New Delhi: Nippon Paint India, a supplier of automotive paints to OEMs and aftermarket, is looking to cross the INR 1000-crore revenue mark for its auto refinish business by 2026, when it also completes 15 years in the country. The company is also consolidating its business in the Middle East with a new facility in Sharjah, UAE and is expanding globally.
“In India, with organic growth, network expansion, and new product introductions, we are aiming to become a INR 1000- crore business by the next 2-3 years,” Sharad Malhotra, President & Director, Nippon Paint India & Middle East, told ETAuto in an interaction.
The company clocked about INR 500 crore revenue for the aftermarket, wood coating and industrial business in FY23. Driving on a high base of last year, it aims to reach close to INR 600 crore in FY24.
Nippon Paint, which entered the Indian market in 2011, produces paints and coatings for the automotive refinish, industrial and decorative sector. It operates via three facilities – Bawal (Haryana), which majorly produces automotive paints; Mumbai, where it produces coil coatings and industrial coatings; and its largest plant in Chennai produces decorative paints.
The Bawal facility has a total production of around 1400 kL per month. By the next 2-3 years, Nippon is targeting to take it up to 2500 kL.
About 30% of the company’s revenue in India comes from new product ranges every year. “For this year, we are looking to introduce car care products including car wash, car polish etc. Recently, we have also ventured into the railway sector quite substantially because it provides big potential and India has a lot of investment happening here,” Malhotra said.
Nippon is also looking to set up its X’Press brand, starting with a store in Gurgaon to be launched next month.
It may be noted that the company had earlier opened about 50 X’Press stores to sell paints. However, the stores were eventually shut down during the COVID period. With the latest plan to reinvent, the company is planning at giving a new brand experience to open these stores as a “signature shop to showcase technology and get closer to the customers to spread awareness about which paint that goes on their cars.”
The paint supplier has its R&D centre in Manesar. Spread across 15,000 sq feet, Malhotra said, it caters to the company’s global needs in the automotive aftermarket.
India is also the company’s major hub for exports. Currently, the United Arab Emirates (UAE) is its biggest export market, followed by Indonesia and Australia. It is also exporting to other regions including Africa, Europe, New Zealand and Southeast Asia.
Middle East business
Started in 2015, Nippon Paint Middle East was integrated into Nippon Paint India business in 2020. However, owing to the Covid pandemic, the company said it began operations in the region only in 2021.
“We started with expanding in the UAE first and now looking at other countries including Oman, Qatar, Bahrain, Kuwait and Saudi Arabia. These markets have huge potential across the segments including automotive and industrial paints,” said Alpansh Sharma, General Manager, Nippon Paint Middle East (NPME).
“The idea is to activate regional partners to expand to the Middle East countries. In terms of OEM and aftermarket business, our potential may not be bigger than the India business but it is surely not less than that too,” he said.
With aggressive plans for this market, the company recently participated in Automechanika Dubai and aims to take part in more such global aftermarket events. It showcased automotive refinish products from the paint and non-paint categories, including the Nippon N-Force and N-Power brands; and the Nax 921 and 922 automotive clear coats.
Automechanika is the largest international automotive aftermarket trade show in the Middle East. It acts as the central trading link for markets that are difficult to reach connecting the wider Middle East, Africa, Asia and key CIS countries.
“After the Covid pandemic, this has been the biggest event in the aftermarket space. Our participation here provides us with a good opportunity as there are players from across the globe. It is also like an announcement to the world about our expansion plans,” Malhotra said.
Sharma said that the automotive aftermarket business is worth around USD 250 million in the UAE. In the next 3 years, experts estimate this to grow at a CAGR of 6-7%.
With an aim to make the best use of this opportunity in hand, Nippon’s target is to double the growth of its Middle East business every two years, at least for the next few years. This year its revenue will be close to USD 5 million.
The company is offering almost all the products available in India in the UAE. It will also launch water-borne paints in the region next year, considering these markets are more environmentally conscious.
“In the non-paint range, demand for body fillers and patties have been growing in India and we are looking to launch that for this market as well. In the UAE, we are targeting around 75% of the numeric reach in the region,” Sharma said.
With a long-term game plan, Nippon is developing a new facility in the UAE Sharjah for automotive paints. This is via a strategic alliance with the Saudi-based MMG Group, and will be operational by the middle of next year. It will have a capacity of around 200,000- 300,000 L per month.
The company has a partner facility at Umm Al Quwain in the UAE which produces industrial paints and has a capacity of 150,000 L a month.
Malhotra believes it is always good to spread out the risks. “Having multiple smaller manufacturing facilities rather than one large facility provides more flexibility. Our market in India is large so we have much larger facilities there. Now we are looking to set up more manufacturing facilities outside of the UAE region as well. We are planning something for Kenya.”
The paint supplier has over 200 direct customers in the Middle East, with about 150 of them in the UAE. However, for other export markets, Nippon prefers to work on a distribution model.
About the potential challenges of and opportunities working in the Middle East, Sharma said, “With several nationalities present here, new market dynamics become a challenge sometimes. But with defined compliances and policies, the smoothness of working here is an advantage.”
Global expansion
Nippon Paint India is a part of the Nipsea Group, a subsidiary of Nippon Paint Group from Japan, the fourth largest globally in terms of revenue.
In the automotive aftermarket space, it takes up the seventh spot globally. “Our aim is to be the No 1 paint brand globally in the next 10 years,” Malhotra said.
Currently, the company’s business is predominantly driven by the Asian market. For the automotive aftermarket, this region comprises about 95% of its business. For OEMs, the company has a good presence in the US and Europe, but again, over 80-85% business is in Asia.
While the Indian aftermarket business is the largest in the continent, it is a very small part of the OE business.
Nippon is now actively working to expand the business to the Middle East, Africa, Europe, and a few other regions.
In the African continent, Nippon is present in Kenya. Thus Africa is also a potential market for expansion along with Central Asia (including Kazakhstan, Kyrgyzstan) and Eastern Europe. The US aftermarket being the largest in the world provides a good opportunity too.
The paint supplier is also “looking for acquisitions and partnerships not only in India, but globally.”
Talking about technological interventions in manufacturing, Malhotra shared that Nippon has deployed color robots in a few facilities outside India. These are bots that do backend functions like using AI to spray colors.
The closest color robot that may be deployed in its Indian facility could be similar to the one in Thailand facility, where it has a strong manufacturing base. “We are trying to do something in India on similar lines, probably in the next 2-3 years,” he said.
According to the Frost & Sullivan research, the main growth driver for aftermarket revenue is the number of vehicles on the road. The number of light vehicles in the GCC is expected to be 15.9 million this year. This figure is expected to rise to 17 million by 2027.
Prominent off-highway products exhibited include TR 45 an R-1 bias tyre designed for tractors and for usage in soil preparation and haulage applications, TM 09 – R 3 tyre that’s designed for single drum vibratory soil compactors, ST 54 Jumbo – L 5 tyre that’s designed for heavy duty applications. Others on display were tyres for material handling and construction – BL 09, BL 18, EL 09 and more, the company said.
