Nippon Paints plans Rs 400 cr expansion

Japan-based Nippon Paints will invest Rs 350-400 crore in India for its various expansion projects over the next four years.

Speaking to Business Standard, Ramakanth Akula, vice-president (decoratives), Nippon India, said the company would invest the proposed amount till 2014. The plans include setting up of two more manufacturing units and introducing new products in high-end and medium segments.

The company, which started operations in south India in 2006, recently commissioned its first plant for decorative paints at Sriperumbudur, near Chennai. The plant has a capacity to produce 20,000 kilo litre paint a year and can be increased to 50,000 kl.

“So far, we have invested around Rs 65 crore in the plant and will invest another Rs 15 crore in 2010,” he said, adding another Rs 30 crore would be invested by 2012 to reach the maximum capacity.

“By that time we will also start looking at putting up new facilities in other parts of the country and have a pan- India presence over the next four years,” said Akula.

The paint major recently entered Gujarat and Maharashtra. In Mumbai, it plans to set up a manufacturing unit for industrial paints at Taloja this year and has acquired around 18 acres of land for the purpose. Under phase I, it would invest invest around Rs 60 crore to set up an 8,000 kl per annum capacity plant, expandable to 15,000 kl.

In phase II, another Rs 30 crore would be invested, he added.

As part of the expansion plan, Nippon is also looking to increase the number of dealers to 6,000, of which 2,000 will be exclusive shops, from 400 now (325 in south and 85 in the west), he added.

By March next year, the company will also localise its entire production. Right now, it imports 60 per cent of its products from the group’s plants abroad.

It has set a target of Rs 500 crore turnover by 2014 from Rs 135 crore currently.

According to Akula, the Rs 16,000-crore paint industry is predominantly dominated by the decorative segment, which contributes around 70 per cent to the total industry.

He is hopeful that the industry would close the current fiscal with a growth of 16 per cent. “We expect the prices of decorative paints to increase around four per cent in the next quarter from the current average level of around Rs 80-90 a litre.”