Market share has gone up to 18%: Berger Paints

Berger Paints saw an increase of 8.6 percent in its revenue at Rs 1,129 crore from Rs 1,040 crore and the net profit jumped 60 percent to Rs 92.80 crore from Rs 58 crore in the fourth quarter of FY16. Volume growth of the company in Q4 was 14 percent, while the value growth was comparatively low, said Abhijit Roy, MD & CEO of Berger Paints.The volume growth for the company for the entire year was around 12.5 percent and Roy expects it to be better going forward. "H1FY17 won't be that great, but after the rains (post September), volume growth will spur," said Roy. It posted its gross margin at 46.8 percent and Roy expects the expansion to continue in the first quarter of FY17. Berger Paints enjoys a market share of 18 percent currently, Roy added. Below is the verbatim transcript of Abhijit Roy's interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18. Reema: Starting with the topline number, 8.5 percent revenue growth in Q4. If you could help us with the volume growth numbers for Q4 as well as FY16 and therefore the projections for next year on volumes? A: Volume growth was in double digit, around 14 percent odd but value growth was much lower because of the price drops which happened subsequently. Reema: 14 percent in Q4? A: That is right. Sonia: For the full year what kind of volume growth have you done and how do you see the first half of next year in terms of demand in different segments and overall as well? A: We did a double digit volume growth; about 12 percent odd was the volume growth that we registered overall in terms of the volume growth for last year. However, in first six months we will probably do double digit volume growth for sure around the mark of what we did last year, but in the second half after rains, which is expected to be good, the volume growth might spur further. Reema: Do you get the sense that volume growth for the full year in FY17 will be better than 12-12.5 percent that you saw in FY16? A: It should be. As I said in my earlier interview, last four-five months have been better and going forward after September-October, typically that is the paint season and it should pickup because of rains, which is likely to be good and in that case the volume should be definitely much better than what it was in FY16. Sonia: You have undertaken an exercise to increase your distribution reach. Has that helped in increase of market share and what is the market share currently in the organised market? A: Of course it is a tough battle in terms of distribution increase. It is not easy. You don't get increases disproportionate to your current market size. Our share is currently around 18 percent odd but we think that we have gained a bit this year as we have been doing for the last three years but that gain is about 0.3-0.4 percent, not enough to change the scenario as it exist today. Reema: What is the outlook on margin because your gross margin stands at nearly 46.8 percent? What is the trend that you see on gross margins as well as EBITDA margins? A: In the first quarter it will hold true in terms of margin because we still have some advantage coming in, raw material prices which had gone down in the Q4. We are holding stock for many of those raw materials and that advantage will sail through and will come through in the Q1 as well. So that advantage, as you have seen because of the raw material price drop for companies in pant, would have shown good growth. In terms of gross margin expansion - that will carry on for the Q1.