NEW DELHI: As Berger Paints is set to complete its 100 years this year, it faces a Rs 10,000 crore challenge from a corporate behemoth that is ready to disrupt the paint industry. The Rs 62,000 crore paint industry, which is dominated by Berger Paints and Asian Paints (both household names), is ready for a shakeup with the entry of KM Birla group’s Grasim Industries, which last year announced Rs 10,000 crore capex for its foray into the sector. Abhijit Roy, CEO and of Kolkata-based Berger Paints, feels the entry of Birlas will disrupt the market, but it won’t be easy for any new entrant to displace the two top players – Asian Paints and Berger Paints.
Roy, who talked exclusively to TNIE, feels Birlas’ entry poses a threat for incumbents like Berger Paints, because they have deep pockets and they are investing big.“They will obviously spend heavily on advertisement, on dealer push, etc. We expect some fireworks there. We are prepared for that mentally. …no one is going to leave or spare market share,” says the Berger Paint CEO. Roy was candid enough to admit that they may see slower revenue growth due to the entry of Birlas.
“Our growth rate has been compounded at 14% over the past 20 years. Maybe, we would lose about 4% growth and come down to 10%,” says Roy. However, he says if they do certain things better, they could grow at 12%. “So, it’s not a major transformational thing that is going to happen as far as we are concerned, and we should still continue to be able to grow at a reasonable pace. This is our feeling,” says Roy. Asian Paints is the leader in the domestic market with about 40% market share, while Berger and Nerolac come distant second and third with 12% and 11% market share, respectively.
Roy says the industry is a difficult market to break into and many new entrants including MNCs in the past have not been able to dislodge the hierarchy in the sector. “The industry establishes itself with dealers, contractors and consumers. All three have to be cracked together in order to penetrate the market. So, that’s not an easy thing to do, and so we don’t expect too much change in the market,” Roy says.
He cites the example of the Bangladesh market, where Berger is the market leader, and Asian Paints has 1/4th of its market share.“A company like Asian Paints, which is by far the largest company in India, is 1/4th our size in Bangladesh. They have tried everything. They have tried the pricing route; they put in two times the number of people on the ground in order to break through the distribution network; they advertised heavily. They tried all the tricks in the trade, and they stand where they are,” says Roy. Berger Paints is a leader in Bangladesh with 55-56% market share. It is the second largest in India, fourth largest in Asia and seventh largest in the world. The company has a market capitalisation of Rs 56,000 crore, and clocked around Rs 8,000 crore in turnover in FY22.-Full interview of Abhijit Roy, MD and CEO of Berger Paints will be carried on Sunday