company amongst the organised sector as well. The share gains have come in not only from the organised but also from the unorganised sector.
The second area which has been also very important is that as a leader, we feel that we need to keep on growing the market and given the per capita consumption in India, there is enough scope for us to be able to grow various segments at a very fast pace. That enlarges the overall market and there is enough pie for everyone there.
Have you seen any sizable rise in raw material prices given the recovery in crude?
The material prices in Q3, starting from late November to early December, have been fairly inflationary. The crude price has been rising for a while and therefore prices of all the crude derivatives have also shown a surge. Also, there are key raw materials which go into the paint industry like titanium dioxide and monomers which have registered a very strong inflationary pressure.
We feel that prices of raw materials will impact to the tune of 7-8% going ahead. But having said that, we are also seeing a little bit of a softening of the rupee which is acting as a buffer in terms of bringing the overall prices down because there is a large import component which comes into that.
Going forward, we are really watching the trends in terms of whether we need to absorb this inflation or consider hiking prices in Q4.
