Berger Paints Initiating Coverage - Myiris.com

More documents

Recommendations

Info

Second largest paints company in India Management profile Name Designation Remarks Berger Paints Initiating Coverage Company Background Berger Paints started operations in 1923 in a small unit in Kolkata as Hadfields India Ltd. The current promoters, the Dhingra’s , entered the company in 1991 after acquiring UB Group’s stake in the company. Berger Paints is the second largest decorative paints company in the country. It derives almost ~80% of revenue from decorative paints and the balance from industrial paints -largely automotive and protective coatings. It has a wide variety of product portfolio including interior and exterior wall coatings as well as metal and wood paints. It has strong and well established brands like Berger Silk, Berger Rangoli, Berger Illusions, Berger Weather Coat, Jadoo Enamel, etc that span across mass to premium category of the market. It has eight manufacturing facilities with a total capacity of 306,000 MT across India and four facilities overseas. It has 82+ depots with a widespread distribution network of 14,000 dealers across the country. Berger Paints has six subsidiaries and two JVs located across geographies including Cyprus, Russia, Poland and Nepal. The company has undergone many change of hands - In 1947, it was acquired by British Paints (Holdings), UK, which renamed the company as British Paints (India). The UK company was then acquired by Celanese Corporation, which later sold the Indian company to Berger, Jenson Nicholson Ltd in 1969. In 1983, the company was rechristened as Berger Paints India and it started using the trade name of Berger. Kuldeep Singh Dhingra Chairman Mr. Dhingra, the Chairman, has been a director of the company since July, 1991. Mr. Dhingra is a graduate and promoter of the company and has a long standing experience in paints and related industries. Gurbachan Singh Dhingra Vice Chairman Mr. Dhingra has been the director of the company since 1993. He is a graduate and has considerable experience in the paint industry, especially in its technical aspects. Subir Bose Managing Director Mr. Bose is a B.Tech (Chemical) from IIT, Kanpur & PGDM from IIM, Ahmedabad having over 36 years of work experience. He started his career with Asian Paints and prior to joining Berger in 1984, he was associated with Abukon Nigeria Ltd. Abhijit Roy Director and Chief Operating Officer Srijit Dasgupta Director and Chief Financial Officer Source: Company, Emkay Research Snapshot on subsidiaries and joint ventures Name Holding Remarks Mr. Roy is a B.E (Mech) from Jadavpur University, Kolkata & PGDM from IIM, Bangalore having over 19 years of work experience. He started his career with Asian Paints Limited and prior to joining Berger, he was associated with ICI (India) Limited. Mr. Dasgupta is a B.Sc (Hons) from Calcutta University, AICWA & Company Secretary having over 27 years of work experience. Beepee Coatings Private Limited, India 100% Entire facility dedicated to processing of company unit's. Recorded sales of Rs 102 mn and PAT of Rs 6 mn in FY10. Berger Jenson & Nicholson, Nepal 100% Commenced its second decorative plant with a capacity of 18,000 MT in FY10. Recorded sales of Rs 305 mn with PAT of Rs 34 mn. Berger Paints (Cyprus) Limited, Cyprus 100% It is a SPV for overseas investments for Berger Paints Berger Paints Overseas Limited, Russia 100% It was affected by the global slowdown in FY10 and hence, recorded a net loss of Rs 15 mn in FY10. Lusako Trading Limited, Cyprus 100% It is a SPV for overseas investments for Berger Paints Bolix S.A., Poland 100% Acquired in FY09 for USD 38 mn; Technology leaders in External Insulation Finishing Systems (EIFS) in the B2B segment in Poland and neighbouring countries such as Ukraine, Russia and the Baltic states. Berger Becker Coatings Private Limited, India 49% A joint venture with Becker Industrial Coatings, it offers a range of wood coating products BNB Coatings India Limited, India 49% The Company’s joint venture with Nippon Bee Chemicals Co. Ltd. of Japan (NBC) for manufacture of coatings for plastic substrates of automobiles. Source: Company, Emkay Research Emkay Research 27 June 2011 2
Holds 17% market share with 14,000 dealers and 7,700 tinting machines Increasing its capacity by 52% over the next two years Berger Paints Initiating Coverage Investment Rationale Second largest player in the decorative paints market… Berger Paints , with a 17% market share, is the second largest company in the Rs120bn worth decorative paints market. This market is characterized as an oligopoly with 4-5 players constituting majority of the market. Berger Paints has a strong foothold in the eastern markets with strategically located plants there. Moreover, it has a strong distribution network including 80+ exclusive stock points and 14,000 dealers to service the decorative paint market across India. Rising consumerism in the country is expected to drive higher demand for decorative paints in future, and we believe Berger Paints is well placed to benefit from this. Competitive landscape Company Decorative market share Competitive position Berger Paints 17% Second largest player in the decorative market. In industrial coatings, it is the leader in the protective coatings market Asian Paints 53% It is the market leader in the decorative segment but lags second in the industrial segment Kansai Nerolac 10% Kansai is the largest player in the industrial segment and is the third largest player in the decorative segment Akzo Nobel 9% Strong player in the premium decorative paint segment Source: Company, Emkay Research Strong place in protective coatings; expect industrial paints growth at 14% Industrial paints constitute 20% of total sales for Berger Paints. Industrial paint market is worth Rs 50 bn and growing at 10-12% every year. The company has strong technical collaborations with DuPont Performance Coatings for automotive coatings. It also commands a strong leadership position in the protective coatings segment, which contributes 50% of its industrial sales . Taking cue from our capital goods and auto team estimates of 17% and 12% growth, we have modeled a 14% growth rate for industrial paints segment in our FY13E estimates. Industrial paints constitute 20% of FY11 sales Source: Company Emkay Research 27 June 2011 3 20% Decorative paints Industrial paints Growing stronger…with considerable size and scale Berger Paints has developed a strong dealer network of 14,000 dealers with 7,700 tinting machines compared to 27,000 dealers and 17,000 tinting machines with Asian Paints. With a strong market foothold in the eastern and northern regions, Berger Paints is gaining momentum in the southern markets with its franchisee stores (40+ in nos.). It plans to scale these stores by 40-50 nos. in the coming years. Further, the company has embarked on an aggressive expansion plan to increase its production capacity by 52%, through the addition of 160,000 MT (Phase I and II at a cost of Rs 1.4 bn) capacity plant (scalable to 320,000 MT) in Andhra Pradesh over the next 2 years. 80%
Page 1: June 27, 2011 Reco Accumulate CMP R
Page 5 and 6: Setting up a 160,000 MT capacity pl
Page 7 and 8: TiO2, 23% of raw material costs, is
Page 9 and 10: Berger Paints Initiating Coverage R
Page 11 and 12: Berger Paints Initiating Coverage P
Page 13 and 14: Berger Paints Initiating Coverage D
Page 15 and 16: Consolidated Financials Income Stat

Berger Paints Initiating Coverage - Myiris.com

Create successful ePaper yourself

Delete template?

Save as template?