By Suresh P Iyengar

Copyright thehindubusinessline

Is fluctuating raw material price a concern?

In the paint industry, about 58 per cent of the cost is raw materials, largely imported from China, Europe and the US. And even the most critical raw material, which is titanium dioxide (TiO2), comes from the western world and China. We have put a capex of about ₹3,500 crore on backward integration.

We are setting up 2.7 lakh tonne white cement factory in Fujairah (UAE). White cement is a very critical product for putty, which is a large segment. There are only two players — JK and Birla — in this category. The plant is almost ready and we are commissioning it in two months. It is almost the fastest cement factory to be set up in the world in about 12-14 months.

We are coming out with a new-gen emulsion VAE (vinyl acetate emulsion), which has lower VOC and no smell. There are only about four or five players worldwide with this technology. We are putting up a 1.50-lakh tonne VAE plant at Dahej in Gujarat. We will revolutionise the market with this new emulsion, with costs which are the best in the world.

We have started making one of the ingredients, surfactant, in-house. We also make opacifier, which is a replacement for an expensive TiO2.

Backward integration is unique to Asian Paints. Competitors do not have the volume to think of backward integration. We have enough money to leverage because we operate on a PBDIT margins, which are possibly 4-5 per cent higher than competition.