Berger Paints fears a severe slowdown in automobiles will impact its joint venture with Japan’s Nippon Paint Automotive Coatings.

Berger Nippon Paint Automotive Coatings Pvt Ltd (BNPA), the joint venture company and a subsidiary of Berger, which posted a revenue of Rs 156.6 crore in 2018-19, supplies coatings to cars, SUVs and three-wheelers.

Berger chairman Kuldip Singh Dhingra told the shareholders at the company’s annual general meeting on Monday the company had commenced a resin and paste plant at Hindupur, Andhra Pradesh, in October. This will enhance the capabilities of the automotive business of the company and its joint venture.

However, with the automobile sector going through a downturn, the business of the joint venture is in strain.

“As of now, the auto industry is not looking healthy and when it will turnaround is difficult to say. BNPA will continue to focus on cars and SUVs but as of now there is bit of a headwind because of automotive degrowth,” said Abhijit Roy, managing director and CEO of Berger Paints.

The company, however, hopes that the downturn in automobile demand is only temporary. “The car industry typically has a cycle. It does well in certain years and then goes down. It’s a temporary downturn unless there is a structural issue. But that type of a signal is not present as of now,” said Roy.

The company is also strengthening its presence in the non-automotive industrial segment.

Expansion plans

Berger is setting up a plant in Uttar Pradesh at an investment of Rs 250 crore. The plant, which will produce decorative, industrial, protective coatings as well as resin, putty, emulsion and construction chemicals, is expected to be complete in 2021.

Berger chairman Dhingra has suggested a finetuning of the Insolvency and Bankruptcy Code to ensure balance and fairness of operational creditors in the insolvency process.