Berger Paints hopes to close FY23 with Rs 10K-cr sales amid strong demand

Riding on strong demand, Berger Paints India — the country’s second-largest paints company — expects to close FY23 with consolidated sales of Rs 10,000 crore.

The first Berger factory was established in Howrah, West Bengal, in December 1923. To coincide with its 100 years, the company had set a sales target of Rs 10,000 crore for FY24.

But Abhijit Roy, managing director (MD) and chief executive officer (CEO), believes that it would be achieved ahead of time — by March 2023. This is in the wake of the growth momentum. In FY22, Berger clocked a turnover of Rs 8,826.37 crore.

“We expect demand to remain strong throughout the year. We will close the year on a double-digit volume growth and a strong value growth.”

Despite inflationary headwinds, Berger Paints posted its best ever quarterly sales in Q1 of FY23 in terms of volume and value.

Revenue from operations on a consolidated basis increased 53.44 per cent to Rs 2,759.70 crore for the quarter ended June 30. Net profit was at Rs 253.71 crore, higher by 80.6 per cent.

A combination of factors contributed to Berger’s performance — launch of a slew of products, renewed focus on distribution expansion coupled with demand.

The demand in urban areas remained very strong, said Roy. “In rural areas, there was a bit of slowdown, but we mitigated it by introducing some new products at lower price points,” said Roy.

It’s not just Q1, Berger has been seeing good demand since 2019-20. 

According to Roy, people were at home and staring at dull walls and wanted a fresh coat of paint. “Worldwide, there was an increase in demand for home improvement products, including paint.”

“Normally, when price increases happen, demand tends to slow down. We have managed to defy that,” Roy added.

Between July 2021 and January 2022, Berger increased prices by about 20 per cent on the back of higher raw material rates.

But it has hit the pause button with a slide in raw material prices. Crude oil has come off from peak levels and its derivatives are key raw materials for paint companies.

“As of now, we are in a wait-and-watch mode,” said Roy. The lower raw material benefits will be felt only from September-October.

“In Q4, we may take a decision to lower prices, if raw material prices are still stable then,” said Roy.

Berger is also building capacity. In Uttar Pradesh, the company is investing about Rs 1,000 crore in a large production facility, which is expected to go for commercial production in November 2022. In West Bengal, it is in the process of setting up a factory.

Roy said every three-four years, the company would be investing Rs 700-800 crore in new capacity. Small acquisitions are also not ruled out.