‘We may feel some heat in the second quarter’

At a turnover of Rs 2,660 crore, Berger Paints is now the second largest paint company in the country. In an interview to Business Line, the Managing Director, Mr Abhijit Roy, explained his vision to take company to newer heights.

Berger is exploring acquisition opportunities in India and abroad. Will you kindly elaborate the strategy behind?

In India, we are primarily looking forward to add volumes. In abroad, the guiding force is access to technology which can be brought back to India.

How did you gain from acquisition of Bolix in Poland?

As a business, Bolix is turned around. We are now planning to launch “Bolix EIFS” – an energy insulation finishing system – in India in another couple of weeks. It guarantees 30 per cent savings on electricity bill.

Is EIFS a paint? How costly is this product?

It is not a paint. It’s a system by which we put a thick layer of foam on the wall and paint it to protect from weather. This technology is popular in Europe to protect from cold. In India, we developed it for energy savings.

It will be useful for businesses such as call centres, cold storages, etc which remain operational round the clock. The product is tested at the Central Building Research Institute (CBRI) at Roorkee.

The product is 12-15 times costlier (per sq ft basis) than normal paint. But the cost can be easily recovered through savings on electricity bill.

Which technologies you are now eyeing to access through future acquisitions?

We are looking forward to technologies in various product categories such as industrial paint, high end wood coat. Wood coat is used in premium wood products such as kitchen cabinet, etc.

A good part of your raw material should be import linked. Aren’t you affected by devaluation?

Base oil and titanium di-oxide constitute 50-60 per cent of our raw material cost. While base oil is linked to crude prices; titanium di-oxide is imported.

While crude prices recently eased, the gains were eroded by a sharp devaluation of rupee.

To keep pace with cost push, we resorted to three per cent price revision in May. We expect prices to remain stable at this level.

We have managed a moderate growth so far. We may feel some heat in the second quarter. However, things should improve in the second half.

Considering the down turn, shouldn’t you go slow on capacity addition in India?

We are not anticipating any major slow down in India. We are already expanding our Indian capacities from 24,000 tonnes in 2011-12 to 44,000 tonnes per annum (tpa) by April-May 2013 through a mixture of greenfield and brownfield ventures.

We have just doubled the capacity of Rishra unit in West Bengal to 6,000 tonnes. We may expand it further in the future.

Apart from Poland, you are also present in Nepal and Russia. How are you doing there?

We are doing exceedingly well in Nepal. It was doing a business of less than Rs 2 crore, when we acquired it from Jenson & Nicholson seven years ago. Today it clocks approximately Rs 70 crore turnover. It’s a small market but margins are better than India.

We used to export paints to Russia during the rupee-rouble trade. To maintain presence, we had set up a small 1,800-tpa greenfield unit in Southern Russia, three years ago. It is a tough market with rules that are difficult to follow.

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