Akzo Nobel India, makers of Dulux Paints, is focusing on augmenting manufacturing sites, enhancing capacity, and scaling up distribution, at a time when the paints industry is likely to witness tough competition with Grasim Industries announcing its foray into the paints business with the setting up of huge capacities.
The company, which has been registering a steady improvement in market share due to sustained efforts in distribution expansion and new product launches, has a “strong pipeline” of innovative products across various categories.
According to Rajiv Rajgopal, MD, Akzo Nobel India, the company’s capacity for paints and coatings range between 200-250 million litres. It is using technology to become more efficient and enhance capacity.
“We are really focusing on augmenting our manufacturing sites and also enhancing capacity, and we’ve got some expansion plans. Our focus has been really on scaling distribution, both off-line, which is through the traditional channel, and online,” Rajgopal said in the earnings conference call transcript.
Also read: Akzo Nobel India net profit up 16% in Q3
The company’s existing plants have enough ability to be able to pull out the incremental. It has enhanced its powder capacity and some augmentation of paints is expected to happen moving forward, he added.
Responding to a question on the impact of the entry Grasim with the proposed huge capacity addition and the resultant price war it is likely to trigger, he said, if it (the competition) is going to be brand-led, then Akzo would be “proactive”. However, if it is going to be price-led, then it would rather “wait and watch”.
“It is a formidable competitor. And we are sort of putting our thoughts in terms of how to handle a formidable competitor. We believe that we’ve got a very strong brand. It’s a legacy brand. We although have a very high presence in premium in paints so we believe that we are going to come with propositions during the course of between now and next year, which will further enhance it. So we believe we’ve got a -- we’ve got a couple of strategies up our sleeves, all of which I cannot reveal today, right, which should give us a bit of a tailwind,” he said.
Also read: Grasim Ind inducts Birla siblings
Enhancing reach and addition of new products
On the ramping up of distribution, he said that the company’s products are available at more than 5,500 towns at present and it covers over 20,000 paint retailers and 4,000 B2B customers.
“We are developing a customer metric, scorecard metric, where we are looking at ourselves internally. And suffice to say that we’ve got areas to work still on. But if you look at brand building, we are working on differentiation, customer-focused solutions, winning in adjacencies, waterproof wood care, and expanding offerings as we move forward. Distribution, I talked about Distribution 2.0 many times, but suffice to say, how can you now move from 5,500 to 8,000 towns and how can you make brand blocks, really reach much wider than where we are today,” he said.
Akzo, which introduced Dulux Weathershield Powerflexx, an ultra-premium offering in weather shield range of exterior paints, has a strong pipeline of innovative products for the next 8-12 quarters.
“So this pipeline is strong, and I believe that we’ve got in both -- in all our categories, actually, our premium, our adjacencies and in our core segments on mass, propositions that are going to be quite attractive,” he said.
The company has also set up a low-cost innovation center to drive differentiated products in Thane, which is going to look at India and countries like China and Latin America over a period of time.