New player will always need more dealers: JSW Paints CEO Sundaresan A S

JSW Paints, one of the latest entrants in the paints sector expects its revenue to reach Rs 5,000 crore by FY26 and it also expects to see its revenue double from Rs 1,000 crore in FY22 to Rs 2,000 crore in FY23.
 

The company also intends to add one more manufacturing in the next three years with an investment of Rs 750-1,000 crore, Sundaresan A S, CEO at JSW Paints told Business Standard in an interview.

The company’s journey in the paints sector has not been easy as it faced issues with its dealers shut shop within the year which hurt it more as it began. While it had approached the Competition Commission of India (CCI) against unfair trade practices by its peer but the final order by the regulator disposed off its plea.

The company has now challenged CCI’s order in National Company Law Appellate Tribunal.

On asked about CCI’s order Sundaresan said, “As a new entrant, you will always have to open many more than an existing player, how else will you catch up on a competition's network of 70,000+ dealers and we could not even open 1,000 dealers in the first year.”

This statement comes on the back of the order stating that Asian Paints is not keeping JSW Paints away from the market.

JSW had told the regulator that in 2019 that immediately after the launch of its decorative paints business, Asian Paints had targeted dealers/distributors/retailers partnering JSW Paints.
 

Sundaresan also explained that all paint dealers are mom and pop stores, and therefore, their own ability to individually take it up against abusive action, etc. is a challenge. “They have no bargaining power. This was affecting our ability to open dealerships and we only felt that we should fight for their freedom to choose which company they want to deal with, so it is a free market and customers have a wider choice,” he said.

JSW had told CCI in 2019 that its competitor, Asian Paints directed dealers to stop dealing with JSW and threatened to stop supplies to these dealers. It also asked dealers to remove displays of JSW Paints’ products from their retail shelves and threatened not to allow them discretionary discounts, among others.

When answering CCI’s order stating that it had more dealer additions than its competition, Sundaresan said, “We are a company which opened only that year (2019) and if you open some dealers and they closed that same year, it is so damaging to us as a new company. Contrast this against an established player for whom the dealers who closed business may have been opened over the last 75+ years and this is used to arrive at net additions to conclude we had more net additions.”

CCI’s order which came out in September stated that Asian Paints, the market leader, was able to make a net addition of 401 and 816 dealers during 2019-20 and 2020-21 (total of 1,217). While JSW Paints’ net addition of 722 and 869 dealers during the same period (total 1,591). Therefore, the fact and figures of the net addition of dealers during the relevant period contradict the allegation of denial of market access to JSW Paints.