Asian Paints reports 14% Q2 sales growth, GST impact continues

Asian Paints reported a 13.7% increase in its revenue for July-September quarter, and said net profit from continuing operations rose 7.5%.

“The Decorative business in India registered high single digit volume growth in the current quarter,” said K.B.S. Anand, Managing Director & CEO of the company.

“Hence there was a recovery from Q1 which was affected by the impact of destocking due to GST. However the impact of GST continued through July and a recovery of sorts was seen only in September,” he added.

Unlike Excise Duties, levies like GST, VAT etc. are not part of revenue, and have not been shown as such, the company said.

The results include numbers from Causeway Paints Lanka (Private) Limited, Sri Lanka, in which Berger International Private Limited, Singapore (BIPL), subsidiary of the company acquired 100% controlling stake on 3 April 2017 and hence the results are not comparable with the previous periods.

For the quarter ended September 30, revenue from operations has risen by 13.7% to Rs 4,274.18 crores from Rs 3,757.66 crores.

Profit before depreciation interest and tax (PBDIT) for the group increased by 13.6% to 801.13 crores from Rs 705.41 crores.

Net Profit after Non-Controlling Interest (from continuing operations) increased by 8.0% to Rs 508.42 crores.

The CEO said material prices remained stable compared to the preceding quarter, helped by the strong currency.

“The Automotive coatings JV (PPG-AP), witnessed subdued demand in the Auto OEM and General Industrial business segment. The performance of Industrial Coatings JV (AP-PPG) was satisfactory,” Anand said.

In the International Operations, Units in Nepal, Bangladesh, Oman and Bahrain witnessed good top line growth, he added.

However, currency devaluation in Egypt and forex unavailability in Ethiopia, impacted the overall performance of the International operations.

“Both the segments within the Home Improvement business – the Kitchen business under Sleek and the Bath business under Ess Ess, performed significantly better than the first quarter’,” he added.

Consequent to the introduction of Goods and Services Tax (GST) with effect from 1st July, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST.