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Manufacturer of Dulux Paints expects another two quarters of margin pressure

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Manufacturer of Dulux Paints expects another two quarters of margin pressure

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Akzonobel India had taken a price increase of almost about 23-25 percent last year depending on categories. This year as well the company has taken price increases in August and September of about half a percent each.

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Paints and coatings company Akzo Nobel expects margins pressures to persist for another two quarters and normalize only between January-March next year.
"Current and the coming quarter would see some volatility but by the fourth quarter of the year and thereon, there will be a significant improvement in margins," Rajiv Rajgopal, Managing Director of Akzo Nobel India told CNBC TV-18 in an interview, adding a caveat that the margin improvement is subject to benign global conditions.
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The Kolkata-based manufacturer of Dulux paints, undertook price hikes of 0.5 percent each in July and August respectively.
For the April-June period, Akzo Nobel reported its highest-ever quarterly revenue of Rs 937.7 crore. Both decorative and industrial businesses contributed to the growth. 35 percent of the company's revenue comes from the industrial segment.
The company now intends to be among the top three players in terms of volume and revenue growth in the industry. Akzo Nobel's revenue grew 49.7 percent in the April-June quarter, behind industry leaders Asian Paints and Berger Paints.
Brokerages suggest that the company has gained market share in the decorative paints segment, something that it wishes to consolidate and build upon. Both Dulux Velvet Touch and Dulux Weather Shield have done really well, according to Rajgopal.
Other Key Takeaways:
  • Looking at strong, double-digit volume growth
  • Have outlined a distribution strategy that focuses on smaller towns
  • Seeing some green shoots in the rural markets, launched a couple of new products there
  • Intend to spend 5-6 percent on advertising from 3.5-4 percent earlier
  • Hope to become the number three player in a couple of years
  • For the full interview, watch the accompanying video
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