homebusiness Newscompanies News'It's a strange industry', Indigo Paints explains what makes it a unique business
'It's a strange industry', Indigo Paints explains what makes it a unique business
Hemant Jalan, CMD of Indigo Paints, pointed out that in this industry the end consumer is not really the decision maker for the brand.
Grasim Industries, the Aditya Birla Group's flagship company, is the latest to announce its entry in the paints business with the 'Birla Opus' range of products.
Hemant Jalan, CMD of Pune-based Indigo Paints, shared insights with CNBC-TV18 on the impact of increasing competition, and what makes the paints industry unique.
“The barriers to entry are very high and it is very difficult to penetrate; it is a strange industry in which the end consumer is really not the decision maker for the brand. The brand choice is influenced by the painter or the painting contractor. The end consumer merely holds a veto power,” he said.
Jalan said since end consumer is not the decider, existing players typically do not increase advertising spends significantly even when faced with competition from large multinational companies.
"All you need is a reasonably decent level of background advertising, so that the consumer is aware of your brand. And the rest of the effort goes into convincing the painter and the influencer as far as the brand selection is concerned. So I do not see any reason for us to increase our ad spend with new entrants entering the market.”
Last year, Indigo Paints' ad spends were at was 7.5% of sales. The company expects this to decline to 6.0-6.5% in the current financial year.
In the first nine months of 2024 (9MFY24), Indigo Paints' revenue grew 23% to ₹921 crore. Its EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin improved to 16.5% from 14.7% and profit after tax (PAT) jumped 41% to ₹94 crore.
The company has a market capitalisation of ₹6,690.99 crore. Its shares have gained,40% over the last year.
(Edited by : Shweta Mungre)
First Published: Feb 28, 2024 4:06 PM IST
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