Rs 800-crore Berger Paints’ plant to come up either in Maharashtra or Gujarat

'Overall, other FMCG categories are growing at a much slower pace, comparatively we have done much better.'

August 18, 2023 02:10 IST

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'We want to double our revenue from the current level.'

Given the current inflationary pressure, a double-digit volume growth for Berger Paints in the first quarter this fiscal is “fairly good”, says its managing director & chief executive officer Abhijit Roy. In an interview with Mithun Dasgupta, Roy says the company’s proposed greenfield plant in South for water-based decorative paint will either be in Maharashtra or in Gujarat, and the investment for this project could be around Rs 800 crore. Excerpts:

Berger Paints’ consolidated revenue for the first quarter this fiscal grew 9.8% year-on-year. What were the factors that contributed to it?

The primary reason for this growth was distribution network expansion. Demand was also reasonably good in April and part of May, though after that it slowed a little bit. Therefore, overall there were demands and we were also expanding a little bit on the network side. So, it enabled us to grow at around 10% level. In this quarter, volume growth was approximately around 14% for decorative segment and overall it was around 12.7%. Given the current situation, the double-digit volume growth is fairly good. Growth has to come via volume and value — both are relevant factors. But growth cannot come just like that when inflation is high or people are little bit hesitant to spend as of now. Overall, other FMCG categories are growing at a much slower pace, comparatively we have done much better.

As inflationary pressures are there, how do you compare urban-rural demand trends for the paint industry and the company?

Now, demands in urban and rural areas are more or less similar in nature. Urban demand was going faster and that of rural was slightly slower. But, as of now more or less similar in nature. There is no great difference between the urban and rural demand rates.

Is the demand expected to pick up for both urban and rural going forward in this financial year?

The rains have been reasonably good so far. A good monsoon should be good for the rural demand. Urban is not so impacted by monsoon as such. It is normal demand growth which happens with the economy. When economy grows, urban demands tend to grow. Over 6% economic growth should be good for the urban demands. Diwali comes late this year. It will help us. Whenever there is a late Diwali, we have more number of days to sell paints and the season tends to do better.

Moreover, in protective coatings and general industrial categories, we are the leader in India. And in these two categories, a lot of spending is being done by the government and private sector. Protective coating is basically for the infrastructure segment, and there is a significant amount of spending being made by the government on infrastructure and infrastructure development. Therefore, that growth opportunities exist for us. Similarly, waterproofing and construction chemicals segments are overall growing.

What are the company’s capacity expansion plans growing forward?

For greenfield expansion, two new plants we have more or less firmed up — one is in Panagarh in West Bengal (for construction chemicals, industrial and solvent-based decorative paints) and the other is in Odisha (for decorative and industrial paints).

The third greenfield plant for primarily water-based decorative paint will either be in Maharashtra or in Gujarat. In another six months time we should be able to firm up the location. Our capital expenditure for this plant in South could be approximately Rs 800 crore. But, it may become higher. There will also be brownfield expansions across some of our factories in West Bengal (Rishra), Andhra Pradesh, Gujarat, Goa and Puducherry.