Input price drop helped margin; volumes still soft: Berger

Last year in the month of April and May we had two consecutive price increases which preponed a bit of the sales into these two months which is likely to impact almost all the paint companies but June onwards things are likely to improve. Therefore, overall Q1 result will be on similar line as you see in Q4.

Ekta: You said volume growth is 2 percent below value. Can you tell us what the exact number was for this quarter as well as for the fiscal?

A: As far as fiscal is concerned year to date (YTD), our value growth on standalone was about 12.5. Its nearly about 10-10.5 in terms of volume growth, 10 percent approximately will be the volume growth in terms of yearly figure, so that is just touching the double digit.

Ekta: Can you replicate that in FY16?

A: We are hoping for a bit better, in fact provided things kickoff which is the expectation. Things are slightly looking up in the urban side, not so much on the rural side, where there is still a lot of stress.

Latha: You will continue to see margin improvement?

A: Margin improvement will continue. This year for us slightly better in terms of net profit because last year we lost little bit in 80IB benefit which we use to get in Jammu in terms of taxation, it went away last year.

So we were suffering on account of that because the operating profit margin was therefore much higher for us than net profit. This year that disadvantage won’t be there in that sense, so we will have a fairly good, robust net profit growth.

Latha: What are you planning considering that from June onwards you are expecting an improvement. What are you planning? Are you planning anything by way of capex, any capital raising, anything at all?

A: I do not think we need to put in a single paisa for the next two years other than the routine expansion or maintenance job which will continue.

Latha: It will be good operational leverage that you should enjoy?

A: Yes, that advantage will be there for the next two-three years.

Latha: What kind of capacity utilisation you think you can see in terms of improvement?

A: We should be moving up by about 5-7 percent from current level because after putting up Hindupur plant which is a big one, our capacity utilization has gone down a bit because that is not fully utilised in the current scenario where the volumes are not moving up to that extent which was anticipated. Therefore, we have enough laxity in the system.

Ekta: If in case you are talking about urban exceeding rural. How much is the growth rate for both the segments according to you?

A: Today the second tier and three tier growth rate are still higher than the urban growth rate, but earlier if rural was growing at 18 it has gone to 14 whereas urban which was growing at 7 has moved up to 8.5-9.