Berger Paints to enter IT business

Berger Paints Bangladesh Limited, a leader in the country's paint industry, has now decided to invest in the information and technology (IT) business as a potential sector.

For this, the multinational company will form a subsidiary company named "Berger Tech Consulting Limited", which will be 100% owned by Berger Paints.

Initially, Tk25 lakh will be invested to open the subsidiary company. This will further enrich Berger Paints' diversified portfolio, according to a senior executive at the company.

The Berger Paints official, speaking on condition of anonymity, said Berger Paints' IT team was successfully supporting the company's business. There are three more companies under Berger Paints that are also being given IT support by this team.

"The board thinks that IT business can be done with this team. But if this business is done under the painting company, it will not get a good response. So it was decided to have a separate company," he added.

Another Berger official said the government was offering various benefits, including tax incentives, for businesses in the IT sector. Moreover, this sector has huge potential in the country.

Berger Paints' portfolio currently includes containers, printing metal sheets, coil coatings and construction chemicals. These businesses are being run under three separate companies.

According to sources, Berger Paints acquired a software licence in 2009 from the German-based software firm SAP SE. Using this software, the company is also providing IT services to its three associates.

In addition, Berger Paints, authorised by SAP SE, has the opportunity to provide IT services to other companies in the country. Now the company wants to take advantage of this opportunity, they added.

In the financial year 2021-22 which ended on 31 March, its consolidated net profit increased 9% to Tk290 crore compared to the previous financial year despite the dwindling economic pressure due to business cost hikes.

It also recommended a 400% cash dividend for that financial year, which was the highest in the last five years.

Berger Paints official said the company could not achieve double-digit profit growth but the board was however satisfied with the turnover growth.

Meanwhile, in September last year, the Bangladesh Securities and Exchange Commission (BSEC) directed Berger Paints to ensure the offloading of 10% shares in the stock market by 2022. Currently, 5% of the company's shares are offloaded on the stock market.

In addition, in the budget for the 2022-23 financial year, it has been proposed to increase the corporate tax of those companies which have less than 10% offloaded shares to 25% instead of 20%.

In this regard, the company official said that Berger Paints will comply with the BSEC guidelines within the stipulated time.

Each share of the company had a closing price of Tk1,716 on the Dhaka Stock Exchange on Sunday.