Berger Paints seeks investors’ nod to expand product range
Berger Paints looking to expand only in ‘related’ areas immediately, will not launch products like wall tiles or laminates in the foreseeable future, says CEO Abhijit Roy
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Kolkata: Berger Paints India Ltd said in a regulatory filing on Monday that it was seeking shareholders’ approval to expand its product range, following in the footsteps of industry leader Asian Paints Ltd, which has already launched various new products such as adhesives, painting implements and waterproofing solutions.
While seeking approval to expand the scope of business, Berger has said in its notice to shareholders that it may, going forward, offer a wide variety of home decor and home improvement products and services such as adhesives, tiles, wooden flooring, laminates, Venetian blinds, waterproofing solutions and even decorative items made of , brass, copper and other metals.
But managing director and chief executive officer Abhijit Roy said Berger was looking to expand only in “related” areas immediately, and will not launch products such as wall tiles or laminates in the foreseeable future.
The company is asking for shareholders’ approval to an “enabling resolution” so that it could freely expand in any direction in the future, he added.
Berger’s aim is to go for “low-hanging fruits” within the construction sector, leveraging its distribution network.
A research team is currently weighing how the company could maximize the exploitation of its core competencies, and a concrete plan for diversification will emerge only in 2-3 months, according to Roy.
Asked if Berger was looking to invest in creating manufacturing capacity for the new products in the pipeline, Roy said the company could manufacture products on its own or outsource them from vendors, but there was no immediate plan to make large investments in its production facilities.
The new products are expected to offer a better profit margin, said a sector analyst who did not want to be named because he does not track Berger.
Margins are under pressure in the decorative paints market because of intense competition, and Berger is the second company looking to bring more profitable products into its portfolio.
Earlier this month, Berger announced that it had concluded a deal to acquire Saboo Coatings Pvt. Ltd for Rs81.77 crore to boost its industrial coatings business.
Berger is also acquiring a 51% stake in Saboo Hesse Wood Coatings Pvt. Ltd for Rs1.5 crore, a joint venture with Germany’s Hesse Shares GmbH, which produces wood coatings.
In fiscal 2017, Berger reported a consolidated net profit of Rs463.61 crore, up 9.18% from the previous year, while revenue grew 7.83% to Rs5,050.45 crore.
The company said in an investor presentation recently that in the current fiscal it expected robust growth in its decorative paints business because of an expected good monsoon and increased spending by the government on infrastructure projects.