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Berger to expand Pune plant, set up new units in Assam

Berger Paints sees revival in demand, particular in the subdued rural markets after a likely good monsoon.

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Berger Paints, third-largest paint manufacturer in the country, is going for capacity expansion with an eye on the revival of demand.

The Kolkata-headquartered company plans to expand its power coating plant at Jejuri near Pune.

It is also setting up two plants in Assam, near Guwahati and Tejpur, to take benefit of income and excise tax benefits to be commissioned by December.

Additionally, capacity at its Nepal plant, under its subsidiary Berger Jenson & Nicholson is being expanded to cash in on the rush to rebuild habitations destroyed in April 2015 earthquake.

The domestic investments come as paint sector is showing revival and demand set to improve more following a likely good monsoon, company officials told analysts.

"We are expanding our Jejuri plant in Maharashtra to make liquid paints besides powder coating paints. Factories are also being set up to address supply issues in north eastern part.

This plant would be operational well before March end and eligible for tax benefits. The capacity would be 36,000 kilolitre a year comprising both water and solvent based. There would be room for expansion," Srijit Dasgpta chief financial officer, Berger Paints, told analysts.

While Dasgupta didn't elaborate on the capex, he said Berger would be investing Rs 140-150 crore annually.

Berger sees revival in demand particularly in the subdued rural markets post a likely good monsoon.

"Last couple of years have been average to below average in terms of monsoon and we expect that following optimistic forecast for this year hopefully an uptrend will happen. Growth in Tier III cities has slowed down and is now lower than Tier II and I because of macro-economic factors including poor monsoon. We are hopeful that better monsoon would impact smaller town demand," the official said.

While these are all in the decorative paint segment, Berger also has big plans for its auto paint business, which was last year divested to an existing joint venture with Nippon Paints of Japan.

"Automotive is a now a small part of our turnover. Our new initiative with Nippon paints JV, BNB Coating will now address the four-wheeler category or the passenger cars. With technical competence of Nippon Japan and our relationship management and low-cost manufacturing capabilities, we would be able to compete successfully," the official said.

The Japanese paint major owns 51% in BNB Coating India with the balance being held by Berger.

Meanwhile, US-based Sherwin Williams's coating paint business, which Berger acquired in 2013, has turned around, the CFO said.

"The operations have broken even on the post-tax profit level with little bit of profit being reported at the end of March quarter," he said without disclosing further.

US-based Sherwin Williams Paints sold off its Indian exterior architectural paint business to Berger's subsidiary Brushworks Paints Ltd.

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