Companies

Berger Paints eyeing double digit volume in FY22

Abhishek Law Kolkata | Updated on June 27, 2021

The company clocked a sales growth of over 7% and 13% in value and volume terms

Berger Paints, the country’s second largest paint-maker, is eyeing a “double digit” volume and value growth in FY22 banking on continued growing demand for decorative paints – at both the economy and premium ends; growth in industrial offerings and a calibrated price rise. One round of hikes happened in May and another is expected in July.

According to Abhijit Roy, MD and CEO, Berger Paints India Ltd, upcountry markets continue to drive demand in decorative paints; while the metro markets are “coming around” with repainting work resuming.

Interestingly, some of the markets in western India, north and pockets of south India are witnessing demand recovery post re-opening after the second wave of Covid infections led to a series of local and regional lockdowns.

The eastern region, normally one of the higher grossers for the company, is witnessing “some lag” (in recoveries) as restrictions continue in markets like West Bengal, Odisha, and parts of the North East. Limitations on shop timings and movement restrictions continue in some of the markets.

Recoveries

Roy maintains, the initial trends over the last few days suggest a spike at the primary level– sales by company to both distributors and sellers – as well as in secondary market sales (to end-user). Premium and economy offerings are witnessing uniform increase in demand irrespective of whether it is coming from upcountry or urban markets. Moreover, monsoon specific offerings in waterproofing and construction chemicals segments are doing “slightly higher” traction (over other products).

“The concern we had some weeks back was whether the rural economy and the upcountry markets have been more severely hit by the second wave. Last year’s economic recovery was led by the rural economy, and then the auto industry started picking up. What we have seen over the few days is that the rural and upcountry markets are not as badly impacted as we feared. We are confident of closing Q1 (April to June) FY22 at numbers higher than Q1FY20. Last year numbers would obviously not be a right comparison due to the low base effect,” he told BusinessLine.

Considering good monsoons – which are mostly on track so far – and other factors like increase in MSPs, if agriculture grows at levels similar to that of last year (3.5-3.6 per cent), then a good recovery can be expected.

The industrial paint portfolio is being ramped up and new launches in the decorative category are on-cards, depending on opening-up of markets.

“For the full year, we are confident of a double digit growth – both volume and value. Price hikes have happened or are in the offing. It is a little difficult to peg growth numbers now because of the changing nature of the virus and infections,” Roy added.

In FY21, Berger clocked a sales growth of over 7 per cent and 13 per cent in value and volume terms, respectively. It reported a consolidated net profit of ₹209 crore (a two fold increase YoY) in the Jan – March quarter; backed by higher revenue from operations, ₹2026 crore ( a 50 per cent YoY jump).

Price rise

According to Roy, a 1.5 per cent price rise of sales is being initiated July 1 onwards for solvent-based paints. Rising input cost, primarily crude derivatives, is the reason. Earlier in May, a near 4.5 per cent increase of sales happened for water-based offerings.

“Till now, we have taken price hike upto 4.5 per cent of sales, whereas raw material impact is around 8 per cent,” he said.

Published on June 26, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like