Berger Paints Eyes Recovery In New Year Despite Fresh Competition, Demand Slowdown
The "triple whammy" for Berger Paints, or the industry as a whole, has not resulted in any meaningful changes, said CEO Abhijit Roy.
Berger Paints (I) Ltd. is focused on maintaining its market share despite the entry of a new competitor and the overall slowdown due to the current economic climate, the company’s Managing Director and CEO, Abhijit Roy, told NDTV Profit on Monday. However, Roy expressed confidence in a turnaround in the company’s growth by next year.
Birla Opus, the latest major entrant in the paint industry, has captured approximately 3 to 4% of the market share so far, Roy mentioned, but added that this has not had a significant impact on his company.
“There has been a new entrant. They will take some share, but it's not very disruptive as of today. And therefore the growth rate will come back next year,” he said.
In addition to increasing competition, Berger Paints’ business has been impacted by two other factors, Roy added.
“What has happened also in this period is that we had a price decrease of about 5% last year, which is impacting us in terms of value growth. There is a slowdown in the economy,” Roy said.
However, this “triple whammy” for Berger Paints or the industry as a whole has not resulted in any meaningful changes, the CEO noted.
“Going forward, you will see normalised growth coming back, and most of the players in the industry will be growing at a good pace,” he reassured.
Roy noted that Berger Paints has gained market share among the top four companies in the first half and therefore is “comfortably placed” in the industry.
“In the first half, we gained about 2% market share in the top 4 categories. But if you build in Birla, possibly we will have a slower growth rate, but we're still gaining market share in the industry,” he said.
The top executive said while the profitability and margins of his company may be impacted in the short term, the goal is to maintain market share.
“We are number two at about 19% to 20% market share. We would like to retain it at those levels. If that is there, and if there is intensification of competition, we will protect,” he said.
Roy predicted that the profit margins may “go more towards 15.5% to 16% in the short run,” which is the lower end of the guided band of 15-17% if competition intensifies.
Shares of Berger Paints (I) Ltd. were trading 0.38% higher at 445.30 as of 10:27 a.m. on Tuesday, after touching an intraday high of Rs 447.95 apiece. Meanwhile benchmark Nifty 50 was up 0.4% at 23,852.20 points.
