“It has synergy with the existing line of our decorative paints business. We have already entered the kitchen and bathroom segment with all possible modern products during the past few quarters. The business is marginal now. But it is a focus. Over a period of time, it will emerge as a significant revenue contributor,” said Amit Syngle, president (sales, marketing and technology).
Syngle added that Asian Paints would leverage its existing retail and distribution network for new product segments. “The market is highly unorganised. But the organised sector is growing faster. Asian Paints will be a dominant player in the segment over a period of time.”
According to a study by consulting firm PricewaterhouseCoopers and equity research firm Edelweiss, about 70 per cent of modular kitchen market in India is unorganised. The market was estimated at around Rs 2,000 crore in 2012 and is projected to cross Rs 6,000 crore by 2016. On the other hand, while there are established companies such as Jaquar and a few foreign players at the premium end in bathroom fittings and décor space, most of the market is unorganised in India.
Asian Paints entered the modern kitchen space after acquiring a 51 per cent stake in Sleek Group for about Rs 120 crore in August 2013. Sleek is in the business of manufacturing, selling and distribution of modular kitchens as well as kitchen components including wire baskets, cabinets, appliances, and accessories. Asian Paints will be expanding the kitchens business across geographies where Sleek’s presence has been limited, and streamline its operations. It will use its existing paints dealers for the kitchen business.
In May 2014, Asian paints inked an agreement with Ess Ess Bathroom Products to acquire the entire front-end sales business, including brands, network and sales infrastructure, as part of the paint maker’s strategy to tap the bathroom fittings and décor market.
According to Syngle, in the paints segment, the repainting business contributes for about 70 per cent of Asian Paints’ revenue in India. While the growth rate for the sector is pegged at 11-13 per cent, the new construction segment has been impacted due to high interest rates.
Repainting business has been growing at a satisfactory rate as the repainting cycle has been shrinking day-by-day. “People are going for getting their homes painted differently much sooner than they used to earlier. While the cycle was 8-10 years earlier, it has come down to three-five years now,” said Syngle, who is in the city to unveil Asian Paints’ ColourNext edition for this year.
ColourNext is a research-based annual colour forecasting report that predicts colours that will strongly influence Indian interiors in the years to come.
Asian Paints has also started getting into alliances with top architects and home designers in top cities. “They influence the decision-making of home owners, while they go for painting their houses,” he said, adding that the premium segment has been seeing a good traction in the past few quarters. The company would continue to focus on the premium end, while increasing penetration in the smaller towns across the country, he added.