Indian paints producer Berger is interested in expanding into Russia with acquisitions as it eyes profitability in operations in the country, the Times of India reported.
Berger already operates in Russia through a step-down subsidiary which has an impairment loss to the tune of over $4 million reported in Q4 of FY19. The losses are primarily on account on forex exchange fluctuations, company officials said.
According to Abhijit Roy, the company’s CEO, the Russian operations of Berger Paints are expected to turn profitable over the next two-three years. A part of this strategy would be to look at acquisition of a profitable business there, primarily a company which is in the decorative paints segment.
“We are exploring opportunities there,” he told reporters on the sidelines of the company’s Annual General Meeting here, on Monday.
In a stock market notification later in the day, Berger said, “At its meeting held on August 5, the Board of Directors recognised that the company is considering investment opportunities in Russia to complement its existing operations. However, no decision has yet been taken in this regard.”
According to Roy, the company is also in the process of de-risking its business following the slowdown in sales to the auto sector. De-risking is being done by bringing on-board clients (within the auto industry). Automobile paint sales account for less than 10 per cent of its total topline.
Berger is “also entering new segments” that include categories in infrastructure sector and across general industries (like pump and compressor paint, among others).
“There is a slowdown in demand from the automobile sector. However, we are de-risking the business by getting new accounts and also by entering other categories across general industries,” Roy said. Sources say the paint industry has seen a 15-16 per cent slowdown in demand from the auto sector.
