How Berger Paints plans to protect its market share

'We will expand distribution rapidly in places where we are currently unrepresented. Second is the waterproofing segment - the consciousness level is rising and consumption increases are likely to happen..'

The decorative paints industry got more competitive when the Aditya Birla group entered the business last month.

Abhijit Roy, managing director and chief executive officer of Berger Paints India, tells Ishita Ayan Dutt/Business Standard in Kolkata, his company is not worried and has a strategy to protect its market share.

Berger entered its hundredth year when a new player, the Aditya Birla group, announced ambitious plans. How will Berger protect its market share?

We have been around for a long time. But our journey began in earnest in 1990 when the current promoters (the Dhingra family) came in.

Till that point, we were the 5 or 6 player in the country.

From there, we have moved up steadily to become Number 2 in the decorative paints segment.

In protective and general industries, we are the leader in India.

We also have a presence in powder coating and automotive coatings.

So, we straddle the entire spectrum of paint and coatings.

Also, we have a presence now in construction chemicals and waterproofing.

In decorative paints, a few things are critical: Distribution and brand strength, equity in local markets which includes the ability to control the dealers, contractors, builders, architects, interior decorators, and customers.

Therefore, we are not worried on account of a new player entering the market because we have built a brand over long years.

We are cautious - it (Birla group) is a serious player and has money power.

But other brands are not pushovers, they will remain and coexist.

You are setting up a plant in Odisha. What are your expansion plans?

Our plant in Sandila (Uttar Pradesh) is operating at 35-40 per cent (capacity) and will probably go up to 55-60 per cent this year.

In three years, we would be utilising 80-85 per cent of the capacity.

The one we are setting up in Odisha will take three years to complete.

In West Bengal, we already have two plants: (in) Howrah and Rishra.

The Howrah plant will be shifted to Panagarh and we will add capacity there.

What is the timeline for expansion?

Panagarh will be up and running in FY26. Odisha will take three years.

The investment in Odisha is Rs 1,460 crore. Is it going to be bigger than Sandila?

The land in Odisha is almost double that at Sandila. It will be built in two phases.

In the next three years, we will invest a minimum of Rs 2,500 crore - the investment in Odisha is Rs 1,460 crore.

Rs 500-600 crore will go towards brown-field expansion of existing factories and the balance at the Panagarh plant.

What would be the company's growth drivers?

We will expand distribution rapidly in places where we are currently unrepresented.

Second is the waterproofing segment - the consciousness level is rising and consumption increases are likely to happen.

What percentage of your revenues is from the decorative segment and what is your market share?

About 80 per cent of revenues come from decorative. We have a market share of 17-18 per cent in decorative. Our overall market share is at 20 per cent.

You have set a target of achieving Rs 20,000 crore revenue in six years. Will the entry of a new player change the timeline?

So far, I have not seen any indication that should be worrying for us. But there may be a minor impact.

My reading is that if we were growing at 14 per cent (which has been the CAGR for the last 25 years), that growth rate could come down to 11 or 12 per cent if we do not take any measure.

If we grow at 14 per cent, we would have doubled in five years.

Do you plan to venture into new markets outside India?

As of now, there is a lot of action here. So, we would rather focus our energy on a market which is growing fast and where we are very strongly positioned.

There is an intensification of competition, so it makes more sense to focus on the Indian market as of now rather than getting distracted by some business outside.

Feature Presentation: Aslam Hunani/Rediff.com