Daijiworld Media Network – Mumbai
Mumbai, Aug 30: Adhesives and construction chemicals major Pidilite Industries expects consumer demand in India to remain resilient despite inflationary pressures and does not see an immediate need for further price increases in the current quarter, Managing Director and CEO Sudhanshu Vats said.
The maker of Fevicol, Fevikwik and Dr Fixit had raised prices by up to 12 per cent in multiple tranches during the June quarter to offset higher crude-linked input costs following the West Asia crisis. With crude price volatility easing, the company does not currently anticipate another round of price increases, although it continues to closely monitor raw material prices.
Vats said demand trends in July and August have remained broadly in line with those seen during the June quarter, with overall consumer sentiment in India continuing to remain reasonably robust despite inflation.
"If you look at Q1 demand, demand in Q2 as well, as we travel and qualitatively see, is broadly holding," Vats said, adding that he was pleasantly surprised by the resilience of consumer sentiment.
Pidilite remains confident of achieving double-digit underlying volume growth in the financial year 2026-27 while maintaining profitability in the range of 20-24 per cent. The company expects demand from both urban and rural markets to support growth.
Vats said the company currently sees no necessity for another price increase but would continue to monitor crude prices, which remain volatile and could move higher.
He explained that even if crude prices settle at around USD 80 a barrel, compared with about USD 60 before the West Asia crisis, the impact on input costs generally takes around six months to fully filter through. The combination of higher crude prices and rupee depreciation has created a degree of built-in inflation that would eventually need to be passed on to consumers.
Pidilite has, however, started offering rebates on selected brands where input costs have eased.
The company's raw material basket includes Vinyl Acetate Monomer, or VAM, a key crude-derived input. VAM is the primary raw material used to produce Polyvinyl Acetate, the polymer base for white wood adhesives such as Fevicol.
Vats said Pidilite's pricing strategy was aimed at passing on the absolute increase in raw material costs rather than expanding margins. The company implemented the increases in a calibrated manner through several tranches.
"We did not price for margin. We priced for making sure that we are able to transfer the absolute increase in costs," he said.
According to Vats, crude prices that were around USD 60 a barrel before the West Asia crisis have stabilised closer to USD 80, creating what he described as a new normal and introducing a degree of structural inflation. Rupee depreciation has added further pressure on input costs.
Despite these challenges, Pidilite continues to see healthy consumer sentiment. Vats said the gradual transmission of higher crude-related costs to consumers had helped demand remain relatively steady.
The company is also seeing healthy demand in urban markets, unlike some fast-moving consumer goods companies that have reported comparatively stronger rural growth. Pidilite's products are closely linked to renovation, construction and repair activities rather than frequent monthly consumption, helping urban demand remain firm alongside rural demand.
"We continue to see that uplift in urban demand as we go forward, rural is strong, but urban is also caught up. For us, the story is a little different," Vats said.
Pidilite is also looking to expand its international operations, which currently account for around 10 per cent of its overall revenue. South Asia remains its main international growth market, while the company is selectively expanding its presence in Africa.
The company already has operations in Kenya through a partner and is building its presence in Tanzania. It will also continue to evaluate opportunities in Southeast Asia as part of its longer-term international growth strategy.
On acquisitions, Vats said Pidilite continuously evaluates potential opportunities but declined to comment on any specific transaction.
"We keep looking at opportunities all the time, but cannot comment till anything is done," he said.
On capital expenditure, Vats said the company had recently inaugurated a large manufacturing facility in Maharashtra and was evaluating another plant in northern India.
Pidilite is increasingly focusing on larger-scale manufacturing facilities as it expands its production footprint. The strategy follows the commissioning of a major facility in Visakhapatnam and is aimed at strengthening manufacturing capabilities across different regions.
The company expects continued investment in manufacturing capacity to support its long-term growth while maintaining its focus on volume expansion, profitability and disciplined pricing.