The Colourful War – Asian Paints Vs Birla Opus.

India’s top paint maker, Asian Paints (ASPN.NS), opens new tab, has lost more market share than analysts expected to rival Grasim Industries (GRAS.NS), opens new tab in the year since billionaire Kumar Mangalam Birla’s ambitious paints venture was launched, according to Elara Securities data shared exclusively with Reuters.

Asian Paints’ market share fell to 52% from 59% in the 12 months ending March 31, Elara Securities data shows, raising the pressure on the industry leader to spend more on marketing and discounts to retain its crown.

Birla Opus’ market share reached 6.8% in the latest quarter.

“Whenever a new entrant comes, its strategies are aggressive. But this time, the scale is much bigger“, said Geojit Financial Services analyst Antu Thomas, who had expected Grasim to gain only 1%-2% in market share from Asian Paints.

Birla Opus, which is the paints arm of the Aditya Birla Group company Grasim, has followed avidly the Asian Paints playbook, to gain ground in the $9.5 billion sector that also features Berger Paints, Kansai Nerolac, Indigo Paints, and Akzo Nobel India.

It was launched in February 2024 with an investment of 100 billion rupees ($1.18 billion), and has consolidated its foothold, by offering deep discounts to lure paint dealers, hired mid-level managers from Asian Paints, and set up factories near its entrenched rival’s units, at a pace never seen before, analysts said.

A paint dealer of Eastern Kolkata reiterated that Asian Paints contributed 70% of his firm’s annual paints sales in 2023. In 2024, the share plunged to 30%. He had switched brands to take advantage of lower prices. These moves by erstwhile Asian Paints loyalists have hurt Asian Paints, which reported a larger-than-expected 45% drop in fourth-quarter profit last week and warned that demand conditions were at their worst in decades. “In a market which is already slow, the intensity of competitive action has been much more“, Asian Paints CEO Amit Syngle said on the post-earnings. “I think it is a double-whammy”.

INTENSIFYING BATTLE –

Birla Opus CEO Rakshit Hargave told Reporters his company had no plans to slow down. “Our objective is to gain market share, and I think, in the plan that we have, we have built in for the fact that we will do so“. He denied the location of Birla Opus factories was decided based on proximity to Asian Paints’ units and said Birla Opus was hiring across the sector.

Industry experts expect the market share battle to intensify further this year, with analysts at ICICI Securities flagging “downside risks” to Asian Paints’ outlook calling for EBITDA margin (operating profitability) of 18%-20%. “The way forward for Asian Paints is not to take steep discounts. It will do well by introducing more products with differential value“.

Team Maverick