Berger Paints expects better margin with drop in input costs: Official

Berger Paints is expecting an improvement in margin with a decline in input costs mainly due to falling crude oil prices, and also weighing a modest increase in rebates during the current fiscal to boost sales, a top company official said.

Despite the expected rise in rebates, the paint maker remains confident in its ability to maintain a healthy growth trajectory, aiming at an EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin of 16-17 per cent in the 2023-24 financial year, its managing director and CEO Abhijit Roy said.

"While we have witnessed a decline in input costs due to the reduction in crude prices, the competitive nature of the industry may lead to a slight increase in rebates.

"Nevertheless, this increase will not be significant as it aligns with the pricing levels we experienced prior to the COVID-19 pandemic," Roy told investors in an analysts' meeting.

The company also does not foresee any dent in demand in the current fiscal, he said.

Speaking about its newly commissioned Uttar Pradesh plant, Roy said the paint maker expects to reach a utilisation level of 75 to 80 per cent at the Sandila facility within the next one and a half to two years, bolstered by seasonal demand and continued market expansion.

The company also plans to commission a new plant in West Bengal in 2025.

Additionally, it plans brownfield expansions in its existing facilities and a greenfield project in Odisha, slated to commence in 2026.

In terms of distribution, Berger Paints aims at expanding its network by adding approximately 8,000 new dealers to its current base of 40,000.

Roy highlighted that historically, a 20 per cent increase in distribution translates to an additional 5-6 per cent growth in overall sales.

Its consolidated revenue from operations was at Rs 10,567.84 crore in FY23, 20.61 per cent higher than the previous fiscal.

Berger Paints' net profit was up 3.3 per cent at Rs 860.40 crore for the fiscal year ended March 31, 2023. It had reported a net profit of Rs 832.95 crore in the previous year.