Housing, infra push drives industrial majors into Rs 60,000 cr paints biz

JK Cement latest entrant after JSW, Grasim, Astral Pipes and B2B marketplace Infra.Market; move aimed at driving synergies, leveraging distribution network, say experts

More options may vie for your attention when you decide to give your house a fresh coat of paint.

JK Cement entered the paints business last week by acquiring a 60 per cent stake in Rajasthan-based Acro Paints for Rs 153 crore. Experts feel this is part of a growing list of building material players who are either entering the Rs 60,000-crore domestic paints market or expanding their presence in the category in a big way, say experts.

Consider this: In April-May 2022, PVC pipes maker Astral acquired 51 per cent in Bengaluru-based Gem Paints for Rs 194 crore. Before that, online B2B platform Infra.Market had picked up 24 per cent in Gurugram-based Shalimar Paints for Rs 270 crore.

In May 2022, Grasim Industries, part of Aditya Birla Group said it would double its investments in paints to Rs 10,000 crore from the Rs 5,000 crore announced earlier, and begin paint production in the fourth quarter of FY24. Rival JSW group said recently that it would look to double its revenue from paints in FY23 to Rs 2,000 crore, and add more distribution points and manufacturing units in the future.

The moves by these companies, say experts, will intensify competition in the domestic paints market dominated by players such as Asian Paints, Berger, Kansai Nerolac and Akzo Nobel. The four account for 75 per cent of the overall paints market in India, according to analysts tracking the market. Yet, the need to tap adjacencies for growth is hard to resist for industrial majors, they say.

"There is a huge infrastructure and housing development push that is happening in the country," says Deven Choksey, managing director of Mumbai-based brokerage KR Choksey Holdings.

"Building material players are keen to capitalise on this momentum. They also realise that they can harness synergies with entry into adjacencies such as paints, and leverage a common distribution network for these products," he says.

JK Cement MD Raghavpat Singhania indicates as much, saying his company's entry into paints will create adjacencies that will act as a key growth driver for the firm in the future.

"We have a focused launch plan in paints to gradually deepen our presence in our strong markets over the next few years, and have identified specific geographic, product, and channel niches where we will dominate," JK Cement CEO Madhavkrishna Singhania said about the company's plans in paints.

At Grasim’s 75th annual general meeting in August, Chairman Kumar Mangalam Birla said the firm’s entry into paints would create new growth engines. “The paints business is focused on project execution and achieving plant commissioning timelines,” Birla said.

Both JSW and Grasim are also investing in online B2B platforms to reach customers for building materials directly and offer paints and cement to them, even as they leverage their offline distribution channels for these products. The aim, say industry executives, is to eventually build a seamless online-to-offline distribution platform for all building materials in their portfolio.

While the domestic paints market is skewed towards the decorative paints segment, which constitutes 75 per cent of the overall market, industrial majors appear to be prepared for the challenge. JSW Paints recently filed an appeal in the National Company Law Appellate Tribunal against an order passed by the Competition Commission of India clearing Asian Paints of anti-competitive practices.

Experts say that the battle between newer entrants and incumbents in paints could heat up further as the fight for market share escalates.

Golden opportunity

• Asian Paints, Berger, Kansai Nerolac and Akzo Nobel account for 65% of the paints market in India
• JK Cement, JSW, Grasim, Astral Pipes, and B2B platform Infra.Market newer entrants in the segment
• Industrial majors looking to tap adjacencies for growth, say experts