The success story of Berger Paints

The paints industry is a growing industry in India. And with the rapid growth of construction in India, for housing, commercial and industrial use, the paint industry has an underlying source of unending growth in demand. But just as the growth of our real estate sector has been moderate compared to the real underlying demand, the growth of the paints industry has been relatively moderate at 6 per cent per annum, rather than the 8-10 per cent we should really be growing at, across all core sectors. Only then can we start catching up with China and reach Viksit Bharat by 2047.

Making simple paints is a cottage industry, but over the years, the technology of paints has changed considerably. Two simple examples highlight the change in technology. In earlier times, the painters who came home to paint would hand mix basic colours to get the shade you wanted. And often rooms were slightly mismatched. But today, with sophisticated dispensing machines at retail outlets, one can get an exact shade from a range of 5,000 shades! Older readers will remember when cars had to be waxed and polished for the colours to remain bright and protected – in spite of which they faded over time. Today’s cars with sophisticated paints and coatings remain shiny and clear, in spite of harsh sunlight for most of the year, only with simple washing and dusting.

This evolution of technology and modern marketing requires investment and scale. This has seen the industry consolidating around half-a-dozen bigger players. Their factories are big, employing larger numbers of people (but relatively limited due to automation) and costing several hundreds of crores. And marketing departments are also large for those that want a national footprint. But because paints are bulky, even the offer companies have 5,6 or more factories to be closer to the customers and consuming sectors.

It is against this backdrop that one has to read the interesting story of Berger Paints. It is the second largest paint company in the country behind Asian Paints. Like many Indian companies, it has its historical origin in an old English company, but the real growth came only under Kuldip Singh Dhingra and his brother Gurbachan Singh Dhingra, the Indian promoters, and it is a fully Indian success story. The brothers are now stepping back after a fantastic innings. The company continues to be professionally and transparently managed as in the past. But it now has the able, qualified and hardworking children of the promoters, Rishma Kaur, Kuldip’s daughter, as Chairman, and Kanwardip Singh, Gurbachan’s son, as Vice Chairman.

The industry is highly competitive and management intensive. This means that just because big, rich houses like the Birlas or JSW enter the field, they cannot steamroller their way to the top. The pecking order in the industry has not changed, with Berger Paints still the strong number two.

Today, Berger Paints has adequate capital and strong management depth and leadership to take on any competitors.

Berger Paints will continue to be a company to watch for a long time.