Value growth of Berger Paints was pulled down in the second quarter to about 7.5 percent due to a de-growth of 30 percent in the automobile business, said Abhijit Roy, MD and CEO of the company.
Berger Paints' topline was below estimates in the second quarter while EBITDA was in-line. Gross margins came in better than estimates.
Roy said that the company saw 13 percent volume growth in decorative business.
“However, we had a de-growth of about 30 percent in the automobile business and so value growth got pulled down a bit in the second quarter to about 7.5 percent,” he said.
“Volume dip has been consistent for the last few months in automotive. We are much more focused on commercial vehicle category which is not doing well, it's de-growing month-on-month. So that’s the problem that we have. We are hoping that this will turnaround,” Roy added. He further said that the auto sector accounts for 8-10 percent in total revenue.
Talking about the rural market, he said, “Tier-II, III and IV are growing much faster than the urban areas. On the year-to-date (YTD) basis, we are at mid-teens in terms of value growth, but much of it is coming from these towns.”
About margins, Roy said, “Margins are a function of many things. One, in terms of prices of raw material which has been benign over last few months. Second, a bit of improvement in terms of premium product sales growth, which has been on the higher side than other products.”