KOLKATA: Country’s second largest paint maker Berger Paints India Ltd Monday said it aims to grow in Russia and was also evaluating inorganic growth in the country while continues to pump in capital in the domestic market.
The company had earmarked Rs 200 crore in the current fiscal toward modernisation in the existing units and greenfield units in the domestic market.
Berger is also constructing its first colourant facility at Rishra in the home state of West Bengal.
“We are looking at opportunities to grow in Russia. Growth through inorganic route is also been evaluated,” Berger chairman Kuldip Singh Dhingra told reporters on the sidelines of the 95th AGM.
When asked about details of the target and funding plans, he did not wish to elaborate saying “we will cross the bridge when it comes.”
The company has been in talks with a few Russian firms which owns a brand and have a manufacturing facility but no final deal had been stuck yet, sources said.
Replying to the shareholders at the AGM, Berger managing director Abhijit Roy said, “The Russian operation is currently making losses, but we hope to make a turnaround in the next two years.”
Berger had to make impairment adjustment of Rs 28.60 crore in the last fiscal on account of accumulated losses by the subsidiary controlling Russian operation due to downturn in the economy.
Roy said they are building its first colourant unit at Rishra unit at an expenditure of about Rs 45 crore and it would be completed in December this year.
The company last year had completed the emulsion facility here at a capex of Rs 30 crore.
“In the current fiscal, we propose a capex of Rs 200 crore. Of this, Rs 60-65 crore would be used for modernisation and upgradation of existing facilities and most of the rest will be spent towards the new plant in Uttar Pradesh,” Roy said.
He said the company was also working on production of paints from natural sources.
The company may also foray into writing ink, Dhingra said.
The automotive slowdown will not hurt the company’s bottomline as exposure in the sector is in single digit of its total revenue.
Last fiscal the company had acquired 51 per cent stake in Berger Rock, formed with Japanese automotive paint company Rock Paints.
“We are also trying to acquire new clients in automotive and focusing at other industrial segments,” Roy said.
Speaking about the current fiscal, Roy said though input material prices had eased, there are some apprehension about economic headwinds.
However, Berger will be able to maintain its growth trajectory, he said.
Meanwhile, in the first quarter ended June 2019, the company reported a consolidated net profit of Rs 176.4 crore, a rise of 32 per cent over corresponding quarter of 2018-19.
Net revenue for the period also rose to Rs 1716.5 crore during the quarter against Rs 1483 crore revenue in Q1FY19.
Source: Press Trust of India