Calcutta, Sept. 2: Berger Paints is setting up a plant in Gujarat to meet the demand of the automobile segment.

In a statement to the Bombay Stock Exchange, the Calcutta-based company said it would set up a mixing plant with a maximum capacity of 2,400 kilolitres per annum near the existing factory of its subsidiary, Beepee Coatings Pvt Ltd, at Vallabh Vidhyanagar in Anand district.

"There is a growing demand for different shades of paints from the auto sector (both two- and four-wheelers). Gujarat is gradually becoming a hub for the automobile sector and our new plant is specifically planned to cater to the local demand from the automobile sector," Abhijit Roy, managing director and CEO of Berger Paints, told The Telegraph.

Auto boom

Japanese auto major Suzuki is planning a manufacturing unit in Gujarat at an investment of Rs 18,500 crore. Ford Motors and Tata Motors have also set up their base in the state.

"The automobile makers typically want the paint units close to their manufacturing sites," said Roy, adding that the Gujarat plant will source inputs from different locations and produce the final shades according to the the requirement of the manufacturers.

The plant, set up at an investment of Rs 5-6 crore, is expected to become operational by December this year.

"We are upbeat about the demand from the automobile sector and recent trends suggest sales are growing," Roy said.

Domestic car sales saw strong growth in August, with market leader Maruti clocking over 12 per cent rise in sales. Hyundai, Mahindra, Toyota, Renault and Nissan also posted strong numbers because of a good monsoon and the onset of the festive season.

In two-wheelers, Hero MotoCorp, Honda and TVS Motor registered growth.

The news of the announcement saw the Berger Paints stock falling 2.66 per cent to Rs 258.20 on the BSE.