Paint cos battle to protect turf as JSW fires AkzoNobel salvo

India's paintmakers must gird up for a tougher battle from two upstarts.

- Dipali Banka & Nehal Chaliawala

Birla Opus, owned by billionaire Kumar Mangalam Birla, has already shaken up the nation's paints sector with its pricing war. Now, JSW Paints Ltd's ₹9,300-crore acquisition of Dutch giant AkzoNobel's India unit portends a tighter squeeze on the profitability of their peers as they battle to protect turf.

The deal by JSW Paints, part of billionaire Sajjan Jindal's steel-to-cement empire, will not immediately change the competitive landscape as it merely changes ownership from a multinational to a local player, according to Abneesh Roy, executive director for research at Nuvama Institutional Equities. "But this is positive for JSW Paints. Over the next five years, we see Kansai, Akzo + JSW, Birla fight for the No. 3, 4, 5 slots, and also take some share from [other] local players."

The sector is already grappling with tepid demand for decorative paints due to a slowdown in new construction and elongating repainting cycles. Birla Opus's discounting to win over market share is squeezing the profitability of incumbents.