JSW Paints (JSWPPL)
New players in Indian Decorative paint industry
Decorative Paint Competition
The Indian paint industry exhibits an oligopolistic structure, with the top five players (Asian Paints, Berger Paints, Kansai Nerolac Paints, Akzo Nobel, and Indigo Paints) dominating approximately 90% of the organized market, estimated at Rs 62,000 crore as of the end of FY23.
JPPL, incorporated in February 2016, The Sajjan Jindal Family Trust has a majority shareholding in JSWPPL, with JSW Steel Limited holding a 12.85% (as of Jan 2024). Mr. Parth Jindal, son of Mr. Sajjan Jindal, is the Managing Director of the company.
The company manufactures industrial and decorative paints and has two manufacturing facilities at Vasind, Maharashtra, and Vijayanagar, Karnataka. While the Vasind plant has an installed capacity of 60,000 kilolitres per annum (KLPA) and caters to the industrial paints segment, the Vijayanagar plant manufactures decorative paints and has an installed capacity of 1,10,000 KLPA.
The strategic importance of JSWPPL to the JSW Group as it supplies industrial paint to JSW Steel Coated Product Limited (JSWSCPL), which manufactures downstream steel products, including colour-coated coils/sheets. JSWSCPL’s entire industrial paint requirement is expected to be supplied by JSWPPL’s industrial paint division.
JSW Paints Private Limited’s improved scale of operations, led by healthy growth in the industrial paints segments as well as pan-India expansion of its distribution network in the decorative segment.
The decorative segment continues to incur operating losses due to significant marketing investments. The company aims to continuously expand its dealer network and strengthen its pan-India presence. Therefore, it is expected to continue undertaking significant marketing and promotion-related expenses over the next two to three years.
It has increased its footprint to North and East regions in the decorative sales segment and has an active network of 6,000 dealers with a plan to keep adding 2500 retailers every year.
CAPEX
The company has planned capital expenditure of around ₹450 crore up to FY26. Out of this ₹97 crore is for routine capex, ₹183 crore is for expansion of existing capacities at Vasind and Vijaynagar plants. The company is planning a capacity expansion of 50,000 KLPA at the Vasind plant and 50,000 KLPA at the Vijaynagar plant by FY26. The rest capex is for land acquisition for setting up a greenfield plant in Madhya Pradesh (MP). The above-said capex is expected to be funded through a mix of debt, equity infusion of ₹250 crore in FY24, and internal accruals.
The company has plans to set up a green-field plant with an installed capacity of 30,000 KLPA for industrial paints and 1,00,000 KLPA for decorative paints at MP at a total project cost of ~₹700 crore. The majority of capex at MP is however expected post FY26 and planned to be largely funded by equity.
The company’s industrial segment reported a compounded annual growth rate of 53% while the decorative segment reported a CAGR of 130.7% in the last three fiscals. The company is generated revenues of ~Rs. 2000 crores in FY2024 and have aspirations to clock 5000 crores by FY26.
JSW Paints broke even for the first time in the financial year 2024 (FY24) after entering the business in May 2019.
As of FY24, the company sees 55-60 percent of its revenue come from decorative paints.
The ad spends for JPPL remained in the range of 10%-12% of TOI, which is higher than the amount spent by established players.
Last one-year demand was weaker than what the company had hoped for at the beginning of FY24.