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Paints: In a consolidation phase

May 20, 2000

Asian paints eyes Shalimar, Bergerís takeover of Jenson & Nicholsonís Nepal plantÖ Is the paint industry in a consolidation phase? Asian Paints Vs Shalimar Paints
Asian Paints is the market leader with a 40% market share in the decorative segment. It is the largest company in the paint industry with an overall market share of 36%. This constitutes a 40% share in decorative paint segment and 12% in industrial segment. The company produces 175 million tonnes p.a. of paints, varnishes, resins etc. The company for quite some time was looking for an acquisition to consolidate its position in the decorative segment.

(Rs m) Turnover Dealer Network Market Share
Asian Paints 10,559 15,000 36.0%
Shalimar Paints 1,300 Around 2,000 5.0%

Shalimar Paints, on the other hand, has an 8% share in industrial segment and a 5-6% in the decorative category. Ratan Jindal, the promoter of Jindal Strips Limited, manages the company. The Jindals hold 44% stake in the company. The company is also setting up tinting machines in various parts of the company.

Asian paints can leverage on the dealer network and the market share of Shalimar paints in the industrial segment, especially the marine paint segment.

Berger Vs Jenson & Nicholson
Berger Paints is the third largest paint manufacturer in India with an overall market share of 17%. It has tie-ups with Herbertsons, Valspar Corp and Teodur BV for auto coatings, heavy duty and powder coatings respectively. In FY99 and Berger and Rajdhoot paints merged with together.

(Rs m) Turnover Dealer Network Market Share Production MT
Berger Paints 4,261.0 7,000 17.0% 36.0
Jenson & Nicholson 1,640.0 Around 3,000 6.0% 25.0

J&N has an overall market share of 6% and a turnover of Rs 1,640 m for FY99. J&N has collaborations with Herbertsons for auto coating. The companyís Instacolour commands good brand value. Berger paints recently took over the Nepal plant of Jenson & Nicholson.

Market View:
While the market leaders, Asian Paints and Goodlass Nerolac, are gaining market share, others are losing their share in the pie. So to withstand competition, consolidation among the weaker companies was expected. The consolidation would lead to better reach to the customers, through their combined distribution network and brand synergy.


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