Price hike in March will help us neutralise higher raw material prices: Abhijit Roy, MD, Berger Paints

In a chat with ET Now, Abhijit Roy, MD, Berger Paints, says Budget's boost for affordable housing and company's announced price hike in March would increase firm's profitability.

Edited excerpts:

Against an expectation of a dip in top line, you have managed to post a 4.9 per cent growth, can you break it up in terms of volumes and realisations?


Volumes were approximately around double digits for the decorative business line, while for industrial business it was much lower, in fact our two divisions posted negative growth. The scooters and the two-wheeler division had a tough time because of the demonetisation and consequently the business took a hit but decorative business was pretty okay. In November, we suffered due to note ban, but normalcy returned in December and continued in January.

What is your expectation in terms of future trend, volumes pick up?

We expect a fairly good fourth quarter. We have declared a 3 per cent price rise effective March 1, which should help us increase our profitability. Our third quarter profits were impacted largely due to the base effect and rise in raw material prices since April-May onwards. So, the announced price hike in March will help us neutralise the impact of rise in raw material prices.

What are your expectations on margins, considering the higher crude oil prices and your announced price hike?

That's right, once we have this price increase sorted out from March 1, we will be able to more or less neutralise the impact of the price change and therefore 14 per cent will be our base level, which we should achieve comfortably.

Will higher oil, titanium dioxide prices impact your overall margins?

Oil prices has not really impacted us so much, the titanium dioxide prices has gone up..

Can you explain how you plan to battle out against higher titanium dioxide prices to protect your operational profit?

We plan to cover the higher titanium dioxide and oil prices with the announced 3 per cent price hike. The oil prices have impacted less than the titanium dioxide as the raw material prices are concerned, but we are more or less confident that we should be able to recover fully through this price increase.

In terms of outlook, what can you indicate to investors about the sales as well as profit trajectory?

Overall, the outlook looks positive, things have come back to normal now and with the impetus given in the Budget to the affordable housing, we should see momentum ahead, which should improve things considerably.