Second quarter should be good, says Berger Paints
It (market) improved in July, is getting better in Aug; Sept will be even better
Berger Paints posted slightly weak first-quarter numbers with 9% revenue growth and mid-single digit volume growth. In an interview, Abhijit Roy, managing director and chief executive of Berger Paints, discussed earnings, the impact of the goods and services tax (GST) and the outlook for the company. Roy said GST would in fact be slightly margin accretive for the company. He however said that it was too early to say whether there would be a shift to the organized sector from the unorganized market. On the business front, Roy said demand recovery was seen in the months of July and August and that he expects to see double-digit volume growth in FY18 if September too fares well. Edited excerpts:
Now that a lot of this goods and services tax (GST) business is behind us, tell us if the market is stabilising and in the run up to the festive season, what are the volume trends looking like?
It is improving. July, it improved from what it was in June and August is better and September should be even better. So second quarter should be good.
Second quarter better than second quarter last year or similar to last year?
No, it will be better than last year possibly. How much of your GST payment you will recover back through input tax? What will be the split in your case? I am trying to go from the micro to the macro. On Tuesday, we got this big GST number Rs92,000 crore but some of it will have to be paid back as input tax credit. We do not know how much that number is. So in your case, what part of the GST are you expecting back as input tax credit?
We have not worked out the exact numbers, but I can only say that as far as GST is concerned, earlier whatever we were paying in terms of taxes on various platforms which is excise, VAT, etc. here it will be slightly better off in the sense that input tax credit, when we take it, it will be marginally, margin accretive meaning it will improve margin a little bit. So you will get more credit than you got in the previous regime? Slightly, because we have some of the factories in West Bengal where we were not getting credit for sending material outside the state. Now, we will get that benefit as well.