Berger is number 2 by a margin in the decorative paint space: MD & CEO

Business Standard

6 hours ago

Berger Paints India's revenue growth in the fourth quarter of 2024-25 (Q4FY25) was the strongest in five quarters, ahead of other listed paint majors. In an interview at its new headquarters in Kolkata, managing director (MD) and chief executive officer (CEO) Abhijit Roy tells Ishita Ayan Dutt on what clicked for the company. Edited excerpts:
Amid intense competition, Berger's growth in Q4 was ahead of peers. What did you do right?
We didn't do anything dramatically different. But our network expansion went off well. We did a fairly good job on the painter-contractor front. And, we launched a few interesting products. Our initiative of going deeper into urban markets where we have a weak presence – Pune, Mumbai, Bengaluru, Chennai and Hyderabad – yielded some results. Therefore, in spite of increased competition, we had a relatively better growth rate than all other players in the industry. On the industrial side, we are the leaders in protective coatings and there was some increased activity in the area. We got some of that advantage.
You added feet on the ground. What was the addition?
That was primarily for the urban markets. We added about 10 per cent in FY25. The results will be felt in the current year and the next.
Given the competition, wouldn't it have been easier to gain market share if you had stayed the course on AkzoNobel acquisition?
These are calls that have to be made with a lot of thought. For us, it would have helped to add some sales quickly. But the cost involved was too high.
Do you think the same results can be achieved through organic expansion?
We are the number 2 brand by far in the decorative segment. But our network size is one-third of the leader. So, my brand is known but products are not available in many places. Just increasing the product presence will give higher coverage and penetration — it's doable organically. Acquisitions are a high risk strategy; there are advantages in utilising one's own strengths.
For organic expansion, you are investing about ₹2,500 crore in the next three years?
Yes, we will be increasing capacity by almost 30,000 metric tonnes per month. That is more than enough for our needs.
It is believed that JSW Paints is poised to acquire AkzoNobel. Do you see the fight for number 2 intensifying?
The fight for number 2 is not intensifying; the fight for number 3 is going to intensify between Kansai Nerolac, Birla and JSW. Number 2 position is too far off – we will have a turnover of ₹20,000 crore by 2030. The big fight is for the third.
What is the business outlook for FY26 – is urban demand picking up?
Not so far – demand is sort of static. From Q3FY25 to Q4FY25, there was some improvement. But Q1FY26 is likely to be on similar lines to Q4FY25. We expect Q2FY26 to be better due to an early Diwali in September and further improvement in Q3. Overall, in FY25, we had a volume growth of about 8 per cent. But our value growth was only 2 per cent due to price drop and change in product mix. We should have 8-10 per cent volume growth this year as well. And value growth should be 5-7 per cent. And once this year is over, competition would have stabilised and then it would be normalised growth for everyone.
Is the early onset of monsoon a dampener?
The early onset may somewhat impact the May sales for all companies. But on a yearly basis, it won't impact the segment.
You took a price hike of 1.5-2 per cent in Q4. What is the outlook on prices?
We increased prices in November and got the advantage in Q4. I don't see further hikes — partly because raw material prices are benign.
Will the anti-dumping duty on rutile – a raw material – have an impact?
That will have an impact to some extent. The Indian Paint Association is fighting a case and the final hearing is on June 11. It may have a bit of an impact on profitability. But it would not be enough to warrant a price increase.