Paint companies are entering what industry executives describe as one of their biggest pricing tests in years as repeated hikes linked to crude-based inflation begin reaching consumers across the country. According to reports from NDTV Profit, companies have raised prices in phases over recent months after geopolitical tensions in the Middle East disrupted supply chains and pushed up the cost of petrochemical-linked raw materials. However, commentary from Indigo Paints, Berger Paints and Grasim Industries now suggests the industry remains uncertain about how strongly consumers and contractors will absorb the increases over the coming quarters. The sector is attempting to balance pricing actions with market share growth at a time when competition remains high and input costs continue to rise.
The sector faces unprecedented cost pressures with raw material prices rising 50%-100% in March after supply disruptions linked to the Iran conflict, as reported by NDTV Profit. This resulted in industry-wide price increases of around 12% across the overall product basket. Berger Paints currently reports raw material inflation at 20%-23%, though recent price increases and internal cost measures are expected to offset a significant portion of the impact. Grasim Industries management emphasized that the industry had been 'forced to implement multiple price increases back to back' due to an unprecedented rise in raw material costs linked to crude derivatives and currency depreciation. The company noted it was 'the first time the industry has seen such high inflation' that has forced the entire industry to take multiple price hikes.
Despite inflationary pressures, paint companies are prioritizing market share growth over margin protection. According to Indigo Paints management during their earnings call, the company stated it is 'in a phase, where growing and gaining market share is the top priority' and is prepared to accept some moderation in gross margins if required. Grasim Industries management emphasized that the industry was entering a phase where 'the demand elasticity curve will be fully tested' due to the unprecedented rise in raw material costs linked to crude derivatives and currency depreciation. Indigo Paints also signalled that companies may not be able to completely protect margins even after sector-wide price hikes, reflecting the severity of the current cost crisis.
Berger Paints Managing Director and CEO Abhijit Roy noted that 'the pace and scale of inflation had forced companies to accelerate price hikes faster than in previous cost cycles' due to the suddenness and quantum of increase. As reported by NDTV Profit, the company said this time because of the 'suddenness and the quantum of increase that have happened, we were left with no choice but to increase the prices very rapidly'. Berger Paints also said competition in the sector had stabilised over recent months even as pricing gaps in the market narrowed. Grasim Industries continues to monitor secondary sales trends and price elasticity on a weekly basis after implementing multiple phases of price hikes during the June quarter.
The impact on consumers and contractors is expected to become visible during the second half of the June quarter and through the September quarter, according to Grasim Industries management. The company indicated it would continue consumer-focused promotional programmes despite inflationary pressure while remaining focused on expanding market share. Grasim Industries management noted it would 'continue consumer-focused promotional programmes despite inflationary pressure' while maintaining its market share expansion focus. Berger Paints also noted that competition had stabilised over recent months, suggesting the sector may be approaching a more balanced pricing environment after the current inflationary cycle.
