The paint industry in India stands at a crossroads with a fresh wave of investments, disinvestments, and acquisitions. JSW Paints, launched by the JSW Group in 2019, acquired AkzoNobel, maker of Dulux paints, in a massive $1.1 billion deal. A year before, Aditya Birla Group launched Birla Opus paint with an investment of Rs 10,000 crore. Not just that, Reliance Industries sold a significant stake in Asian Paints.
Here is a look at the key developments across the paint sector in the past few months-
Reliance’s Asian Paints disinvestment
Asian Paints, the largest paint company in India, with a market share of about 52%, saw a major stake sold by Reliance Industries, the largest company in India by market capitalisation.
In mid-March, Reliance held about a 4.9% stake in Asian Paints. However, the company started trimming its shareholding in the paint major in June and sold almost all its stake in two major trades.
On June 12, Reliance sold 4 per cent of its stake in a deal worth about $901 million, or Rs 7,700 crore. Further, the company sold about 8.5 million shares of Asian Paints for $218.32 million, or Rs 1,876 crore, to ICICI Prudential Mutual Fund. After the two deals, the company is left with just 200,000 shares in Asian Paints.
Asian Paints VS Birla Opus Antitrust battle
In early June, Aditya Birla Group’s Birla Opus filed a complaint with the Competition Commission of India, saying that Asian Paints is using its dominant position in the market to restrain dealers from dealing with Birla Opus paint.
A month later, on July 1, CCI passed an order, initiating an investigation into the matter. CCI observed that Asian Paints is restraining its dealers from dealing with Birla Paints by imposing unfair conditions upon deals. Further, CCI noted that Asian Paints is restraining the suppliers from supplying essential raw materials to Birla Paints.
As per the CCI direction, the Director General will file its investigation report in the matter in 90 days.
JSW Paints’ AkzoNobel acquisition
As the mega conglomerates like Aditya Birla and JSW Group, with deep pockets and already existing dealer networks due to their cement businesses, are looking for consolidation, smaller players are fearing market loss.
Dutch paint maker AzkoNobel decided to sell its Indian business amid the intensifying competition between the new entrants and established players. The company sold its India business to JSW Paints for $1.6 billion.