Nov 20, 2012, 05.22 PM | Source: CNBC-TV18
In an interview to CNBC-TV18, Abhijit Roy, chief executive officer of Berger Paints says there will be some improvement in profits possibly in Q3.
“ We have a market share of around 20 percent in the domestic market. ”
- Abhijit Roy (CEO)
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As far as the business is concerned, he says, August-September was relatively slow. "In October, we saw a huge surge in demand, possibly some amount of it was pent-up demand, which did not happen in August-September because of excessive rains in the non-central areas. So, October was reasonably good for almost all the paint companies," he elaborates.
Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.
Q: How consumption is panning out in the second half of the year? You have seen previous festival seasons, there is an all-round complaint of downturn and consumer downtrading, how would you gage consumer mood at this point?
A: As far as the business is concerned, August-September was relatively slow. But, in October, we saw a huge surge in demand, possibly some amount of it was pent-up demand, which did not happen in August-September because of excessive rains in the non-central areas. So, there was some postponement. So, October was reasonably good for almost all the paint companies.
I think in terms of consumer demand per se and we saw it also in the automobile to some extent, there was a lift in demand. We saw some uptick. Will it sustain itself through the period in November-December? That has to be seen. Though upto Diwali, it was quite good in November, it has to be seen whether it holds good now onwards upto December end.
Q: What your main markets are? What is your market share currently at this point in time? What is the volume and pricing power looking like for Berger Paints?
A: We have a market share of around 20 percent in the domestic market. As far as our main markets are concerned, we are relatively stronger in the northern and eastern part of the country and comparatively weaker in the west and the south.
As far as our pricing power is concerned, we have a reasonably good pricing power because we do have 20 percent market share, which is the second highest in the industry. We have some unique brands as well in our portfolio. Therefore, we have some amount of pricing power in the market.
Q: How are you viewing costs and margins? We did see a fall in the price of titanium dioxide, would you say that there is some kind of a receding of cost pressures for you and therefore scope for margins to improve in the second half? Also, how is pricing power?
A: There is a fall in the prices of titanium dioxide. But it is too early to predict how it will behave because it is going up and down, cyclical in nature. It fluctuates with demand and the supply situation.
However, we had some amount of stocks, which were being carried on our books earlier. So, it will start reflecting from now onwards in terms of profitability. There will be some improvement in profits possibly in Q3 as was expected.
As far as pricing power is concerned, I think prices should hold good. We are not seeing any immediate impact or drop in prices.