JSW Paints — a late entrant and a minnow in the competitive domestic paints sector — has evinced interest in acquiring the decorative paints business of AkzoNobel India, the owner of the Dulux brand.
“As a group, we are open to opportunities for inorganic growth. We will certainly look at it,” said Sundaresan A.S., joint managing director and CEO of the company, when asked if JSW would consider bidding for the Akzo asset.
A successful acquisition will catapult JSW to the big league of decorative paints, aligning with the aggressive growth strategy pursued by the ₹33 billion JSW Group in every sector it operates.
However, JSW is going to face competition from several players including Berger Paints, the number two company in the decorative paints segment. Industry sources said Berger was keen to consolidate its place in the pecking order and ready to acquire Akzo’s brands and assets. But there is only one caveat: the price has to be competitive.
In May 2024, JSW Paints said it had achieved ₹2,000 crore turnover in FY24 and had achieved operating profit within five years of operations. It then set an ambitious target to attain revenues of ₹5,000 crore by 2026.
Sundaresan, who was in Calcutta to participate in the Indian Paint Conference organised by Indian Paints Association, said JSW has invested ₹1,000 crore so far and it plans to put in an equal amount in the next three to five years.
Explaining the rationale for the company’s interest in Akzo assets, Sundaresan said that the latter had ‘certain brands, decent brand value and there could be complementarity in terms of geographies.’
“We look for acquisitions which must be synergistic, complementing some of the things we do,” he added.
AkzoNobel India, in which parent AkzoNobel NV has a 74.76 per cent stake, has two primary businesses: decorative paints under the Dulux brand (acquired previously from ICI) and powder coating for industrial application.
In October 2024, the parent announced that it would review its portfolio that would involve focus on decorative paints in South Asia and the redeployment of capital to the core coating business.
AkzoNobel India, which has a market capitalisation of ₹17,000 crore as on Friday, said it has been advised by the parent to spin off the powder coating business and R&D centre associated with it to a separate wholly-owned subsidiary of ANNV.
Simultaneously, the listed entity will buy the intellectual properties of decorative paints from the parents.
Once the rejig is over, AkzoNobel India, which posted a turnover of ₹3961 crore and PAT of ₹426 crore in FY24, will primarily become a decorative paints company and primed for a selloff while the parent retains the coated business.
Eye on Budget
Paint companies will monitor the union budget closely, hoping that any tax relief for low and middle-income assesses will boost consumption demand, especially for discretionary commodities like paints.
“We expect some tax breaks should be given in the budget, especially for lower and middle-income categories. If that happens, hopefully, consumption demand will grow,” said Abhijit Roy, MD & CEO of Berger Paints at the IPA conference.