Berger Paints upbeat on Russia unit after World Cup contracts
Berger Paints, which has a manufacturing facility in Russia for the past four-five years, is now looking to scale up and is even weighing the possibility of acquiring assets in that country.
The company's Russian arm, Berger Paints Russia, has painted three stadiums and two airports. The size of the orders was Rs 7 crore, which is almost equal to its turnover of Rs 7 .93 crore in 2017. "Last year, the Russian unit's topline was just Rs 7-8 crore. But, the order for the three world cup venues and two airports will help the turnover reach Rs 15-16 crore in the current fiscal," said Abhijit Roy, managing director & CEO of Berger Paints.
"We have painted three stadiums - Rostov Arena, Volgograd Arena and Kaliningrad with material supplied by Berger Paints Russia. Moreover, two airports - Rustov and Volgograd - was given a fresh makeover. The company has used a special grade of silicon-based paint from the WeatherCoat range using Indian technology for the stadiums," he added.
Berger Paints, which has a manufacturing facility in Russia for the past four-five years, is now looking to scale up and is even weighing the possibility of acquiring assets in that country. The company is scouting for opportunities among smaller paint makers in Russia, which will cost less than Rs 200 crore and has a presence in both decorative and industrial paints.
“Ideally, we are a risk-averse company, and will look at acquisitions of smaller local companies with a good distribution presence and goodwill in the region. If required, we may mull joint ventures in Russia, too,” Roy said.
The company is also looking to scale up sales of industrial coatings in Russia. The country imports around half of such chemicals it consumes from Europe. Berger Paints is also looking to export these chemicals from India, which is a more economical production base, Roy said.
Roy, who is also the president of the Indian Paints Association, has urged the government to bring down the goods and services tax (GST) rate to 18 % from 28 % ahead of the GST Council meet scheduled for July 21.
"The paint industry in India is currently estimated at around Rs 50,000 crore. Rationalising the tax rate to 18 % would result in an annual loss of around Rs 5,000 crore translating to around Rs 415 crore of revenue loss on a monthly basis which is negligible when we consider the fact that the average collection under GST for 2017-18 was around Rs 90,000 crore per month," he said.