Volumes gaining traction; may beat industry growth rate: Berger

On marketing spends, he says, it is required to gain market share and the company will continue to expend on it.Below is the verbatim transcript of Abhijit Roy’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18.Sonia: Things have been going very steady for you. About a 14 percent growth is what you have in the last quarter. How is the demand on the ground. Have things picked up further since we last spoke?A: Yes, a little bit from when we spoke last time. The volume growth has been reasonably good. So, that is encouraging and we expect that after the second half the rains have been pretty good so far and with one rank one pension (OROP) and central government money coming in the second half should be better than what we have seen so far.Anuj: Of course you are the second largest player in the decorative market. Your market share has been about 16-17 percent. Asian Paints of course remains the big leader, but going forward do you think you will grow in line with the industry or do you think you have the potential to grow faster than the industry?A: We can grow a little faster than the industry possibly based on the distribution expansion which is possible in our case where we have a lot of scope and opportunity which we have been trying to ramp up now for some time plus premiumisation which is likely to take place. We have a relatively lower share in the premium segment and we have been growing pretty aggressively on that front and that will continue. So, overall if you look at probably we will have a slightly higher growth than the industry also in terms of profit you might see a better improvement there.Sonia: Everyone is gunning for some of the smaller cities there because demand is increasing in the tier-III cities as we call them and over Berger Paints has seen demand moderate a bit compared to some of the other players. What is the sense you are getting hereon, how much market share could you grab in the tier-III cities and how do you expect demand to pan out?A: Tier-III cities had been growing at a much faster pace earlier and it still grows faster than the urban centres but the growth rate which we were witnessing in the past has slowed down a little bit. But still higher than the major cities. So, it is not as if it is moderating there or compared to urban centres. Urban centres possibly might have a growth rate in terms of volume probably around 8-9 percent and those will be having 15-16 percent in the tier-III type of towns. But we were witnessing a far higher growth there with the monsoon and being good. Those are affected to some extent by the rainfall and the agricultural produce and therefore second half, that is why I was suggesting, could be much better.Anuj: Last year of course you had a tailwind in terms of crude oil prices and crude is an important mix in your margin picture. That has jumped quite a bit over the last three or six months. From the lows it is up 30-40 percent. Would that change things as far as margins are concerned?A: Not really. I think crude is holding firm. The benchmark now has become between USD 40-50/barrel, toggles between these two points and we are very comfortable at this price point. Unless it goes up beyond say, USD 55-60/barrel I don\\'t think margins will be affected to that extent. The growth in margins may not happen at the level at which it happen last year. But it will be retained at these levels.Sonia: Is it because your other expenses have been going up? Marketing spends, not just for you but the entire sector, has been picking up. We have seen such expensive brand ambassador that your peer Asian Paints have got on board, the likes of Deepika Padukone etc, but what about you? Will marketing spends continue to be high?A: Yes, actually obviously this is a very competitive sector and margins being high for most of the companies now and most of them are earning decent profits so the tendency is to therefore spend to gain market share and also this time you can do some amount of brand building activity. So, therefore there is a tendency to spend little bit more than what you would have normally done. So, that trend will continue possibly this year.Anuj: You don't have too much of debt and there is quite a bit of cash in your books as well. Any inorganic moves that you may have planned?A: We will look at. If something suitable comes up surely we will go for it. But as of now nothing on the horizon.