The paint industry, long an oligopolistic stronghold with high entry barriers, is undergoing a shift. The entry of new players has intensified competition, leaving established players scrambling to defend their turf.
To retain or expand market share, both incumbents and new entrants are ramping up capacities, expanding dealer networks, and are set to boost advertising spends. But this aggressive push is straining profitability, especially with disruptive pricing from entrants like Birla Opus threatening earnings growth. Companies face a tough choice: prioritize market share or protect margins.
And the tumbling rupee presents an additional challenge. The Indian currency recently breached ₹85 to a US dollar to hit an all-time low.
"Indian paint companies import around one-third of their raw material needs, including crude oil derivatives like titanium dioxide and resins, making them vulnerable to higher raw material cost due to a weaker rupee and increasing crude prices," said Poonam Upadhyay, director, Crisil Ratings.
Esta historia es de la edición January 02, 2025 de Mint New Delhi.
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