JSW shakes up the paints market dominated by Asian Paints, Berger

The paints unit of the Sajjan Jindal-led JSW Group, which operates in the western and southern regions of India, will close the current financial year with a direct distribution reach of 1,000 dealers and a top line of Rs 600 crore.

The achievement of its first-year targets comes as JSW Paints is looking to disrupt the Rs 50,000-crore domestic paints market, dominated by Asian Paints, Berger Paints and Kansai Nerolac Paints.

Last month, the Competition Commission of India (CCI) had ordered an investigation against Asian Paints for unfair business practices on a complaint filed by JSW Paints. The probe in the matter is still on, said industry sources, with the competition watchdog likely to submit its report in the future.

The face-off between Asian Paints and JSW also points to the competitive nature of the business, said experts, and the challenges faced by newer entrants who are keen on shaking up the pecking order.

JSW has entered the domestic paints market after decades of domination by Asian Paints across regions. Industry sources say Asian Paints and Berger enjoy 56 per cent and 20 per cent market share, respectively, in the decorative paints segment that makes up around 75 per cent of the overall market. Industrial paints constitute the remaining 25 per cent of the overall market, catering to sectors such as auto, steel and consumer durables.

JSW, which operates in both decorative and industrial paints, hopes to triple turnover of its paints business in three years, and take its presence to north and east India, in addition to south and west.

The company entered the retail market in May with a portfolio of 1,808 shades, all priced at Rs 477 a litre. This was a shift from the established practice, says Abneesh Roy, executive vice president, research (institutional equities), Edelweiss, of pricing products based on colour. The strategy here was to induce trials and get consumers to use the brand, he says.

Apart from this, the company has been tweaking its model of distribution on the ground to make it easier for its dealers to push its shades. A S Sundaresan, joint managing director and chief executive officer, JSW Paints, says that in the larger cities, where its warehouses are located, the company has “tinting spokes” in the vicinity that allow retailers to access shades without having to invest in tinting machines or paint dispensers.

As such, the distribution model in paints, say experts, works on the premise that retailers will become dealers of a company and take their tinting machines to deliver a set of shades to consumers.

While JSW does have this option too, the introduction of “tinting spokes”, say experts, makes it convenient for smaller retailers to outsource heavier tinting work to these centres. In addition to paint and hardware stores, JSW is also tapping retailers who deal in a large variety of construction materials, including steel, cement and allied products, and are keen to stock paint products as well to complete their portfolios.

“Outside large cities, for instance, there are outlets that deal in all products. We consciously check whether there are dealers like this in the towns we want to enter or where we currently exist that are open to stocking paint products apart from the allied construction smaterial that is already there within their outlets. This gives us an additional point of entry at the retail level,” he says.

The company is also working with group units, such as JSW Steel, to make inroads into industrial paints. Firms, for instance, which source hot-rolled coils from JSW Steel are potential customers of the paints unit of the group. The company is also looking to enhance manufacturing capacity at its plants in Maharashtra and Karnataka as its business grows.

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