India has become a talent base for us globally, says Amit Jain

Q&A with chairman-designate, AkzoNobel India, and managing director, North and West Europe

Having served as managing director of AkzoNobel India, maker of Dulux Paints, industry veteran Amit Jain moved to Amsterdam in 2014 to head its decorative paints business in North and West Europe. After three years, he is again taking up a leadership role in the local unit, assuming the post of chairman. Jain, who will continue to serve at Amsterdam, speaks to Arnab Dutta about the Indian business and future plans. Edited excerpts:

Where does the Indian business stand in AkzoNobel’s global portfolio?

In 2009, our business was about Rs 900 crore, almost the same as what it was in 1987, when I started working for ICI. I joined back as the managing director of AkzoNobel India in 2009 and over the past eight years, we have trebled the size of the company and our profit. Thanks to the fact that ICI got acquired by Dutch paints giant AkzoNobel in 2008 and the new team that the company had acquired.

Today, our Indian subsidiary is one of the fastest growing businesses for AkzoNobel globally and a very important market for us. Also, India has become a talent base for AkzoNobel. Six years back, we built a new team here and the only member of that team who is still in India is our current managing director, K Jayakumar. All other members are now handling global roles within the company. 

The India business continues to be quite small, compared to AkzoNobel’s business globally...

The Indian paints market is one of the fastest growing in the world, with growth rates of 10-12 per cent. However, it is more competitive in terms of value chain, compared to many other large markets. We have one of the tightest value chains here. The cost of the same paint in India would be half of that in the Western markets. 

The cost of manufacturing in India is a third. While distributor and retailer margins, put together, in India is 11-17 per cent, in the West it is 35-50 per cent. All these add to the cost elsewhere. This is also why Indian talent is getting exposure globally, as they are bred under such competitive circumstances.

How and in what ways is the market here unique... 

First, the cost of distribution has to be maintained tightly. One has to reach thousands of outlets across a large country, unlike in most other markets. So, distribution is a huge challenge.

Second, unlike developed markets, people in India do not paint their houses themselves. Since consumers are less aware of the nature and quality of the product, the role of the brand becomes critical during their buying decision. So, brand building is more important here.

How has the slowing in industrial activities and real estate affected the company’s business in the country? 

We have not felt the heat of slowdown in the industrial paints segment. While some sectors might have slowed, newer sectors have picked up. The slowdown in real estate hit us less, as 80 per cent of the decorative paints business comes from repainting. However, the industry is under margin pressure, as raw material prices have gone up sharply in one and a half years. The industry has taken a couple of price hikes but the pressure is still there. 

When do you expect to see consolidation in the local market?

India is one of the few large countries which has significant scope for penetration and expansion, as a lot of people continue to use lime paints. We are already witnessing consolidation by the top four players. The organised players now hold 65 per cent of the market. 

With high-cost efficiency and economies of scale, India is a more mature market than China, though penetration remains low. That is why all major paint multinationals have tried to get into this market.