Paint wars: Dulux shade card may be part of a merged palette
ET Intelligence Group: The war among paint makers in India may well end up in mergers. And Akzo Nobel India - the fourth largest player in India's decorative paints segment - may have a role to play in it. Akzo Nobel India has informed that its Dutch parent Akzo Nobel NV is conducting a strategic review of its portfolio to redeploy capital towards growing its core coatings businesses. The initial focus will be on its decorative paints business in South Asia and various strategic options will be explored ranging from partnerships or joint ventures through to mergers or divestments. Akzo Nobel India, which retails under the Dulux brand, has a 5-6% market share of the ?75,000 crore decorative paints industry in the country. According to the company, Akzo Nobel has a premium and highly profitable position in India with a strong track record of growth. Given this unique market position, the company is well-placed to participate in the further development of the highly dynamic South Asian decorative paints market, which is ripe for consolidation. Incidentally, several business houses have entered the decorative paints business, which was until recently oligopolistic in nature with Asian Paints being the market leader followed by Berger Paints, Kansai Nerolac and Akzo Nobel. Currently, players such as JSW Group, Aditya Birla Group, Pidilite and JK Cement are vying for a share in the decorative paints market at a time when consumer demand is subdued and input cost inflation poses a constant threat. There is also discounting and local competition from unorganised players to contend with. In such a scenario, small or non-serious players could find it difficult to grow.
The MNC may well command a premium for its India business amidst the current competitive landscape. The Dutch paint manufacturer is restructuring its operations to cut costs, improve efficiency and become more agile in volatile markets.
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