Drop In Crude Oil Prices To Boost Margin, But Price Cut Unlikely: Berger Paints CEO Abhijit Roy

Berger Paints India expects the recent drop in crude oil prices to boost their margins, the company’s managing director and chief executive officer, Abhijit Roy, said. Crude prices on Tuesday hit a 33-month low, with Brent crude falling below $70 a barrel. 

“In the last few months, raw material prices have been relatively stable. As crude prices go down, with further decreases expected, it will not immediately impact us across the board, but some of the raw materials will get impacted immediately,” he told NDTV Profit. 

Roy added the effect of the price drop in crude oil will be reflected from the third quarter onwards. 

Talking about the company’s performance, the Berger Paints executive said he expects the Ebitda margin to improve from the 16.9% reported in Q1.

“Normally, our margins are in the range of 15-17% but this time it will cross the 17% mark, and we will be at a higher level slightly, largely because of the raw material prices softening,” Roy said.

Despite the drop in raw material costs, Berger Paints is not looking at a price cut.

“It’s not only crude, but the demand-supply equation, too, which has to be kept in mind. Raw material prices can change based on the changing world scenario, therefore I don’t see us dropping prices,” he said.

“Demand is there, the third quarter is going to be reasonably good and so there is no need (for price cuts),” the top executive added.

Talking about the volume growth for the company, the Berger Paints CEO explained that numbers were likely to stabilise from September onwards following a muted performance in August due to excessive rains.

“September looks good as of now, maybe better than expected. We should bounce back in September quite a lot. In Q3, the volume growth will come back to somewhere around the mid-teen level possibly,” he predicted.