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Monopoly of Asian Paints Share Price
Asian Paints is one of the greatest country in the history of India. And the most fascinating thing about this about Asian Paints is, it is the only company which has grown at a CAGR of 20% for the last 60 years. It is currently trading at Rs 2819 as of 18 May,2024. Can you imagine if you have invested 1 lakh rupees in this company in 2000 how much money would it have become? As per current share price it would have become more than Rs 1.8 Crore and that too without dividends. It sounds crazy right but it’s true.Â
The business of Asian Paints doubles every three year so its share price also shoots up and it has been the market leader in the industry for the last 56 years. It has generated a revenue of Rs 35,382 crores and a net profit of Rs 1275 crore in FY 2023-24. Its competitors are way behind in terms of financial metrics. Now the question is how they are dominating the paint industry and what’s their secret sauce? Let’s see.
History of Asian Paints and It's Share Price
The history of Asian Paints dates back to volatile times of 1942 India and during that time India was still under the British raj, the World War II was going on and the government had banned the imports of paints in India. During those days, the paint industry in India had few foreign companies and Indian players like Shalimar Paints were the major players in the market. But this resulted into a brilliant opportunity for domestic production. And spotting this opportunity, Mr. Champaklal Choksey and three of his friends set up Asian Paints in Mumbai in 1942.
The incredible thing about this gentleman was that he was a great market researcher and he spent a lot of time understanding the paint industry. This is where he understood that there were two segments in the paint industry, one was the industrial segment and the other was the decorative paint segment.
In the industrial segment, it was a B2B space that is all about supplying paint to giant factories and plants whereas the decorative segment was a B2C as in sell paint to the common man to paint his house.
Long story short, initially the large distributers rejected Mr. Choksey so he turned to villages wherein people painted the horns of the bulls and the South Indians painted the entrance of their house, considering it to be auspicious. Looking to this demand, Mr. Choksey started supplying to the village distributors. The demand soon enough short up and within sometime the bigger distributer started approaching Asian Paints. And in the next 10 Years with this rural to urban approach, they hit revenue of Rs 23 crores by 1952. But it was not enough to be the market leader of the industry.
The second phase of growth of Asian Paints started when Mr. Choksey noticed another huge gap in the market. During the 1950s, Mr. Choksey saw that there were two major products in the market. One was a basic dry distemper which was extremely cheap but it had a tendency to peel off, it would stick to clothes and it used to stink very badly. The second product was the plastic emulsion product. It was free from all of these problems but was five times costlier than dry distemper.Â
Therefore, it was unaffordable for the common man. And then Asian Paints came with a game-changing product called washable distemper that was placed exactly between dry distemper and plastic emulsion. This was a revolutionary product because it had the qualities of the plastic emulsion but it was way cheaper than the emulsion product. The company grew at a CAGR of 21% between 1952 to 1962 and after 25 years of starting, it became the largest paint company in India.
How Asian Paints Share Price shoot Up?
Well, there are 3 critical factors of Asian Paints dominance.
First one, the company has a world class supply chain that they’ve built over the past 60 years. They have eliminated the middle men in the supply chain and deal directly with the dealers.
Second one is efficiency. The company has been continuously investing heavily in technology since its early days. In fact, Asian Paints purchased a super computer 10 years before ISRO, 10 years before IIT Bombay and 21 years before any other company in the country. They used technology to forecast demand of products in the market.
Last but not the least, third one is extreme care. Asian Paints treats employees and dealers as their part of family. The company goes beyond its call of duty to make financing easy for dealers. If the dealer has any query it get resolved utmost within 24 hours and most importantly to go out of the way to help them out during a calamity saving them from an unimaginable amount of pain and suffering.
Conclusion
Lastly, while good brands have legendary leaders but a great brand has a legendary culture. In this case, it was the impeccable board of directors of Asian Paints, the star recruits from IIM and the wise marketers who have kept the legacy of the company for 70 consecutive years. If this isn’t an epitome of greatness then I don’t know what it is!
