The story is about plumbing. If you think that’s humdrum, wait. It gets exciting when superstars Salman Khan, Allu Arjun and Ranveer Singh endorse the product and then the brand is associated with the IPL.

It is the Astral story. A household name in India and a torchbearer for what remained an unorganised sector for decades, the plumbing and construction materials player, Astral Ltd, has become the industry’s charm and an investors’ delight. Here’s how.

The shareholders’ wealth has multiplied by 4x in last five years with its share price zooming from ₹453 in June 2018 to ₹1,821.35 as on May 31, 2023 on NSE and about 15x from the IPO of ₹115 in 2007. And the confidence booster for the investors is Astral’s stupendous almost 100x growth in revenues from ₹54 crore in fiscal 2006, to ₹5,185 crore for year ended March 31, 2023. Net profits have jumped by 118x from ₹4 crore to ₹472 crore during the period. The diluted earnings per share (EPS) now stands at ₹17 (at face value of ₹1 each) versus ₹7.29 (at face value of ₹ 10 each) at the time of company’s IPO.

It has been 25 years since Astral (formerly Astral Poly Technik Pvt Ltd) was set up in Ahmedabad as a pipe maker. The company was the first licensee of Noveon, USA (formerly known as Specialty Chemical Divison of B.F Goodrich, USA) to manufacture and market chlorinated polyvinyl chloride (CPVC) piping and plumbing in India. There was no market for CPVC pipes then, which made the going tough for Astral.

‘Engineer’ed rules

Speaking to businessline, Kairav Engineer, VP-Business Development, Astral, says, “We started with one category of industrial CPVC pipes, but that couldn’t take off because metal pipes were ruling the industry then. So, in 2001-2002 we faced severe financial crunch. We were small and the banks started giving us securitisation notices. It was a bad time for us.”

To overcome this phase, it switched to imported CPVC plumbing fittings that gave Astral a much-needed foothold. Its Founder and CMD, Sandeep Engineer, decided to make it more competitive by local manufacturing of CPVC plumbing fittings, and set up a plant at Baddi, Himachal Pradesh, in 2001-02.

“Due to backward integration, our profitability shot up. The entire profits of the first year was pumped into branding and advertising with a clear focus to make our visibility and create a brand recall for the users,” says Kairav, the elder son of the senior Engineer. Product innovation and a strong marketing exercise put this plumbing player at par with an FMCG or white goods player on brand visibility.

Brand recall

In 2012, Astral used in-film branding for its CPVC pipe showcased by the Dabangg 2 star Salman Khan in an action sequence. A decade later in 2022, Telugu heartthrob Allu Arjun and Bollywood star Ranveer Singh were made the brand ambassadors. Engineer doesn’t spare an opportunity to strike a chord with his consumer base. The brand Astral is seen on banners behind autorickshaws and also at cricket events. Astral is the associate partner for IPL 2023 teams, Mumbai Indians and Gujarat Titans, and an official partner for Chennai Super Kings.

“We are connected to our end users, who are plumbers, carpenters, masons. In India, movies and cricket are the two things that are democratically watched by people. By heavy spend on advertising and branding, I am targeting them. These are my real customers as they are the key decision makers on ground,” explains Engineer, adding that such a branding strategy helps building trust besides brand recall. Astral also does training programmes for its 1,18,000 registered plumbers and 34,000 registered dealers.

De-risking measures

“We are not necessarily spending more, we are just being smart with our money,” Engineer says, as this strategy has paved the way for Astral’s foray into newer categories of building materials. But the company’s heavy dependence on suppliers for CPVC raw materials posed a risk on sustainability. “We decided to de-risk ourselves and expand our product portfolio,” he adds.

As part this, Astral introduced products such as lead-free unplasticised polyvinyl chloride (UPVC) plumbing and column piping solutions to Indian markets. It also forayed into the pipe adhesives space after acquiring a UK-based adhesives and sealants maker, Seal IT Services Ltd, in 2014. In recent forays, Astral has identified a synergy in sanitaryware faucets and last year, the company acquired a controlling stake in the paint business of Bengaluru-based Gem Paints to enter this segment. Last fiscal, its plumbing business revenues touched ₹3,767 crore, and paints and adhesives recorded ₹1,391 crore.

“We already had access to the distributor channel. It was just a matter of introducing a product. Now we are in the entire ecosystem starting from water tanks to faucets with a brand in ‘back-of-the-wall’ category,” he explains.

So far the company has completed six acquisitions and two mergers across segments.

The way forward

Besides the core piping segment, Astral is now a multi-product building materials player with presence in adhesives and sealants, paints, sanitaryware and faucet, infrastructure pipes and plastic tanks.

The market opportunity is estimated at ₹1.5-lakh crore. “We are just scratching the surface. India is a big market and with the government’s push for $10 trillion economy, we believe consumption will go up and building materials are here to stay,” he says.

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