Companies

‘We should end the fiscal with better growth than the industry’

Abhishek Law Kolkata | Updated on December 25, 2020

Abhijit Roy, MD and CEO, Berger Paints India Ltd

Strong recoveries in upcountry markets, urban demand will keep momentum going: CEO, Berger Paints India

Berger Paints, the second largest paint-maker in India, beat street estimates with a good set of numbers in Q2 (September quarter ending), indicating its resilience, and reiterated that the company was back on the growth track. Strong recoveries in upcountry markets continued, and demand was seen coming back into urban markets in the ongoing December-quarter.

The stock has reacted positively. In the last three months, it has jumped about 28 per cent, outperforming the BSE Sensex, which rose 22.8 per cent in the same period.

In an interview to BusinessLine, Abhijit Roy, MD and CEO, Berger Paints India Ltd, talks of how the company manoeuvred the challenges posed by the current year and the outlook for 2021. Excerpts:

How has 2020 been for Berger?

From a 48 per cent turnover de-growth and a 65 per cent fall in net profit in the June quarter-end (of FY21), we closed the second quarter (September-end) with a 9 per cent rise in net sales and near 14 per cent rise in net profit. This was possible through recoveries in upcountry markets initially. Urban markets are coming back too. Indications are clear that the demand recovery has sustained post the festive season and we are targeting to close Q3FY21 (December quarter) with a sales growth in the high mid-teens, volume growth will obviously be higher. In Q4 FY21 (March quarter), a lower base effect is expected to help report better numbers. We should end the fiscal with better growth than the industry.

What led to the recoveries for Berger?

Firstly, although the lockdown was unprecedented, we decided to use the time as an opportunity. We decided not to retrench employees. We honoured all hiring commitments. It created a sense of security with employees, they stopped worrying about job loss and focused on growing the business. We gave extensive training to employees online and interacted with other key stakeholders, such as dealers and architects, making them aware about new paint products and newly launched waterproofing products.

On the supply side, we ensured that the supply chain was intact and whenever Unlocking happened it could get back on track. Painters were also paid in advance to see the period through. This helped create trust in the marketplace.

As Unlocking happened, upcountry markets were less hit with infections, as per reports. Plus, a good monsoon and better cash handouts by the government ensured that people were willing to spend. We realigned sales teams, some of the team members from urban markets were reassigned to upcountry markets. This helped us gain market share in these regions and faster recoveries.

For urban markets, we focused on digital spends and changed the pitch of our premium offerings to Safe Express painting, to give assurance about quality and safety of services. We explored adjacencies like water-based disinfectant sprays and anti-viral paints.

What is the outlook for next year?

The outlook for decorative paints looks very promising. Demand should hold up and our newly launched products and services, like Breathe Easy, Longlife and Safe Express painting, should gain further momentum.

Industrial coatings are recovering too, with auto in double-digit growth for us. We expect industrial coatings to do well.

This apart, investments are happening in new growth areas like waterproofing solutions, an MNC-dominated market. We hope to be amongst the top five players in the segment by FY22-end.

What are your Budget expectations?

We are hoping that there will be focus on demand generation. The growth in the economy has to be sustained. This government has not believed in doles, so we are expecting policy decisions to boost demand, focus on infrastructure and real estate, and improve liquidity.

I would say MSMEs and the service sector still need some hand-holding, as they remain the worst-affected post the pandemic.

Tax sops are also expected to spur the investment cycle. Maybe some tax adjustments/holidays against investments being made by companies could help.

Published on December 25, 2020

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