BL interview. New entrants see paint business grow, offer decent margins: Berger Paints MD

For Berger Paints, it has been a privilege to serve the Indian market and consumer for nearly a century. We have seen far too many changes, but what stands out are the growth opportunities thrown up by the opening up of the Indian economy over the last three decades during which our company grew the fastest as well.

The rapid formalisation and digitisation of India in the last decade have only provided an impetus to the growth story of the economy. Initiatives such as Jan Dhan, GST, UPI, Fastag, UPI, India Stack, ONDC, and OCEN all have had an exponential and non-linear impact that has benefited most industries. The massive infrastructure build-up in terms of highways, road network, electrification, airports, freight corridor, and ports have allowed the industry to flourish. Today, India has a large youth population that is poised to take charge. We are focused on providing them with a great future filled with possibilities.

It is our expectation that the Indian paint market will keep growing and expanding for the foreseeable future on the back of the generational transformation that we have witnessed in the last decade, the surge in consumption brought about by a young and growing population, and rapid urbanisation.

The demand for paints in this fiscal will reflect the growth story of the Indian economy. The GDP growth forecast of 6.5 per cent for the year should yield fairly stable growth for the industry overall. There could be above-normal growth, provided the government continues to invest in infrastructure and the realty sector continues its revival. This fiscal, the automotive and general industry should see reasonably good growth once again.

Potential entrants see the paints in India as a growing business that offers decent margins. In the past, the Indian paint industry has seen foreign entrants such as Sherwin Williams, Nippon, and Jotun. Some have wrapped up operations, while others continue to have a small presence in niche segments. The industry appears attractive when viewed from the outside but like any business, it has its own set of unique challenges. The current wave of interest from Indian businesses is likely a reflection of the optimism in the Indian growth story.

Over the last 18-24 months, there has been severe pressure on RM prices owing to various factors. This has resulted in a series of price increases across all product categories which companies like ours delayed as long as feasible and then calibrated to have the least impact on demand while maintaining profitability. We are seeing some stabilisation of input costs and do not anticipate any major surges in the immediate term.

Berger enjoys market leadership in categories like Protective coatings and Coil Coatings, and is a strong No. 2 in most other segments. The decorative paints category is the largest one in which we have close to 20 per cent market share.

We have various plans to grow our business. Some are based on improving the efficiency with which business-as-usual is carried out, while others are based on successfully applying the learnings from the experiments we have carried out. Improving distribution, providing new and innovative products, and value-added services to our consumers are the key elements of our strategy. Everything depends on having the right people, rewarding, and motivating them and executing our plans well.

Our newest plant at Sandila in UP came online just a few months ago and this has boosted our capacity manifold. We are also building additional capacity in our existing plants. We are now well-placed to serve our domestic and industrial consumers in a timely manner. However, we will continue to look for opportunities to get even closer to the consumer and shorten the length of the supply chain, and are willing to invest at the right time.

Berger Paints already has a thriving home-painting service offering for consumers that has the potential to be grown further. Express Painting from Berger Paints was the country’s first service that offered an at-home consultancy, trained painters using mechanised tools, and supervised painting with full-fledged customer support. We have now moved into providing services for water proofing and wood coating as well.