Berger Paints plans new plant in south India

Berger Paints India is planning to set up a greenfield plant in south India, a top company official said here Friday.

"We will set up a water-based paints plant in south India on an investment of Rs.100 crore. It will have a production capacity of 100,000 tonnes per annum," said Kuldip Singh Dhingra on the sidelines of the company's annual general meeting.

The major paints maker will set up the plant either in Karnataka or Tamil Nadu over the next two years, Singh told reporters.

The new venture will be funded through internal accruals and conversion of warrants.

The company is investing in water-based paint as the segment is growing faster than the solvent-based paints, Dhingra said.

According to him, while the annual industrial volume growth of the water-based segment is around 15-17 percent, that of solvent-based paints is only 8 percent.

Eighty percent of the company's business is decorative coatings, with the remaining 20 percent being a mixed bag of protective, automotive, general industrial and powder coatings.

The company is also putting up a Rs.5-crore plant in Goa to make 500 tonnes of resin annually, which would be commissioned by December.

Emulsion and resin are used for making water-based and solvent-based paints.

Berger is also setting up an emulsion plant in Gujarat next to its existing facility at a cost of Rs.26 crore.

The plant, with an annual production capacity of 2,000 tonnes, will be commissioned by April 2010 and will help bring down yearly cost of inputs for water-based paints by 15 percent.

However, the company has shelved plans for setting up of an automative paint plant near Pune because of the economic slowdown.

"The decision to build an automotive paint plant in Pune has been deferred following the slowdown in the automobile market. We will take a call once the sector starts reviving," said managing director Subir Bose.

Berger's current paint making capacity is 200,000 tonnes a year, of which 60 percent is water-based, Bose said.

The company is expected to post a 30 percent profit growth this fiscal.

"Last year was an anomaly, but this year we expect to achieve about 30 percent growth in our net profit," Dhingra said, adding that sales were expected to grow 12-13 percent this fiscal.

The company posted a net profit of Rs.88.7 crore last fiscal.