Berger Paints to invest Rs150 crore in new unit

Berger Paints to invest Rs150 crore in new unit

New Delhi: Berger Paints India will invest Rs150 crore for setting up a new manufacturing unit in Andhra Pradesh, said Abhijit Roy, senior vice-president of sales and marketing.

“We have taken the land already...This will come on stream possibly in one or one-and-half years," Roy told Reuters on Thursday.

Berger Paints, which plans to double its capacity to 500,000 tonnes over the next five years, does not expect capacity expansion to have any adverse effect on pricing, Roy said.

Other Indian paint makers such as Asian Paints Ltd and Kansai Nerolac Paints are also expanding capacity.

Analysts, however, feel the likelihood of the excess capacity pushing down the prices is minimal as demand too is surging at the same pace.

The market is growing 15-17% and in order to hold on to the market share, the company will have to double capacity, Roy said on the sidelines of a news conference.

He said the increase in raw material prices have already been passed on to consumers and any further rise in price is unlikely this year.

“So far (it) does not look like it will go up immediately unless demand surges," Roy said.

The Kolkata-based paint maker also launched a new eco-friendly product on Thursday, which Roy expects to generate sales of about Rs150 million in the first year.

He said although August was a “dull month" for the company due to the rains in North India, he still expects to end the year with sales growth of 18-20%.

Shares of Berger Paints, which have doubled in the past 52 weeks, were up about 4% at Rs118.75 Thursday afternoon in a choppy Mumbai market.