Thanks. Interesting video but don’t really buy the argument that Grasim will somehow magically disrupt the industry and change the dynamics just because they have deep pockets. Historically, there have been others who tried and failed before. So, it all comes down to execution, distribution, dealer relationships etc. Grasim may go on to be successful, but is it going to at the cost of other organized players is a wait and watch for me. Also, Grasim themselves believe that their entry will lead to a shift of demand from unorganized players to organized players which it aims to catalyze. This might also help the organized players further. The decorative paints sector is a Rs.40,000 crore market, with unorganized players accounting for one-fourth of the market share. So there is a good chance that the current top 4-5 companies might still be able to grow and maintain their margins over the long term. And the demand for this segment is also ever increasing so it remains to be seen how much of it can be captured by Grasim. While the points called out in the video are definitely good food for thought, I don’t see any major moats or advantages that Grasim comes with apart from deep pockets and a good starting points of using their putty distribution channels. Also, Indigo Paints is pre-dominantly in the tier-3, tier-4 cities whereas Grasim is planning to target Tier-1 and Tier-2. Its not easy for new entrants to make immediate impact as it would take a good 5-6 years to establish oneself and then start to compete with incumbents. Indigo Paints took ten years to build brand recall among customers through heavy advertising. Grasim does have the their cement depots to sell its paints but building a brand is neither easy nor quick. So, I personally don’t see any adverse impact on Indigo paints in the near term and dare I say medium term too.
| Subscribe To Our Free Newsletter |
