The Managing Director, Berger Paints Nigeria Plc, Mr. Peter Folikwe, in this interview spoke on the challenges facing the paints industry, share price and products of the company, recapitalisation issue, government policy among others.
By Peter Egwuatu
GOVERNMENT is the biggest spender in the economy and there was a time that government was criticized for not patronizing made in Nigeria products. What is the current situation?
The trend has not totally changed although the government keeps talking about it. I was privileged to be at a forum of Chief Executive Officers, CEO’s with Lagos State Governor, Akinwunmi Ambode, recently and I raised this pertinent issue. I told him that I have taken time to review some of his projects where decorative paints were applied. Virtually in all the projects, paints used have faded within a short period of time.
Suffices to note that Berger Paints also quoted for these projects but for whatever reasons, these projects were awarded then to unbranded paint companies. I explained that one of the ways by which government can encourage indigenous companies who fulfil their statutory obligations to patronise their products.
In fairness to Governor Ambode, he has put in place some processes to address these concerns in Lagos State. I hope other governors and indeed the Federal Government with its mass housing scheme will take a cue.
In view of the challenges facing manufacturing firms in Nigeria, is Berger Paints considering capital injection by leveraging on the opportunities in the capital market?
For Berger Paints, we are careful about how we source for fund to do business. The cheapest fund is obviously through the capital market. We were the first paint company to be quoted on the Nigerian Stock Exchange, NSE. It shows that we understand the nitty-gritty of the market and quickly took the advantage of the opportunities in the market then. But, it’s increasingly becoming difficult nowadays to get this cheap fund. Investors are more than ever cautiously looking at the market indicators that will encourage them to invest in a company.
Considering all the challenges facing the manufacturing sector, many high net worth investors are apprehensive of putting their money where returns will not come quickly in view of the state of the economy. As for Berger Paints, we efficiently manage our working capital to ensure that we minimize our exposure or avoid borrowing as much as possible, except for our capital projects. We, however, recently took some money from Bank of Industry, BOI, for the purpose of completing our new ultramodern factory project currently at completion stage. This is a project that will transform our operations and reinforce our position as an industry leader. We are capital market friendly and the shareholders are always ready to support our initiatives. Having existed for over 59 years, our pedigree and brand positioning are very solid. If you take a critical look at Oba Akran, Ikeja today, only few companies that started at about our time then still exist till today. Our pedigree shows that investors will have confidence in our stocks.
Looking at the factors that drive a company’s share price which are the financial performance, demand and supply of shares and market hearsay, what effort is Berger Paints making to attract more patronage to the company’s shares on the Nigerian Stock Exchange?
We have put in place a number of marketing initiatives that will soon start yielding positive results. It will also create more visibility for our brand. Marketing is not just about advertising. There are other legs of marketing such as public relations, media management, and investor relation, etc. We are also working round the clock to make our products visible in the market place. Our products are on high demand because of its superior quality and competitive pricing. Our focus therefore is on the top-line and bottom-line figures without taken our eyes off excellent customer service for repeat purchase.
Some of your competitors have a policy of annual colour that people look out for every year. Are you thinking along that line?
We don’t do colour of the year at Berger Paints as we believe that customer preferences keep changing by the day. We only observe colour of the month. This promotes an array of colours annually. For instance, our colour for this month is lemon–yellow. If you are observant you will notice this at the entrance gate! It is also visible on all our online platforms – website, facebook etc.
Considering the fact that people tend to see Berger Paint’s products as meant for the rich only, is there any strategy being put in place to segment your products without compromising standards?
Fundamentally, every one of us understands that there is no way a company can address every market segment. You obviously have to set your goals around your target market. You can’t target everybody. You need to profile your customers and cascade them into segment. People however migrate from one segment to another, depending on the shift in their economic status at any point in time. The segment we focus on is the medium to the upper class of the economic strata. We are not saying that we are beyond the reach of the lower economic group. We expect people to improve in their economic status.
Obviously, our products are aspiration brands. Everybody out there is interested in our products because of the top class quality. Being that as it may, the way people look at price and value differs. We believe that if you buy value, over time the economics of paying for premium abinitio pays-off into the future because of durability. There is a saying that “cheap is expensive.” A lot of people don’t understand what that means. For instance, if you buy product today for N100; meanwhile, there is an alternative for N30. If you buy the one hundred Naira brand, it will last you for ten years.
Conversely, if you buy the N30 brand it will only last you for two years. If you do your proper arithmetic, the N100 brand is less expensive in the long run, aside saving time and inconvenience on the replacement of the less durable product. Therefore, on the face value, the N100 may look initially expensive, but from the perspective of intrinsic value, you actually get more value than the cheaper alternative.
Last year, there was a brief period of industrial dispute between Berger Paints management with its labour force. What is the current situation?
I will say that the situation is like the Yoruba man will say that “the nose is very far from the head” Laugh…! The situation has been turned around. It was well managed. What management did with the support of the board was to listen to feedbacks from the staff because these are issues that dated back so many years ago. It is just that the issues crystallized a few months ago. There is nowhere in the world that disputes are settled when opponents are at war. They are ultimately settled in a round table discussion and that was basically what we did. We listened to each other understood each other’s grievances and sorted out everything. In a home, husband and wife may disagree but they settle afterwards. The way we settled shows how pragmatic we are as an organization that is ready to listen to all stakeholders. We just hope that the government will one day listen to us like we listened to our staff. I can confirm that relationship between the management and the unionized labour labour is cordial.
They are very committed to their duties. Without being immodest, I can say that Berger Paints has one of the best brains in the chemical and allied paints business. In terms of technical and production processes, we pride ourselves as adding value to the lives of our employees by training and retraining them.
In fact, we encourage personal development, so that every staff can add value to his or her life. We take issue of staff welfare and morale very seriously. For instance, we run a canteen system in which the kind of food you eat there is the type you can eat in any good restaurant around. Our staff members are very happy.
Berger Paints is an eco system. What is your vision for the company in the next five years?
When I was coming to assume duty as the Chief Executive Officer in this company, my decision was to leave Berger Paints someday better than I met it. I will say we are not fully there yet, but a number of initiatives we have executed are aimed at achieving this singular objective. One of the objectives we aim to achieve is to change the route to market dynamics because if you don’t get your
route right, your topline will be threatened. As mentioned earlier we are completing our new factory which will offer innovative products of international quality standards. This will no doubt enhance our leadership role in the paints business in Nigeria. Our leadership is not only in terms of numbers but also in product quality, customer service delivery and a host of other performance metrics.