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ShareMUMBAI: Close on the heels of acquiring city-based Nitco Paints, Sherwin-Williams plans to acquire two more local firms. The $7.1-billion US-based company, the second-largest paint maker in the world, has allocated around Rs 600 crore for the two acquisitions this fiscal, according to company sources.
The acquisition of Nitco Paints is just the beginning of Sherwin-Williams' journey in India, Christopher Connor, chairman and CEO of Sherwin-Williams, told DNA Money on Wednesday. "There is more to come soon," he said on the sidelines of an event to announce the acquisition of Nitco Paints.
Sources further said that Sherwin-Williams has drawn up a huge spread for India, involving exclusive retail outlets across the country and entering into exclusive tie-ups with leading real estate developers and builders for exterior paints.
The company even plans to list on Bombay Stock Exchange by 2009, they said.
Sanjiv Batra, CEO, Sherwin-Williams, though, said, "I can't disclose any future acquisition plans or fund allocations at this moment, but the company will grow at a rapid speed in the next few quarters."
On the Nitco Paints acquisition, he said it will continue using the Nitco brand name for the next three years, but may change it after that as more Sherwin-Williams products come into the country.
The local paint industry expects to witness a 15-20% increase in capacity in the next three years, given the current growth in demand. The five-year compound annual growth in demand is estimated at 8.5% for 2002-07.
There are five major players in the paints sector and the largest is Asian Paints, with a turnover of close to Rs 2,500 crore and a market capitalisation of Rs 6,200 crore. Nerolac Paints, Berger Paints, ICI and Shalimar Paints are the other four big players. In fact, UK-headquartered ICI Paints has earmarked Rs 1,500 crore for acquisitions. The company has Rs 500 crore in cash and can raise another Rs 1,000 crore for acquisitions.
Experts believe Sherwin-Williams' foray into India will change the dynamics in the local paint industry. Domestic players will have to face new challenges as foreign players are making a beeline for India. Nippon, Jotun, Akzo Nobel, Dupont and BASF have begun expanding capacities and setting up greenfield operations in the country.
