Not simple for new players to win market share in paints industry, says Akzo Nobel India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rajiv Rajgopal, CMD of Akzo Nobel India, makers of Dulux paints, believes that it isn’t a simple task for a new player to win market share in the paint industry as this industry is a consolidated and disciplined industry.

This comment came on the back of Grasim’s launch of its much-awaited paints business, Birla Opus.

Grasim launched its paints business in February with the commissioning of the Panipat, Ludhiana and Cheyyar plants. The fourth plant will begin in the first quarter of financial year 2025, fifth in the second quarter and the sixth plant will launch in the fourth quarter of the next financial year.

Aditya Birla Group Chairman Kumar Mangalam Birla said that the group’s company Grasim’s paints business will turn profitable in the third year of operations and will cross the topline figure of ₹10,000 crore.

Akzo Nobel, a Dutch multinational corporation renowned for its paints and performance coatings, has a significant presence in over 150 countries, with headquarter in Amsterdam. Despite its global reach, Rajgopal highlighted the intricacies of penetrating the Indian paint market, where the company holds a 5% market share in decorative paints.

Akzo Nobel stands as a market leader in 56-60 districts across India.

However, Rajgopal mentioned that the journey of building distribution channels, brand recognition, and expanding production capacity has been an easy one.

Despite the challenges, Akzo Nobel maintains 16-17% market share in premium paint products.

Amit Sachdeva, Head of India Equity Strategy at HSBC thinks long-lasting price battles are unlikely in the paint business as there is little room for that.

Brokerage firm Investec has a pessimistic view of paint companies. They argue that Grasim’s entry into the paint market, particularly with the launch of their eagerly awaited brand, Birla Opus, might disturb the established pricing norms.

In an interaction with CNBC-TV18 on March 27, Berger Paints Managing Director and CEO Abhijit Roy mentioned that in an industry like the paints industry, incremental steps have to be taken and growth doesn’t come in a burst unless the existing players make some mistakes.

At present, Akzo Nobel’s market capitalisation stands at ₹10,857.27 crore.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow