Hemant Jalan, CMD of Indigo Paints, said that they are expecting a revenue growth of Rs 1,500 crore annually. He also said that the operating leverage will improve the margins going forward.
“There is some operational leverage that will continue to kick in for a very long period of time because we are still a relatively small player in a huge industry. We have miles to go before we catch up with the larger players. So, the operational leverage can only serve to improve the margins as we go forward,” he said in an interview to CNBC-TV18.
He also said that going forward the company will look at a shift towards premium products. “As a company grows and as its brand salience grows, there is a slight shift that happens every year in the product mix – a marginal shift towards premuimisation in the product portfolio. As that happens that also tends to push the margins in an upward direction,” he said.
Jalan said that though they have been aggressive with ad spends for the past few years, future increase in ad spends will be less aggressive than other players.
“For the company of our size, we have been doing a disproportionate amount of advertising. That has been a cruel necessity because we have 4 large players in this industry who have been doing tremendous amount of brand building over the last 40 years. So, we have started advertising in the last 5-6 years and we need to outspend at least as a percentage of revenue to be able to get the share of voice in the media on parity with some of the larger players. Our ad spends have kind of reached rough parity with at least 3 of the 4 larger players and the future increase in ad spends may be less aggressive than what they have been in the last 5-6 years,” he said.
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