Sharad Malhotra, Managing Director, Nippon Paint (India) Group

The sharp rise in crude oil prices, along with the aggressive pricing strategies adopted by new entrants, has put significant pressure on margins across the paint industry. With key raw material costs closely linked to crude derivatives, input cost inflation has emerged as a major challenge, while rising inflation has also begun to weigh on demand sentiment. Sharad Malhotra, Managing Director, Nippon Paint (India) Group shares his perspective on the evolving challenges and the way forward for the company, including M&A to expand its portfolio and capabilities. Excerpt:

Do you expect demand to slowdown this fiscal given the inflation concern?

Inflationary pressures do create short-term caution in consumer spending, but the long-term fundamentals of the paint industry remain strong. Urbanisation, housing demand, infrastructure development, and a steadily shortening repaint cycle continue to support category growth. India remains a structurally high-growth market for us. There may be temporary fluctuations across quarters, but the overall consumption trajectory continues to be positive. Our strategy remains focused on long-term market development rather than reacting to short-term cycles.

Will the paint companies be able to pass on the incremental cost if the demand slows down?

Pricing decisions in our industry always require a calibrated approach. While raw material movements do force periodic corrections, we remain mindful of market sentiment and consumer affordability. We incessantly focus on supply chain optimisation, manufacturing productivity, and cost management measures to absorb volatility wherever possible. Pricing action is typically taken only after evaluating the broader market environment and long-term sustainability of the business.

Do you expect further increase in raw material cost?

Our industry remains closely linked to crude derivatives and global supply chain movements, so volatility in raw material pricing cannot be ruled out. While input costs have shown signs of stabilisation, geopolitical developments and global demand continue to influence the outlook. The industry’s focus today is not only on managing volatility but also on building resilience. We are investing in R&D, localisation initiatives and alternative formulations to reduce dependency on external disruptions over the long term.

How do you view emerging competition in the decorative paint business?

Competition is a positive sign for any growing industry, and the Indian decorative paints market continues to offer significant headroom for expansion. India’s per capita paint consumption remains below several developed markets, which indicates long-term growth potential for all players. The entry of new companies will accelerate innovation, strengthen category awareness, and raise consumer expectations around quality and service. For us, it reinforces the need to evolve and differentiate ourselves through technology, product performance and customer engagement.

Do you expect new entrants to drop prices to capture market share?

Price-led disruption is common across industries. But paint is a high-involvement, high-labour category where product performance and trust play a significant role in long-term consumer preference. Consumers do not want to repaint every two years because a cheaper product failed on their walls. Indian consumers calculate value over the lifecycle of the product — prioritising durability, aesthetics, washability, and health standards like Low-VOC (Volatile Organic Compounds). You can buy initial market share with deep discounts, but enduring brand equity is built on trust and consistent performance.

Do you plan to diversify into allied businesses like other paint companies?

Absolutely. We view ourselves as an augmented finishing solutions provider, not just a paint manufacturer. The boundaries between paint, surface protection and construction chemicals are blurring as the industry is moving toward integrated surface solutions. Our growth strategy is dual-pronged. We are evaluating opportunities across both organic expansion and strategic partnerships where they align with our long-term growth. We are also on the lookout for inorganic M&A opportunities that will allow us to acquire niche capabilities, expand our portfolio, and reach new customer segments faster. Our objective is to build a broader solutions-driven portfolio while continuing to strengthen our core coatings business.

Will the demand for industrial paint sustain?

We are seeing strong momentum across infrastructure, manufacturing, automotive, and industrial capex in India, all of which continue to be key demand drivers for the paints sector. The Government’s ‘Make in India’ push and the rapid transition toward electric vehicles are also driving demand for highly specialised, high-performance protective coatings capable of withstanding extreme operating environments. At the same time, customer expectations are evolving, particularly around durability, corrosion resistance, sustainability, and advanced performance standards. Together, these trends are creating significant opportunities for technologically advanced coating solutions in the Indian market.

Do you expect further consolidation in the paint industry?

Consolidation is a natural trend in any evolving industry. I believe the paint sector will also see strategic partnerships and acquisitions in the coming years. However, future consolidation will be driven not just by scale, but by the need for differentiated capabilities. Areas such as specialised technologies, sustainability solutions, regional distribution strength, and manufacturing efficiency are becoming important. As the industry becomes more competitive and technologically advanced, all paint companies will look to strengthen these capabilities through various routes.

What are your investment plans for FY’27?

India continues to be a strategic growth market for Nippon Paint, and we are committed to serve the evolving needs of the Indian consumer. Our focus for FY’27 includes strengthening our manufacturing capabilities and enhancing operational efficiency to support long-term demand growth. We are continuously evaluating capacity expansion opportunities in line with market requirements and business growth across segments. The broader objective is to ensure that our manufacturing and supply chain ecosystem is agile and scalable.

Published on June 16, 2026