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Berger will initially be a production partner for CMP India but the partnership also opens up the possibility of a future joint venture (JV).
Abhijit Roy, managing director of Berger, said CMP would procure paint from the former's VVN plant in Gujarat, which has an installed capacity of 4,000 tonnes a month. “However, we might opt for a JV to enter this segment directly,” he said.
Berger's factories at Jejuri in Maharashtra and in Puducherry would also be used for marine paints products in the near future. The paints would all be sold under the CMP brand in India but Berger expects to gain hands-on experience in the marine coatings business, helping to decide a final plan on foraying into this segment.
Industry officials believe the marine coatings industry, though estimated at only Rs 250 crore, is growing at 25 per cent annually and would do so for another five years. The overall decorative paints segment in the organised sector is estimated at Rs 26,000 crore and poised for eight to 10 per cent annual growth in the near term. “Compared to the decorative segment, the marine coatings industry is expected to grow three-fold in the near term,” an analyst said.
The marine paints JV which is under consideration will not entail substantial investment from Berger, with the existing capacity at its plants and the production technology coming from CMP. Also, Berger has decided to bring in the Bolix brand of insulation paints, which it feels has the potential to become one of the key growth drivers for it. Poland-based Bolix is a 100 per cent subsidiary of Berger Paints India. With this new revenue stream, Berger is also considering a JV with state-owned real estate company NBCC India.