The fourth quarter earnings will be better than the current quarter on the revenue side, believes Berger Paints' managing director Abhijit Roy. He said the company expects the fourth quarter volume growth to mirror trends of Q2FY14.
Also Read: Berger Paints Q3 profit up 7% to Rs 82.3 cr
Speaking to CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, Roy said that during the quarter the industrial side was hit due to a slowdown in the infrastructure sector. However, the decorative segment has been doing well and the auto segment has seen some movement forward.
The company went for a 2.2 percent price hike, effective February 1. It expects the carry-forward inventory of raw material, which was at a high cost in the third quarter, to go away in the next quarter.
“It will be double positive in the fourth quarter on the back of price increase and relative lowering of the raw material prices,” Roy said, adding that the company does not require any further price hikes in the short term.
Below is the interview of Abhijit Roy, MD, Berger Paints with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: Can you tell us what was the exact volume growth that you clocked in this quarter and what was the price growth as well?
A: We do not give the volume growth figures but it was about 2-3 percent below the value growth.
Latha: How is the current quarter panning out both in terms of revenues and in terms of price hikes? Will you take any more?
A: I think Q4 will be better than what has happened so far. One is on the revenue side; I think it is going to look up a bit and at least January went off reasonably well so I presume things are looking up. The decorative side has been doing well relatively so far. On the industrial side, we had an issue with the infrastructure sector, which still remains to some extent but on the auto side there is some movement forward.
So, overall revenue will look up a bit in Q4. In terms of profit, it will be reasonably better improvement in Q4 for two reasons (1) price increase, which we have taken effective February 1, which is about 2.2 percent and (2) carry-forward inventory raw material, which were at a very high cost in Q3, will go away in Q4. So, overall therefore it will be a double positive in terms price increase plus relative lowering of the raw material prices.
Sonia: I understand you cannot give the exact volume growth figure but I am trying to find out whether it was similar to last quarter’s strong growth of 13 percent. Will you continue to see double digit volume growth in the quarters to come?
A: In Q4 yes, we are reasonably certain that it will be a double-digit volume growth.
Latha: We are asking you because some analysts came with an interesting proxy to calculate volume growth that it would be usually 1.5-2 times real gross domestic product (GDP) growth and real GDP growth has been dismal – 4.5 percent, so do you get to double digits?
A: We will have double-digit volume growth largely on account of our better performance in tier II and tier III centers.
Latha: You will be able to press for more price hikes?
A: It is not required at the present moment. It is comfortable as of now, so therefore unless the dollar again starts appreciating then only there is a problem otherwise it is fine.
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