Asian Paints has been a household name in our lives for many decades. We have grown up seeing the creative ads for Asian Paints, and many of us associate painting homes with Asian Paints. The Mumbai-based Indian multinational company has a clear leadership position in India in the paints segment and is a part of our lifestyle too.
The company, whose operations include manufacturing, selling, and distributing paints, coatings, products related to home décor, bath fittings, and related services, was founded in February 1942 as a partnership firm by four friends, Dixon aimed to challenge the largest and most renowned paint companies operating in India at that time. The company was formerly named Asian Oil and Paint Company Pvt. Ltd.
The saga of Asian Paints’ success is remarkable. Champaklal Choksey, Chimanlal Choksi, Suryakant Dani, and Arvind Vakil founded the business in a garage in Gaiwadi, Girgaon, Mumbai. Over the next 25 years, Asian Paints became India’s leading paints company, a position that it maintained for 57 long years.
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Implementing Smart Ideas
The initial phase of Asian Paints is characterised by two extremely successful marketing endeavours.
Initially, the enterprise of four enterprising entrepreneurs faced frequent rejection by large distributors, making them turn to the villages where they found demand for their paints. In rural India, they had an important niche market segment comprising people painting horns of bulls and the entrance of their houses (mainly in south India). After cracking the rural market, they started making significant inroads into the urban market. By 1952, the company had an impressive revenue of Rs.23 crores.
Another major development in Asian Paints’ growth curve came in the 1950s when Champaklal Choksey observed a huge gap in India’s then B2C paints market.
Then, two types of products ruled the Indian paint market. One was a basic dried distemper, which was very affordable but tended to peel off, stick to clothes, and stink badly. The other extreme was a plastic emulsion product, which was free from all of these problems but was more than five times costlier than the former option, making it unaffordable for common Indians.
Sensing the gap, Asian Paints developed a washable distemper that matched the quality of plastic emulsion but was much more affordable. This game-changing product was marketed with a sure-shot winning campaign: “Don’t lose your temper; use tractor distemper.” Within no time, their washable distemper became a super hit in the market.
With a steadfast commitment to consumers and a pioneering ethos, Asian Paints has held the top position in India’s paint market since 1967. Being the market leader in a given segment for more than 57 years makes Asian Paints among the greatest companies India has produced. It is probably the only Indian company to have a CAGR of 20 percent for 60 years.
Growing Presence
We can see that Asian Paints’s rich legacy is complemented by its impressive portfolio. Asian Paints produces a diverse array of paints for both decorative and industrial purposes. Additionally, it offers wall coverings, waterproofing solutions, adhesives, and services within its portfolio. The company also has a presence in the home improvement and decor sector, providing bath and kitchen products. It has also introduced lighting, furnishings, and furniture to its portfolio.
Asian Paints operates in 15 countries and has 27 paint manufacturing facilities worldwide. It services consumers in over 60 countries. Besides Asian Paints, the group operates worldwide through its subsidiaries – Asian Paints Berger, Apco Coatings, SCIB Paints, Taubmans, Asian Paints Causeway Paints, and Kadisco Asian Paints.
In 2023, Asian Paints Ltd. accounted for 59 percent of the Indian paints market’s market share, and the company can be said to monopolise it. The next big player in this segment is Berger Paints India Ltd., which accounted for an 18 percent market share in the last year.
Sales and Success
The revenues of Asian Paints was Rs 348,751 million in FY23, which was 18.3 percent more than its revenue of Rs 294,813 million reported in FY22. Its revenue in FY19 was Rs 195,829 million, and this huge Rs.152,922 million revenue growth of the company in four years has been despite the Covid pandemic, which is nothing short of impressive. The net sales of Asian Paints increased by 19.8 percent in FY23 to reach Rs. 29,953.1 crores from Rs 25,002.1 crores during its previous fiscal.
Some of the major reasons for Asian Paints’ maintaining a clear leadership position in the Indian paints market for more than 50 years could be the company’s impeccable supply chain management, being very techno-savvy (Asian Paints bought the first supercomputer in India in 1970, even 10 years before ISRO), doing away with all middlemen like distributors and wholesalers from their distribution channel since 1970s(which increased the company’s margin), and portfolio diversification.
Acquisition of Stake
In 2022, Asian Paints entered into definitive agreements to acquire a 49 percent stake in Obgenix Software Private Limited (popularly known by the brand name “White Teak”) from the promoters for a consideration of approximately Rs. 180 crores, along with an earn-out of up to a maximum of Rs. 114 crores, payable after a year, subject to achievement of mutually agreed-upon financial milestones. Obgenix Software, commonly known as White Teak, specializes in the business of decorative lighting products and fans.
It was also agreed to acquire the remaining 51 percent stake in White Teak in a phased manner. Herein, an 11 percent stake would be acquired in FY 2023-24, subject to certain financial achievements, with a maximum consideration of Rs. 66 crores, and the remaining 40 percent stake would be acquired in FY 2025-26 for a consideration based on certain financial achievements, with the highest consideration of Rs. 360 crores.
