In order to compete with current companies that receive roughly 10% of their revenues from this category, Indigo Paints intends to enter the related building chemicals and waterproofing market. In the coming months, the organisation will also be increasing its footprint by 40% by hiring more salespeople. Having primarily concentrated on tier 3 and tier 4 communities, it is also planning to expand into larger towns and cities, where it is still significantly underpenetrated. The company is also unconcerned by Grasim Industries’ foray into the paints industry. When the company’s management met with Nuvama Institutional Equities, they explained their plans. Read More Business News on our website.
Allied Section Sortie
As waterproofing and building chemicals are intimately related to the paints industry and have enduring effects, the majority of paint companies include them in their product line. It makes logical for Indigo to enter this market as well, given that other paint firms derive more than ten percent of their revenue from construction chemicals and waterproofing goods. The merchandise would be made available under the Indigo name.
Increasing Reach and Dispersion
As a late arrival in the paints sector, the company is filling in distribution and reach gaps by expanding its sales staff by 40% in the coming months.
It is now predominantly found in smaller towns and cities, but it is also spreading into bigger towns and cities, primarily tier 1 and tier 2 cities. The growth of the sales team, according to Nuvama, will only slightly increase expenses by 6-7 crore.
Given the sum of money Indigo already spends on marketing, it stated that the additional sum “should not be a problem for the company.” In the past, the corporation has also been growing its sales team. For instance, it ended with 16,785 active dealers.
Demand and Profit Margins Will Rise
The paint industry is emerging from a period of restrained demand growth as a result of a higher base as well as the protracted monsoon that reduced demand in several regions of the country in October and November. The sector had a small comeback in December, and the first two months of 2023 have been favourable for the industry. The month-to-month demand is also doing nicely.
The profitability margins of the industry and Indigo Paints are anticipated to improve with significant volume growth anticipated in the March quarter and a reduction in raw material costs.
Rivalry Ahead
A significant headwind is the passage of Grasim into the paints business, as most would consider to be normal to influence all players in the area.
Indigo Paints anyway kept up with that another contestant into the area wouldn’t make any critical wave in the quick term because another player would require 5-6 years to lay down a good foundation for itself and afterward begin to be a contender for officeholders.
Even though Grasim can sell its paints through cement depots, creating a dealer network took time. Through extensive advertising, Indigo Paints took ten years to establish brand recognition among customers.