Pidilite Industries, an adhesive and construction major, plans to wait six months before gauging the market response to its paint venture.
The company launched its decorative paints in smaller towns in Andhra Pradesh, Telangana, and Orissa two months ago. Pidilite, which already has a presence in waterproof coatings and lower-priced distempers, has completed its product range with the launch of interior decorative paints.
The competition in the paint business is heating up with the entry of Aditya Birla Group company Grasim Industries and Delhi-headquartered JK Cement. The existing players, such as Asian Paints, Berger, Nippon, Kansai, and AkzoNobel, are enhancing their capacity to retain their market share.
Bharat Puri, CEO, Pidilite Industries, said given the company’s standing and network, the initial reactions were good for the paint business, but it is better to wait for another three to six months before making any firm conclusions on what are first readings.
“We are not strangers to paint. We have exterior waterproofing, lower-priced distempers and tinters. As far as distribution, Pidilite has a deeper distribution network than every other paint company except Asian Paints in urban and rural regions,” he said.
He added, in rural and semi-urban areas, the company actually has more distributors than Asian Paints, and the decision to enter the paint business was in response to dealers’ calls to complete the product range.
After touching a high of $2,500 a tonne, the company expects vinyl acetate monomer (VAM) prices to have bottomed out below $1000 a tonne and are expected to range at the same level for the next six months unless there are any Black Swan events, said Puri.
The company has passed on the benefit of lower raw material prices to consumers and is open to cutting prices further if the cost comes down, as it does not want unorganised players to undercut the market.
Puri expects the export business to take at least three to six months to see some improvement, but would wait another two quarters before declaring where it would settle.
The company’s subsidiaries in Bangladesh and Sri Lanka are suffering from foreign exchange, but they are coming back slowly. “We believe these will turn around much quicker, and therefore you will see better results in them in the next three months themselves ,” he said.