InvestorQ : Why did the profits at Kansai Nerolac fall so sharply in the Jun-20 quarter?
ishika Banerjee made post

Why did the profits at Kansai Nerolac fall so sharply in the Jun-20 quarter?

Answer
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Niti Shenoi answered.
2 months ago


Kansai Nerolac, a leading paints company in India, reported 79.42% fall in net profits at Rs 29.64 crore for the Jun-20 quarter, largely on account of lower income. It had posted net profits of Rs.144.69 crore in the Jun-19 quarter. The total income for the quarter was lower by 58.23% at Rs.647 crore.

There was unprecedented demand destruction in the Jun-20 quarter as it took the full brunt of the lock down imposed on account of COVID -19. This impacted sales and also the bottom-line. While the sales of decorative paints have seen some semblance of revival in May and June, the industrial paints segment still remains tepid and under pressure. The company management is confident of double digit growth in 2021.

Apart from the lockdowns, Kansai also suffered due to major disruptions to the supply chain. However, with multiple plants the company is in a better position to manage these logistical challenges. Paint companies have broadly benefited from lower crude prices, which is a key input for paint manufacture.