Asian Paints Limited, India's leading paint and decor company, has announced a significant extension of its joint venture partnership with the PPG Group, a global leader in paints, coatings, and specialty materials. The renewed agreement, which extends the collaboration for an additional 15 years through 2041, underscores the success and strategic importance of this long-standing partnership in the Indian market.

Key Highlights of the Joint Venture Extension

• Duration: The partnership has been extended for 15 years, effective from 2026 to 2041.
• Structure: The existing 50:50 joint venture structure remains unchanged for both PPG Asian Paints Private Limited (PPGAP) and Asian Paints PPG Private Limited (APPPG).
• Management Control: PPG retains management control of PPGAP, while Asian Paints maintains control of APPPG.
• Market Focus: The joint ventures will continue to serve industrial, protective, marine, packaging, automotive, and powder coatings customers in India.

Historical Context and Growth

The partnership between Asian Paints and PPG has a rich history, dating back to 1997 when the first joint venture, PPG Asian Paints Private Limited, was established to service the automotive, refinish, marine, and consumer packaging markets. In 2012, the collaboration expanded with the formation of Asian Paints PPG Private Limited, focusing on the protective and powder coatings market.

Strategic Implications

Amit Syngle, MD & CEO of Asian Paints Ltd., emphasized the strategic importance of this extension, stating, "The extension of our partnership with PPG is a reflection of the strong collaboration and value creation we have achieved over the years. This ongoing partnership will continue to leverage PPG's technological expertise and Asian Paints' deep market understanding and local relationships to meet the evolving needs of the automotive and other industrial coatings market in the growing domestic sector."

Governance and Structure

The renewed agreement maintains the existing governance structure:

• Each joint venture company's board comprises four directors, with each partner nominating two.
• The chairperson of the board is appointed from among the directors nominated by the partner in control of the respective joint venture.
• The right to nominate the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) remains with the respective partners in control of PPGAP and APPPG.

Market Position and Future Outlook

Asian Paints, ranked among the top eight coatings companies globally, reported a consolidated turnover of ₹337.97 billion and a market capitalization of approximately ₹2,276.00 billion. The company's extensive operations span 14 countries with 26 paint manufacturing facilities, serving consumers in over 60 countries.

This strategic extension is expected to further solidify Asian Paints' position in the industrial coatings segment, leveraging PPG's global expertise and Asian Paints' strong local presence. As India's economy continues to grow, this partnership is well-positioned to capitalize on the increasing demand for high-quality industrial coatings across various sectors.

The renewal of this joint venture agreement demonstrates both companies' commitment to the Indian market and their confidence in the continued growth potential of the industrial coatings sector in one of the world's fastest-growing economies.

Asian Paints , India's leading paint manufacturer, reported a 1.2% decline in net sales for the first quarter, despite achieving volume growth in its decorative business. The company's performance was impacted by early monsoons in June, which affected sales in the coatings segment.

Key Highlights

Volume Growth Amid Revenue Decline

Despite the slight dip in revenue, Asian Paints managed to achieve volume growth across its segments. The decorative business, which forms the core of the company's operations, saw a 3.9% increase in volume. When including the industrial segment, the overall volume growth stood at 4.2%.

Industrial Segment Outperforms

The industrial business emerged as a strong performer, registering an impressive 8.8% growth. This segment's robust performance helped offset some of the challenges faced in the decorative segment.

Margin Performance

Asian Paints maintained healthy margins despite the revenue decline. The company reported gross margins of 43.2% and PBDIT (Profit Before Depreciation, Interest, and Tax) margins of 19.4% for the quarter.

Market Dynamics and Challenges

The early onset of monsoons in June significantly impacted the coatings business, leading to a slowdown in sales. However, the company noted encouraging signs in urban markets, with green shoots of demand emerging.

Amit Syngle, Managing Director & CEO of Asian Paints, commented on the market conditions: "We are seeing some good shoots in the urban markets which basically is indicating some revival of demand which is happening. Similarly, I think the monsoons this year have been fairly consistent and quite regular, which means that it is going to be definitely a normal monsoon and it is looking at upping the agrarian economy and therefore the rural demand should be definitely better."

Product Performance and Innovations

Asian Paints saw strong performance in several product categories:

• Economy emulsions
• Waterproofing business (under the Smart Care brand)
• Exterior textures
• Wood finishes

However, luxury emulsions underperformed expectations, with the company observing some down-trading in this segment.

The company continued its focus on innovation, introducing new products such as Nilaya Arc, a super-luxury emulsion targeting the premium segment. New product introductions contributed approximately 14% to the overall revenue for the quarter.

Expansion and Distribution

Asian Paints expanded its retail network to approximately 1.7 lakh outlets across the country. The company also progressed on its backward integration projects, including a VAM VAE emulsion plant in Dahej and a white cement plant in Dubai, which are expected to enhance product quality and cost efficiencies in the future.

International Business Performance

The company's international business, AP Global, grew by 8.4% in INR terms (17.5% in constant currency). Strong performance was noted in Asian markets, particularly in Sri Lanka and Nepal, as well as in the UAE and Egypt.

Outlook

Looking ahead, Asian Paints remains cautiously optimistic. The company expects single-digit growth in both value and volume terms in the near term, given the current demand scenario. The management is closely monitoring raw material prices, particularly in light of the recent anti-dumping duty imposed on TiO2 imports, which could impact costs by 1.5-2.5%.

As competition intensifies in the paint industry, Asian Paints is focusing on sustainable growth strategies, including innovation, brand enhancement, and regional initiatives to maintain its market leadership position.