Berger Paints Expands in South and West India, Increases Production Capacity

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Berger Paints Expands Retail Presence and Capacity to Meet Rising Demand

Team FS

11/Jun/2024

Key Points:

Berger Paints is expanding its retail network across southern and western India.
The company plans to install over 8,000 new Colorman printing machines this year, with a significant portion in new areas.
Berger is investing ₹1,800 crore in new production facilities in Panagarh and Khurda to boost capacity.

Berger Paints India Ltd, the second-largest paint company in India by market share, is making significant strides to expand its retail presence and production capacity to meet the rising demand and stay ahead of the competition. The company is focusing on broadening its reach in the western and southern regions of the country while also enhancing its production capabilities in the east.

Expanding Retail Network

Berger Paints is strategically increasing its retail network in key states across southern and western India. The targeted states in the south include Tamil Nadu, Telangana, Karnataka, and Andhra Pradesh. In the west, the focus is on Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, and Rajasthan. This expansion is aimed at capturing a larger market share and making their products more accessible to consumers in these regions.

Abhijit Roy, the CEO of Berger Paints India, highlighted the company's aggressive approach in installing Colorman printing machines, which are crucial for expanding the dealer network. Traditionally, the company installed around 4,000 such machines annually. However, last year, Berger accelerated this pace, installing 7,300 machines. This year, they plan to surpass 8,000 installations, with ambitions to reach 9,000 next year. Notably, 65% of these new machines will be installed in new areas, while the remaining 35% will fill gaps in existing markets.

Strategic Ground Presence

Strengthening their presence goes beyond just expanding the dealer network. Berger Paints is also focusing on aligning other key stakeholders, including painters, architects, and builders, to ensure a comprehensive market presence. Roy believes that within the next three to four years, Berger Paints will have a strong representation in all the targeted regions, solidifying their market position.

This strategic expansion comes in response to increased competition, particularly from Grasim Industries, which launched its Birla Opus brand earlier this year. Grasim aims to disrupt the paint industry with a target of ₹10,000 crore in revenue within three years. In this competitive landscape, Berger’s methodical approach to entering new markets is expected to yield positive results, according to industry analysts. Abneesh Roy, Executive Director of Research at Nuvama Institutional Equities, noted that Berger Paints has successfully transitioned from a low-end player to a strong contender in mid- and top-end markets over the past fifteen years.

Major Investments in Capacity

In addition to expanding its retail network, Berger Paints is investing heavily in increasing its production capacity. The company plans to invest ₹1,800 crore over the next three years to establish new production facilities in Panagarh, West Bengal, and Khurda, Odisha. The Panagarh project is valued at ₹500 crore, while the Khurda project will see an investment of ₹1,300 crore. These facilities are expected to be operational by the first quarter of the financial year 2027, funded through internal accruals.

These new plants will significantly boost Berger’s production capabilities, ensuring they can meet the growing demand for their products. The investments reflect the company's commitment to maintaining its competitive edge and supporting its expanded retail network with adequate supply.

Conclusion

Berger Paints India Ltd’s strategic expansion and significant investments underscore its commitment to maintaining its market position and meeting the growing demand in the paint industry. By enhancing its retail presence in southern and western India and increasing production capacity in the east, Berger Paints is well-positioned to fend off competition and continue its growth trajectory.

The company's methodical approach to expansion, combined with its focus on aligning key stakeholders and substantial investments in new production facilities, positions it for continued success in the dynamic and competitive paint industry. As Berger Paints continues to implement its expansion strategy, it is set to become an even more formidable player in the market, capturing new opportunities and driving growth in the coming years.

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