Kansai Paint Co., Ltd. hosted a conference call to brief investors on the business strategy for Kansai Nerolac in India. Management confirmed that while competitive intensity in the Decorative segment remains elevated due to new entrants like Grasim, the pace of increase has stabilized. The company is focused on premiumization and expanding in Industrial Coatings, particularly in construction chemicals via recent acquisitions like Nerofix and Perma. Profitability goals target an increase of 200 basis points in margins over the mid-term plan.
Competitive Landscape and Decorative Segment Stabilization
Kansai Nerolac discussed the competitive environment following major entries into the Decorative (Deco) segment. Pravin Chaudhari noted that competitive intensity remains strong but has stabilized since late 2025, with some recovery in growth visible since October 2025. While smaller players captured some growth, the focus for Kansai is on defending its strongholds. The strategy involves a 360-degree approach in zones and towns where the company is already ranked No.1 or No.2, deploying resources selectively for easier wins.
Industrial and Automotive Growth Drivers
In Industrial Coatings, the strategy is twofold: strengthening existing segments and expanding into new areas. The company is leveraging its global network to introduce new production technologies across segments where it currently holds No.1 or No.3 positions. Key growth areas include pre-engineered buildings, Railways, and Coil coating.
Regarding the Automotive segment, management highlighted four supporting factors for long-term positive growth, estimating sustained growth levels between 8% to 11%. These factors include production pickup post-GST changes, capacity expansion by OEMs (projected to double by 2030), a shift towards larger vehicles (increasing paintable surface area), and India becoming an increasing export hub.
ASP Trends in Automotive
While the overall automotive paint share is pegged at 50% plus, ASPs are improving slightly below inflation due to a favorable mix shift. The growing popularity of SUVs leads to larger paintable areas, and the premiumness of metallic shades is supporting better pricing, although the volume-value gap remains fairly stable.
Path to Profitability Improvement
In response to questions regarding profitability lagging global peers, management detailed initiatives to improve margins by an expected 200 basis points over the mid-term plan. This will be achieved via two main levers:
- Operational Efficiency & Premiumization: Growing into niche and premium segments while managing expenditures tightly.
- Expense Optimization: Optimizing SG&A expenses and ensuring spending is effective.
Pravin noted that the company’s current gross margin is influenced by its mix, which is more than 50% industrial, making it less directly comparable to peers heavily focused on Decorative business.
Strategy for the Decorative Business
When questioned about divesting the Decorative segment, which is now treated as a cash cow, Pravin stated that management is not seriously considering this option. Despite intense competition, Nerolac maintains a No.2 brand recall. The company believes that by focusing sharply on core strengths and extracting maximum value—especially given that no significant incremental investment is required for brand awareness immediately—the segment will continue to be a valuable part of the balanced portfolio.
Industrial Segment Expansion Focus
The Industrial business is focusing on consolidating its leadership in powder coatings (where it has been dominant for over two decades) while aggressively targeting growth in the liquid segment. Key areas of focus in liquid coatings include pre-engineered buildings, Railways upgrades, and Coil coating, driven by significant government infrastructure spending.
Source: BSE
