Berger's largest plant gets delayed on Telangana agitation

The commissioning of Berger Paints’ biggest plant, at Hindupur in Andhra Pradesh, has been delayed due to the ongoing agitation over the formation of separate state of Telangana.

“The commissioning of the Hindupur plant has been pushed back due to the Telangana agitation. The plant was supposed to start operations this month. The government permissions required at the fag end of the completion of the plant, including power connection, have been delayed as there has been widespread absenteeism of officials due to the agitation,” managing director Abhijit Roy said.

The water-based paints and emulsions plant would have an initial capacity of 7,000 tonne a month scalable to 20,000 tonne.

The Hindupur plant, considered to be one of the most modern paint plants in the world having robots and minimum human workers, was supposed to come up in May-June.

Also, Berger, which at the beginning of September raised prices, doesn’t see any need to go for further hike in coming days.

“We expect rupee to remain at this level of 60-62 to a dollar range. Prices of most of the raw materials have stabilised of late, but have an upward bias,” Roy said on the sidelines of the annual general meeting of Indian Paints Association.

Among the raw materials the industry has been lobbying for rationalisation of import duty on titanium dioxide, which consists of 15-18% of the purchase basket of a paint company.

“We are being forced to import most of the titanium dioxide as there is just one producer in India, an entity of Kerala government, whose production capacity is insignificant compared with annual imports of Rs 4,000 crore. But the import duty on this is 10%, which is much higher than 7.5% applicable to other imported raw materials. We are trying to explain to the government that duties on titanium dioxide should be brought at par.”

Roy sees a favourable monsoon leading to higher paints demand in the second half of the year.

Monsoon has an immediate impact on the need to repaint houses while it has a lag effect on agricultural income, which, in turn, impacts demand for paints.