Undergoing a series of ownership changes since 1923, Berger Paints has come a long way, emerging as the India’s second largest paint company. Its turnover has increased manifold, as has the number of its units. From a lone unit in West Bengal’s Howrah, it now has a presence in 11 locations in India and three in overseas. Given below are edited excerpts from an interaction The Hindu had with its Managing Director and CEO, Abhijit Roy .
What is the near- and medium-term outlook for the company? What does the interest rate cut mean for you?
The near-term is challenging as the growth momentum has still not picked up in the Indian market but the signs are positive. For the medium-term, we are far more optimistic as we believe that the GDP will look up, and coupled with increased urbanisation and spend on infrastructure, we see a significant perk-up in paint demand.
Regarding the interest rate, we feel that the cycle towards reduction has begun. Consequently, the housing sector and its allied activities such as the paint industry should also do well as the affordability factor improves. But it needs to be kept in mind that painting is an end-cycle activity. We get to feel the benefit after about two years.
Berger is the number two in the organised paint industry. How intense is the competition? How do you plan to tackle it? Are you planning any revamp of your marketing strategy, especially in the rural markets? What are your views on e-commerce in paints?
The competition is very intense. The top four companies contribute about 65 per cent of the sale in the Indian market, but there are numerous small companies in the market.
The best way to tackle competition is to focus on the end-consumer and deliver products and services which meet their needs better. Keeping this in mind, we are planning some innovative marketing strategies in the near future. With rapid urbanisation, large stretches of rural habitations are becoming suburbs, and as people move into pucca houses, they will need paints. We are setting up a strong presence in Tier-III and Tier-IV towns in the North and East. We also plan to expand in the South and West. We have to increase our distribution reach going closer to consumers. As regards innovative approach, we have started a training academy for painters, which, we think, will bring in more accountability and improved skill sets.
E-commerce is still in the nascent stage as far as the paint industry is concerned. We have to await the results of various experiments being carried out. However, internationally, this forms a very small percentage of total sales of the paint industry as there are logistic challenges involved in moving a bulky, flammable commodity such as paint.
Outperforming your peers is among your mission statements. What are the main components of the strategy?
Outperforming peers can only happen when we are able to service our customers better than our competitors and make them aware of the same. This implies that we have to come out with innovative products and services and advertise the same to let customers know about its benefit. The training academy is a move in this direction.
What sort of business do you expect from nuclear power plant segment in which you are the lone player?
Some business will come but it is nothing significant as the number of nuclear power plants in India is very few.
Which segments are growth-drivers for the company? What role does the company see for itself in India growth story?
We expect both the decorative and industrial sector to do well in the coming years. We are No.2 in the decorative paint industry in India and leader in protective coatings, plastic coatings and coil coatings on the industrial side. These will be key growth-drivers for the company in the near future. Paint consumption is linked to the GDP of the country. Increased growth momentum in India will result in an increase in GDP, which, in turn, will result in an increase in consumption of paint.
What are the concern areas for the company and the industry?
No major area of concern as of today, but the status of paint as a red-category industry despite the raft of measures that have been taken is bothersome. We have zero discharge. We reprocess. And yet, we remain in that category. This impacts the time taken for clearances for our green and brown-field projects.
What is the way out?
Though paint falls in the red category, all our plants have strong effluent treatment mechanism in place, resulting in zero discharge. We have a strong safety, health and environment culture within our organization. And, we try to minimise our risks on these issues. All our products in the decorative paint segment are lead, chrome and mercury free. We will continue to improve our product quality and make it more environment-friendly though it is not mandated by law as yet in India. However, for changing the perceptions about the paint industry, efforts are on to harness the offices of the apex industry association, the Indian Paints Association, for this.
What is the import content in your product? How will you tackle the problems arising out of exchange-rate volatility?
In our products, import content is in the range of 20 per cent plus. We expect exchange rate to remain relatively stable in near future.
Are there any acquisitions on the radar?
We are always open to acquisitions provided they meet our requirement.
indrani.dutta@thehindu.co.in
