Home Loan Recovery May Brighten Paint Demand, Says Berger Paints CEO

The recent monetary easing measures and income tax reliefs will support housing demand and, eventually, boost paint consumption, even if the benefit for the sector takes time to show, Berger Paints India Ltd. Managing Director and Chief Executive Officer Abhijit Roy said.

Speaking to NDTV Profit, Roy said the Reserve Bank of India’s move last week to cut the repo rate by 50 basis points and reduce the cash reserve ratio by 100 basis points will likely make housing finance cheaper.

“There will be some advantage there because interest rates will come down for loans. So there will be some improvement in terms of new housing or existing housing—basically, for anyone involved, the consumers will get some relief,” Roy said.

Lower interest rates directly reduce borrowing costs for home buyers, meaning equated monthly instalments get lighter and more people can afford to take housing loans. Combined with the government’s income tax benefits that kick in this month, Roy expects this to lift housing sentiment and spur home purchases.

“The government is doing it a bit for boosting consumption… sentiment should improve, and that will have a positive impact going forward,” he added.

However, Roy cautioned that the positive impact on paint demand typically comes with a lag. “In paint, it comes with a little bit of a lag… It won’t happen immediately,” he said.

While competition in the sector remains intense, Berger Paints has managed to grow its market share through improved execution on the ground and a sharper distribution strategy.

The company expanded its distribution footprint significantly last year, addressing gaps in urban markets and pushing into smaller towns. Roy said that the company also installed over 8,000 paint tinting machines last year, up from the usual 5,500, which helped them cater to demand better and outpace the industry.

Despite the competitive pressures, Roy said he is optimistic that once the broader housing market stabilises, paint demand will also pick up. “Competition has always been there, but we have to fight it out in the marketplace and do our best,” he said.