Paint companies recently dropped the prices following the decline in raw material costs. This comes as a benefit to the consumer. While competition has increased in the category, companies say they are not apprehensive of it.
Asian Paints, the largest player in the segment, and Berger Paints cut prices in the quarter ended March. Asian Paints cut prices by 3.7 per cent, the company said in its earnings call.
Berger Paints said it cut prices by around 4.5 per cent in January. The company took a marginal price cut, of 1 per cent, in November. Companies are betting on product launches to drive growth.
Amit Syngle, Managing Director and Chief Executive Officer, Asian Paints, said, “New products form a sizable part of our overall revenue. They are 11-12 per cent of the top line … it gives higher profitability to the network.”
Abhijit Roy, Managing Director and Chief Executive Officer, Berger Paints, told investors on its conference call after announcing its results that the company was more comfortable now than it was earlier with competition in the sector.
“We were more anxious earlier. I think after two months, we are bearing down to the thought that this competition is serious, but it has not started impacting us in a strong way as of now. We will continue with our thoughts and the way we normally do business,” Roy said.
Talking about competition, Syngle told investors: “It doesn’t impact the market. And there have been so many new players in the last two decades.”
These comments come on the back of Aditya Birla Group making an entry into the paints business with Birla Opus.
The newest entrant has priced its products at a discount compared to Asian Paints.
Roy told investors the company was not going to react to any new competitor.
He said, “Most of the players are going to retain their share or probably improve at times. Frankly speaking, after these two-three months have gone by, I don’t see any change on the ground, which is significant enough.”
Source: Business Standard
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