The demand outlook for the coming quarter remains solid and the company expects to do much better in the H2 FY 23 compared to H1
The South India manufacturing facility remains on hold for another quarter, but we are quite confident that we will be in a position to share updates on the same before the end of this financial year, says Apoorv Agarwal, Joint Managing Director, Sirca Paints India Limited during Q2 FY2022-23 earnings call.
"So we have already planned to increase capacity in our existing plant by adding six fully automated 3 tons mixtures where the Capex will be about Rs. 3 to 4 odd crores. Since currently we have a 1,500-liter tank now we'll be moving to a 3-ton tank. For the further we will be adding six more times, which will add almost 18,000 liters in a single shift every day, increasing in the production side. Beside this for sure, as I told you, the Coimbatore plant which is still on hold, Coimbatore plant which is still on hold, will aggressively being taken up in the next couple of months so we will come out with the increase in new capacity in the Coimbatore in the South part of India, so another about 5 to 8 odd crore Capex plan there. about 5 to 8 odd crore Capex plan there. So altogether about Rs. 12 crore Capex plan in terms of increasing the production of UNICO and Italian PU we plan in next one year," said Agarwal.
"The demand outlook for the coming quarter remains solid, barring some minor seasonal disturbances like temporary stop on the spray painting due to pollution related issues in the Delhi NCR region otherwise, we expect to do much better in the H2 FY 23 compared to our H1," commented Agarwal.
Talking about market share, Agarwal said, "See amongst the Italian PU, we still are enjoying almost 20% market share, above 20% market share. Because this market has grown more than about 800 to 900 odd crores considering the data that we have from Europe of export. But once the (inaudible) in Asian Renner is moving towards manufacturing in India also of the product which they import from Italy the actual imports of these products are declining but for us. For now, we are still maintaining the Italian identity for sure. In the coming months, 5-6 of our main products will be produced in India, so we will be in a better stage or position to compete in the market in terms of pricing. But as of now, we hold more than 25% share when it comes to the pure Italian category. Overall PU market. If you say which combines of the Italian PU made in India, PU, 1K, 2K, waterborne thinners, wood fillers altogether, is above 6,000 to 7,000 odd crores out of which we are still present in a smaller niche because the uniform manufacturing has just started and we are increasing our distribution footprint. So currently the market size of the total wood coating is above Rs. 6,500 - 7,000 crore."
Talking about H1 performance, Agarwal said, "As you can see from our performance in Q1 and Q2 in FY23, it has been on a solid footing for the company. We witnessed healthy growth in the top line in both Q1 and Q2. The performance has been good across all product portfolios while Italian PU continues to be the bedrock of our performance. Other emerging categories like UNICO are also making a noticeable contribution to our top line now. On the wall paint side, the response is good and more specifically in our premium category of solid color finishes and texture coating that is San Marco. Keeping in mind the response of San Marco so far, we are launching our first exclusive experience center for this portfolio, beginning with our first one in MG Road located in New Delhi and the other one is in the pipeline. The movement on Durante & Vivan Hot Melt Glue portfolio is yet to pick up, and we have ordered the container with a full load of products for the sampling for our OEM customers, which is expected to arrive within this month."
"On the resin side, as announced in a previous investor communication, we were in the process of commissioning a resin manufacturing line in our existing Sonipat facility, which is now operational since the end of Q2. Currently this line is manufacturing resin for our melamine and NC product category under the UNICO brand and the next step is we are planning to take up the manufacturing of resin for UNICO. PU range of products we believe this project will be very crucial in standardizing the quality of the manufactured products and also will aid in cost optimization," added Agarwal.
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