InvestorQ : Why did the profits of Asian Paints fall so sharply in the Jun-20 quarter?
Aashna Tripathi made post

Why did the profits of Asian Paints fall so sharply in the Jun-20 quarter?

Answer
image
Tisha Malhotra answered.
3 months ago
Follow

In the FMCG space, even the normally sedate Asian Paints was not spared the horrors of the lockdown. It reported 67% fall in net profits at Rs.218 as the lockdown meant that most of the activities came to a virtual standstill. The bottom line got some support from softer raw material prices and the cost control measures actively pursued by the company.

Not only profits, even the revenues from operations fell by 42.7% to Rs.2923 crore for the Jun-20 quarter. The decorative paints segment witnessed improving business conditions since June. Of course, the industrial paints business is yet to pick up. Asian Paints saw some late traction in global markets like Middle East, Africa, Nepal and Bangladesh.

Revenue from the paints business fell sharply by 42.6% to Rs.2871 crore even as the operating EBIT was down by 65%. The EBIT margins fell nearly 840 bps to 12.9% in the Jun-20 quarter. The one big support in the quarter was the 75% fall in the tax cost due to shifting over to the new 22% tax regime.

3 Views