See over 10% Q3 volume growth; 13.3% margin: Berger Paints

Berger Paints’s revenues rose 5.7 percent to Rs 1,167 crore for the quarter ended September.Speaking to CNBC-TV18, Abhijit Roy, MD and CEO, Berger Paints says the company has performed well domestically both in decorative and industrial segment leading to a standalone revenue growth of 7.2 percent. However, one of Berger’s international joint venture saw a 27 percent degrowth because of dumping by Chinese firms, and this limited the growth in consolidated income.Furthermore, he expects the company’s volumes to grow over 10 percent and operating margin to be over 13.3 percentBelow is the verbatim transcript of Abhijit Roy's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: Can you tell us how much volumes you sold? We have an idea of your revenues 5.7 percent but volumes and realisations?A: On a standalone basis, the growth is about 7.2 percent and the volume is very close to the double digit. As far as the domestic business is concerned, we are a fairly good growth in both the decorative and the industrial side. What suffered and what brought down from 7.2 percent to 5.7 percent was our business which is a joint venture (JV) in coil coatings where because of a lot of goods coming in from China, there was a drop in sales there. So negative 27 percent there and therefore 7.2 became 5.7.Latha: So I should assume that if your volume was almost 10 percent and your revenue is 5.7 percent, you sold lower margin products?A: No, that is why I was explaining to you that 5.7 percent is on account of the coil coatings division which didn’t do well.Latha: Even at 7 percent?A: If you assume it at 7 percent, we had 2-2.4 percent in price drop effective March 1, which we passed on to the market when the oil prices were dropping. Therefore that is impacting and therefore if you add 2.4, it becomes 9.6 in volume terms.Sonia: You expect the coil coatings division to be under pressure in the second half as well and what would the second half volumes look like?A: Second half should be better in terms of the business, October was good and therefore strong double digits whereby it looks like that the demand is picking up a little bit at least the season has gone off well. So we are hopeful that the second half will be better than the first half.Latha: You expect your volumes will be better than 10 percent?A: Yes.Latha: What about the international division, has it turned around or still making losses?A: No, our Poland division is giving us good profits. It is doing reasonably well. Unfortunately, the currency is an issue whereby the polish Zloty against the dollar is depreciating. So that is making the problem as far as we are concerned because we are consolidating on dollar terms. So that is a problem which is there but on their own currency terms, it is doing reasonably well, it is giving double digit growth.Sonia: At 13.2 percent there was a good amount of expansion this time because of falling raw material prices. Do you expect the positive trend to continue?A: That will continue because the raw material advantage that is there will continue right through till the end of the year. The mix change will probably add a little bit to Q3.Latha: So you did 13.3 percent margins in Q1, 13.2 in Q2 so will you average 14 percent or will you average 13 percent?A: No, it will be higher than 13.3 percent for sure.