Situation Complicated But Paint Industry Has Growth Potential: Berger

Though the situation remains "complicated", the paint industry essentially provides "growth potential" in view of pent up demand, safe painting solutions, development of rural markets with growth in sales of related non-premium range of products, Berger Paints has said.

Moreover, there is a gradual shift from unorganised to organised players led by better consumer awareness in the segment and per capita paint consumption in India is expected to boost the paint and coatings industry, said the latest annual report of Berger Paints.

"Increased focus on home improvement, stress on keeping the family members safe from infections indicate an opportunity for the paint and coating industry," it said.

Besides, the government's push towards infrastructure growth, combined with the differentiated product offerings, waterproofing, construction chemicals, wood coatings and home hygiene products provide an edge even during difficult times, Berger Paints added.

"The overall thrust on housing for all/affordable housing measures by the government has aided fresh painting demand and will aid repainting demand in future," it said.

FY2020-21 has witnessed "uncertainties and complexities" owing to the COVID 19 pandemic creating overall disruptions.

"Though the situation remains complicated, the paint industry essentially affords potential for growth in view of pent up demand, safe painting solutions, development of rural markets with growth in sales of related non-premium range of products like putty and distempers and various new product launches, aided by a gradual shift from unorganized to organized players led by better consumer awareness," it said.

According to some reports, the Indian paint industry is estimated to have a turnover of Rs 50,000 crore.

With the threat caused due to the COVID 19 pandemic still looming large with sudden spikes in infection resulting in sporadic lockdowns adding to the anxiety and pressure, the scenario still remains somewhat uncertain, Berger Paints added.

Besides, there are other challenges such as entry of new competitors, displacement of migrant workers, hardening of raw material prices including brent crude oil derivatives but so far and Berger Paints has overcome these with "dexterity".

"... beyond the uncertainties, with proper and intricate planning and execution coupled with technological support, human resources, products services and market presence, the Company is well-positioned to take advantage of the additional demand both from domestic and industrial consumers," sBerger Paints said.

The Indian coating industry is expected to attract the attention of new investors and is well poised to take benefit of the favourable demand swing while following the COVID 19 protocols in the near future, the annual report said.

However, it also added factors such as - rising oil prices, production cutbacks of international raw material suppliers, force majeure in some geographies, uncertainty in global vessel movement and supply-demand parity led - to an unprecedented increase in raw material prices and freight charges in the third and fourth quarters of the year under review.

"There has been significant inflation in crude derivatives as well as critical raw materials like titanium dioxide and monomers," it said adding "while a part of these needs to be passed on, the company always counters these through efficient sourcing and innovations in the formulation. Any moderation in prices will have a positive effect on the margins."

For the financial year ended on March 31, 2021, Berger Paints consolidated revenue from operations was at Rs 6,817.59 crore.

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