JSW Paints CEO Parth Jindal on July 1 said that the company will aim to challenge the top two players and become the leader in industrial paints. This comes after the company signed an agreement to acquire up to 74.76 percent stake in Dulux paints-maker Akzo Nobel India.
While speaking at a press conference, Jindal said that the acquisition would take the company to the fourth position in the Indian paint industry. "Dulux has 19,000 retailers across India, JSW-Dulux will have a total of 26,000-27,000 retailers," he said.
AkzoNobel CEO Grégoire Poux-Guillaume, meanwhile, said that the international company is happy with its outcome, and the sale of stake in its Indian subsidiary aligns with strategic focus to realign business. He clarified that the company is not exiting Indian business completely. AkzoNobel will be active in the powder business, and will be a technology partner to JSW Paints in coating business, he said.
"Depth of distribution in India is not as it should be. We need scale and firepower for it," Grégoire Poux-Guillaume further said, while adding that the company will return most money to shareholders from the sale of India operations. He noted that number three spot for the paint player isn’t too far.
Speaking about how JSW Paints will fund the acquisition, Jindal said it will be a mix of accruals, debt, private equity and other instruments. He added that it is premature to think about a reverse merger process.
“JSW Paints will not exceed 75 percent ownership in AkzoNobel India. It intends to keep it as a listed entity,” Jindal said. “We will be able to increase per-dealer throughput with both brands. We will continue with premium prices for Dulux,” he added.
FY25 was an anomaly for the decorative paint industry, and decorative segment margins will likely be under pressure, Jindal said. "We expect industrial paint market size to expand in next few years. We are also exploring ideas regarding synergies between businesses such as steel, cement and paints," he added.
JSW Paints signed definitive agreements to acquire up to 74.76 percent stake in Akzo Nobel India from its parent company and affiliates for up to Rs 8,986 crore, subject to final adjustments, the company said in a filing on June 27. The deal will need approval from the Competition Commission of India and includes a mandatory open offer to public shareholders.
JSW Paints will acquire Akzo Nobel India at a price of Rs 2,762.05 per share. Additionally, contingent consideration of up to Rs 447 crore may be payable upon completion of the transaction.
Earlier this year, Akzo Nobel India received a binding offer from its parent company, Akzo Nobel N.V., to acquire its powder coatings business and international R&D centre. The company plans to transfer both units on a slump sale basis as going concerns. The powder coatings business is valued at Rs 2,073 crore, while the R&D centre is proposed to be sold for Rs 70 crore.
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