Berger Paints plans to enter non-paint home decor business

It seeks shareholders' approval to diversify the portfolio

Berger Paints, the country's second-largest paint company, is planning to foray into the home decor business vertical and launch a basket of products other than paints — which has so far been its sole focus area since the company's inception in India.

In a notice to BSE, the company said it is "considering the business opportunities available in various areas relating to the home decor and construction industry as well as adhesives and other related materials".

The company will be leveraging its existing manufacturing facilities and the marketing network to take this new venture forward in the initial days.

While the company is in the process to evaluate the possibility of entering at least two new sub-segments in the decor business, it has first sought shareholders' approval as it involves modifying the company's Article of Association — a document specifying regulations for the company's operations, purpose, layout to achieve tasks within the organisation and handling financial records.

"We are in the process of studying the potential in these segments but are seeking shareholders' prior nod. In case an interesting opportunity opens up in the near foreseeable future, we'll be ready to tap the opportunity if we have the prior consent of our stakeholders," said the company's Managing Director (MD) and Chief Executive Officer (CEO) Abhijit Roy.

Under consideration is the entry into segments such as sealants, adhesives, doors, windows, wooden floor and laminates, tiles, decorative items made of brass and copper, industrial flooring and various items made of wood, board, aluminium and other materials.

Although the company is seeking shareholders' approval to enter a basket of new segments, it is not expected to enter more than 2-3 segments in the initial days. 

"The paints business is going to remain the focus area for the company, although we may enter another 2-3 segments," Roy said.

So far, Asian Paints, the market leader in the decorative paints business, has a similar line of business apart from paints.

According to the industry sources, the home furnishing industry's market in the country is estimated at around Rs 31,000 crore, which is witnessing a near nine per cent annual growth. The industry's market is expected to touch at least Rs 40,000 crore by 2020.

Lately, the company has been on an acquisition mode to diversify its paints business with low ticket acquisitions and joint ventures with Japanese firms. From having just a product portfolio of decorative and automobile paints, the company has added marine, industrial and insulate paints while increasing its wooden paints vertical.

Over the past five financial years (FY), the company's topline has more than doubled from Rs 3,331 crore in 2012-13 to Rs 5,051 crore in 2016-17.

However, the company's standalone net profit was impacted in the fourth quarter of the last FY, which dipped by over 21 per cent at Rs 74.97 crore. Roy blamed tepid buying in the post demonetisation regime as the main culprit behind it.