When operating profit declined for everyone in the paints industry, a combination of better gross margin and lower cost, helped Berger Paints register an operating profit margin growth in the first quarter this fiscal, says its Managing Director & CEO Abhijit Roy. In an interview with businessline, Roy said the company has earmarked capital expenditure of over ₹2,000 crore in the next three years for greenfield and brownfield projects to expand production capacity further as it wants to grow its market share continuously amidst heavy competitions. Excerpts:
Amidst heavy competitions within the paints industry, how was Berger Paints able to expand its EBITDA margin and market share during the first quarter this fiscal?
We are the only company which registered the highest growth amongst the major organised listed players during the quarter. Mainly the growth came from automotive and decorative coatings. In the decorative segment we have a lot of scope for growth, largely because of ongoing distribution expansion. We had installed about 8200 colour bank tinting machines in the last financial year. And this year, we have set a target of installing at least 10,000 tinting machines. In the first quarter, we managed to install 2500 machines. So, this is one of the reasons, which is the expansion of the network. There is still a lot of scope in that, and we can keep expanding this particular network to grow. Secondly, we have done well in certain areas like construction chemicals, waterproofing and wood coating segments, which registered a strong double-digit growth. That is also helping us to grow at a slightly faster pace than possibly other players in the industry. So overall, our execution in terms of network expansion and also the sale of these types of product categories which are doing well are helping us to grow at a slightly faster pace than the industry. During Q1, we saw an overall volume growth of 5.7 per cent year-on-year.
As far as profitability is concerned, operating profit for the industry in general declined in Q1. We were the only listed company that actually increased operating profit. For everyone else, it declined. The growth in our operating profit was again related to two factors. Firstly, compared to the first quarter last fiscal, our gross margin itself expanded in Q1FY26 because of a better product mix as we sold more better quality products with higher profits. Secondly, this fiscal, we utilised the Sandila plant (in Uttar Pradesh) capacity much better, and hence the overhead costs as a percentage went down. Last fiscal, this plant came into operation and therefore we were using it sub-optimally.
How much market share gain did the company witness in the first quarter year-on-year? And what is the outlook going forward?
We grew from about 20.2 per cent to about 21.4 per cent. So, that is over 1 per cent or 100 basis points market share gain in Q1FY26.
We plan to further expand our network because there is a huge scope there. And possibly some new product introductions. There are some…
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