The targets set by a new entrant in the Paints sector is "highly improbable" to achieve, according to Berger Paints Managing Director & CEO Abhijit Roy, who said this in an interaction with CNBC-TV18 on Wednesday.
Roy mentioned that in an industry like the paints industry, incremental steps have to be taken and growth doesn't come in a burst unless the existing players make some mistakes.
"In my opinion, therefore, it will be a slow grinding process, it will not be as fast as possibly anticipated. It might be lesser than what the projections have been given. I don't think it is impossible to achieve those targets, but it is highly improbable that the targets will be hit," Roy said.
Roy did not name competition but recently, the Aditya Birla Group forayed into the paints segment with the launch of "Birla Opus." It has set targets of ₹10,000 crore revenue and achieving profitability in the next three years.
Birla Opus is also offering dealer discounts, in addition to its limited-period promotional offer of a 10% volume discount across all water-based paint products.
The MD & CEO of Berger Paints said that pricing does not necessarily impact consumer sentiment. "The problem is that the customers want the best quality product. They don't want a 5-10% price off in terms of pricing. They are interested in getting a good quality product, apply it properly and available at the right place," he said.
However, he mentioned that that Birla Opus' effort is a scale different from all other new entrants in the past.
Roy further added that the company will not engage in the game of price cuts. "I don't see us reacting in that manner," he said, adding that the company will act as and when required.
Explaining the dynamics of the industry, Roy highlighted the example of four cities in Uttar Pradesh that are very close to each other - Ayodhya, Lucknow, Kanpur and Allahabad. Berger is the leader in two of these cities, while Asian Paints leads in the other two. In both cases, both Berger and industry leader Asian Paints have a 40% to 50% market share.
"Asian Paints do not lack product quality or advertisement muscle power or for that matter knowledge of the paint industry and have excellent quality people all around," said Roy and further added that changes in the paints industry are slow and incremental. "It is not like you bomb and you flatten the surface and then you become the leader suddenly. It is one-on-one fight at every place, which is time taking and that's why we are of course cautious, but we're not worried (about rising competition)," Roy said.
The Berger Paints MD & CEO also does not see industry wide margins being impacted and that the company will continue to operate in the 15% to 18% margin band, something that they have
(Edited by : Hormaz Fatakia)
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