By Hritam Mukherjee
(Reuters) -Akzo Nobel India said on Friday it expects the demand for paints to recover from the second half of the year after the effects of the federal budget’s consumption-boosting proposals filter through essential items before influencing discretionary purchases.
Last week, the government dished out its biggest income tax relief in at least a decade, hoping that higher disposable incomes would boost demand and consumption, thereby lifting the economy.
However, the effects of that on the demand for discretionary items such as paints will only start from the second half of this year, Akzo Nobel Chairman and Managing Director Rajiv Rajgopal said in a post-earnings call.
Earlier in the day, the ‘Dulux’ paintmaker reported a 5% fall in consolidated third-quarter net profit to 1.09 billion rupees ($12.47 million) as its 2% increase in its revenue was outweighed by a 2.3% rise in expenses.
Paintmakers saw weak demand from retail consumers who are choosing cheaper brands in the face of high inflation, analysts say and demand forecasts by paint companies have been mixed so far.
While market leader Asian Paints missed earnings estimates and issued a grim demand outlook, Kansai Nerolac said it also expects the lower income tax rates to increase demand.
Akzo Nobel India’s larger peers, Grasim Industries and Berger Paints, are due to report their results next week.
(Reporting by Hritam Mukherjee and Ashna Teresa Britto in Bengaluru; Editing by Savio D’Souza)
