Jotun Paints to expand retail network in India

Norwegian paint manufacturer Jotun Paints is planning to strengthen its retail network in the country by doubling its retail chains from the current 130 through the franchise model. The expansion will happen on a pan-India basis by the end of next year. The proposed expansion plan would require around Rs 25 crore of investment.

Meanwhile, the paint manufacturer is expected to close the current calendar year with a turnover of Rs 200 crore and is set to double in the next two years. One of the main focus markets for Jotun Paints is the decorative market, which at present is dominated by brands including Asian Paints, Berger, Kansai Nerolac and ICI.

The company inaugurated its first manufacturing facility in April 2008 at Ranjangon in Pune with an investment of Rs 110 crore. The total capacity of the plant is 50 million litres of paint and 10,000 tonnes of powder.

In the next 4-5 years the plant will run on full capacity, and by that time the company will set up a manufacturing unit in North India, Percy Jijina, general manager - Decorative, Jotun India told Business Standard.

The manufacturing unit in Pune mainly caters to Kerala, Karnataka, Tamil Nadu and Maharashtra and will move to the northern markets such as Gujarat, Delhi and Haryana subsequently. The company has provided for expansion at the present location and may double the present installed capacity, if necessary, he added.

Production from the Ranjangon unit will serve the needs of the domestic market, and will be retailed through exclusive Jotun brand shops. The company, which already has a presence in the country with 130 retail outlets, is increasing this number to 300 by next year, Jijina said.

The new outlets will be developed through the franchise model, wherein the the franchise will invest in the shops. The minimum investment would be Rs 15 lakh for setting up a 300 square feet shop.

Unlike Indian paint companies, Jotun is not entirely driven by dealers on the marketing front. Rather, it has a shop-in-shop concept through which it sells paints. Stating that India is an important market, Jijna added, "We are here because of the huge potential in a market that is growing at 15 per cent annually." Segments such as decorative paints and marine and industrial coatings are expected to be growth drivers.

The expected turnover from the Indian operation is around Rs 200 crore for the current calendar year 2008. The company has set a target of Rs 400 crore and hopes to achieve 8 per cent market share by 2010, Jijina said.The $2-billion Jotun group, which is headquartered in Sanderfjord, Norway, has more than 40 manufacturing facilities worldwide.