In an email-based interview with Shweta Bhanot Mehrotra, Mr. Anuj Jain, Director – Decorative and Industrial Sales & Marketing, Kansai Nerolac Paints Ltd. (KNPL) talks about GST preparedness and its benefits on the overall demand in the business.
Q. Over the last couple of years, domestic paints industry has grown at a significant rate. Do you see it sustainable under the new tax (GST) environment?
GST is a good and simple reform for all the industries, it is a welcome step. The concept of one nation, one tax will bring transparency into the system and we feel that it is beneficial for the overall demand in the business. Since GST is a consumption-based tax, for those states where the consumption is high, the revenues will go up and the benefits will be positive.
Q. Where do you position KNPL in this new environment and what are the challenges?
Whenever changes are introduced in any system, teething issues are bound to surface. It will be a learning and growing experience for everyone, the one which will take time. We have to see how it pans out to completely understand the challenges. It will be too soon to predict accurately all the nuances.
At Kansai Nerolac, we started to integrate GST with our systems much in advance. We conducted workshops for our teams, dealers and other partners to make sure that we do not face any major issues once GST is implemented. All these preparations made us to start GST billing smoothly. However, since we also deal with many small dealers, there are some initial issues in getting GST numbers on time, there is also confusion about how to file the return, rigidity of the system and so on.
Q. Considering that the industry volumes have been dawning out of the impact of demonetisation, and now the expected GST-driven near-term disruption, what is your outlook on the segment performances?
The impact of demonetisation was temporary and the demand was back in February. After the implementation of GST, the primary demand was affected in June due to destocking by the traders. However, there was no impact on the secondary demand. We foresee that traders will take some time to understand the new system but the situation will be normal from August.
Q. If you can throw some light on the warehouse consolidation that might be planned over the coming quarters under the GST era?
Most of our warehouses are created with the objective of servicing hence, we do not see any consolidation in the near future.
Q. With the three new plants coming up, what will be KNPL's overall India capacity?
The new manufacturing plants coming up in Punjab, Gujarat and Andhra Pradesh will increase the overall manufacturing capacity of Kansai Nerolac by 35%.