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Financial News

May 2013 Financial News

Berger splits paint portfolio - New boss to focus on Jamaica

May 24, 2013

Berger is already a dominant name in paints, but the new man in charge wants an even bigger slice of a market that has remained soft over six years, coinciding with the period when the economy lost all of its gloss.

Mustafa Turra, the managing director of Berger Paints Jamaica Limited, took over the operation following the retirement of Warren McDonald on May 1, the same day that Jamaica landed a bailout deal with the International Monetary Fund (IMF).

Turra says he will be positioning the company to deliver the best products and service to the market, but his push for growth will require the cooperation of a construction sector yet to reclaim its pre-crisis glory, as well as Berger loyalists willing to spend.

Since 2007, Berger's turnover has stagnated at or around J$1.5 billion. The company grew sales by a modest four per cent last year to finally break through to J$1.61 billion of revenue at yearend March 31, 2013. Operating profit fell, but net profit of J$34.1 million was marginally higher than the previous year's J$33.3 million due to a lower tax bill.

"The current economic situation in the country has put a lot of pressure on our supply chain in terms of increased prices of raw material, because of the depreciation of the Jamaican dollar and tightening in the supply of foreign exchange in the previous few months," said Turra.

"But, having signed the IMF agreement in the beginning of the month, I am cautiously optimistic of the future and we at Berger Paints are working towards yet another strong year for the company, which can add value to our shareholders and other stakeholders," he said.

Unlike McDonald, who held the dual tile of regional managing director for the Caribbean, Turra will only be responsible for the Jamaican operation. It's his first opportunity at leading an operation. His previous postings inside the Indian parent operation has largely been in marketing positions.

McDonald will continue to serve on the Berger Jamaica's board as an independent director.

"As with organisations, there has been a bit of restructuring that has happened with the role of regional managing director. So, while Mr Warren McDonald was the regional managing director and was responsible for operations of all three Berger companies in the region, under the new structure I will be heading only Berger Paints Jamaica Limited," said Turra.

He will report to new regional head Tom Thomas, who will also supervise the other two Berger subsidiaries in Caribbean.

"Berger Paints has had a strong legacy and has been managed professionally in the past, so there will be no major changes in the management or operations of the company going forward. My job here is to ensure that our customers are able to get the best products and service in the marketplace, and we will position ourselves to make that possible," Turra told the Financial Gleaner.

Berger also operates in Barbados and Trinidad and Tobago. All three are subsidiaries of Berger International Limited, which is ultimately owned by the Asian Paints Group of India.

Turra was previously in charge of marketing for Asian Paints and oversaw export markets in Africa and the Commonwealth of Independent States from Dubai, where he was based. He reported to the group's regional vice-president for the Middle East and South Asia region.

Prior to that, Turra was based in Mumbai, India, where he worked in marketing at Asian Paints' head office.

An electrical engineer by profession with extensive experience in sales and marketing along with finance, operations, and supply-chain management, Turra said he hopes to use that knowledge to work with the company's research and development arm on product enhancements.

"New products or newer ways of adding value for customers is always in our plan, and as we go along the year you will see a renewed focus from Berger on our colour mixing platform - Colourworld - which we see as a tool to offer a wide range of colour offering to the consumer at the point of sale," he said.

"We already have 80 machines across the island today and are looking to see how we can expand this network."

Berger Paints Jamaica manu-factures and distributes industrial and decorative paints and paint-related material.

Turra says Berger has a market share of 65 per cent in the island's decorative-paint market and distributes its paints through a network of more than 400 dealers, which includes 80 Colourworld counters with mixing machines.

The company manages assets valued at J$894 million from a complex at Spanish Town Road in Kingston.

"We have a fairly well-equipped plant in Jamaica and have been doing changes, as required, over the past few years. There is no plan in the near future regarding retooling the plant, but we have a few machines/lines that need changing, which will be done as part of the ongoing process of upgrading," said Turra.

Asian Paints acquired the Jamaican asset when it bought 51 per cent controlling stake in Berger International in November 2002. The Indian company operates in 17 countries across the Caribbean, the Middle East, South Asia, South East Asia and the South Pacific region. It has 23 paint manu-facturing facilities worldwide serving customers in over 65 countries.

Turra said he does not see foresee any dramatic changes in Berger's operations in the medium term, but says there are budding opportunities for business.

"We definitely see a few areas of growth, especially with the announcements of investment in infrastructure and the tourism sector; and I think we are well placed to take advantage of the growth in these sectors and contribute to the economy," said Turra.

"I don't see a drastic shift in Berger's profile in the next three to five years, and maybe the only change will be to ensure that we are able to service our new customers in the growth sectors to make the country better," said the paint executive.

Berger Jamaica will soon be rolling out its premium line of 303 Everglow and 404 paints," said the paint executive. In the recent past, new products have included RustPro - a fast-drying rust-inhibiting enamel, and Royale Silk - luxury paint for interiors, and Weatherproof Ultra - which is specifically design to protect exterior surfaces exposed to weather conditions.


Source:
Sabrina Gordon, Business Reporter
business@gleanerjm.com
Jamaica Gleaner
Friday May 24, 2013

http://jamaica-gleaner.com/gleaner/20130524/business/business1.html