It’s been two years since Kansai Nerolac Paints Limited (KNPL) India, started manufacturing paints in Nepal after acquiring 68 per cent stake in Nepal Shalimar Paints in 2012. The company, which produces paints under the brand name Kansai Paints, claims to be the pioneer in producing lead-free and zero VOC (volatile organic compound) paints in the country. Satya Prakash, Country Head of Kansai Paints Nepal Pvt Ltd, recently spoke to Akhilesh Tripathi of New Business Age about the company’s growth over the past two years, new launches, competition in the market and corporate social responsibility (CSR) activities. Excerpts:
Could you tell us briefly about how this company came into existence? What is the legal status of the company?
Kansai Paints Nepal Private Limited is a subsidiary of Kansai Paints Company, Japan, in association with Kansai Nerolac Paints India. This is a Japanese company, truly multinational with presence in more than 35 countries around the World. Being a Japanese company, Kansai Nerolac paints has high presence around the globe and we have world-class paint technology with us. We are working in Nepal with a very clear motive – to bring eco-friendly and high quality paints in the Nepali market. We have a best-in-class manufacturing unit at Parwanipur, Birgunj.
For the last two years, we have been operating with our manufacturing unit in Nepal but our relationship with this country and the consumer is not new. We have been operating in Nepal by exporting paint material from India for more than past two decades. Hence the product and brand Kansai Nerolac Paint is well-known to the Nepali consumers since long.
How have the past two years been in terms of business growth?
It’s been really fabulous for us. When we were exporting materials from India, there were some logistic hassles related to import and export but now we have our own manufacturing unit in Birgunj. We have received tremendous support from our consumers. Our growth over this period has been very good. This is because of the product range and the best in class quality we have offered. We are the company to take the initiative of bringing in lead-free paints; we are the company to introduce low VOC and zero VOC paint to the Nepal market. We are certainly aiming at technological leadership in the Nepali paint market.
In one of your interviews a year ago, you had said that the market share of Kansai Nerolac paints in Nepal is 12-15 per cent. Has the market share increased or decreased over the past one year?
Our market share has certainly increased. Our growth rate is faster than the growth rate of Nepal’s paint industry; it is almost double the market growth rate. This has been possible because of the continuous support from consumers - institutional buyers like builders, architects and engineers. In a very short time Kansai Nerolac Paint has become applicator’s preferred choice; everybody has appreciated the quality of our products.
Can you tell us your exact annual growth rate?
What I can say is our growth rate is almost double the industry’s growth rate. The paint industry in Nepal is growing in double digit.
How is the market competition?
Nepal is a competitive market. There are many companies producing paints in Nepal. However, if you talk about the quality and range of products, we are among the few companies which are producing and maintaining high quality standards in paints. Kansai Nerolac paint is certainly a market leader so far as the technological aspect is considered.
Do you have any plans to launch any new products this year?
As of now, we have the largest range of products in both interior and exterior segments. Apart from that, there are specific products for wood and metal. The present range of products we have is sufficient for the time being, although there are few new products in the pipeline. We have recently launched a product called Nerolac Acrylic Putty. It’s the best in the class of readymade paste putty for walls and is getting very good response from the market. Likewise, we have launched a new interior primer which is very cost-effective. We have been able to provide better quality at very reasonable price because of our technical edge. Very soon we are going to launch designer metallic range of products for walls.
What about the lead content in your products?
As I already mentioned, all our products are lead free - interior or
exterior – they comply with the standard norms. Our focus is always on maintaining quality and we are the first company to bring lead-free and eco-friendly products in Nepal.
How are you promoting your products? How much do you rely on advertisements?
There are two things. One is the quality of the products; if the quality is good it will speak for itself. Those who have used our products have appreciated their quality. They are repeatedly asking for our products. Hence, the popularity of our products is spreading by word of mouth. So far as our presence in the media is considered, in the last two years, we are supposed to be the most alive company in the Nepali market. Our advertisement comes in all digital and print media. Bollywood star Shahrukh Khan is the brand ambassador and has endorsed our product. This advertisement is coming in almost all Indian and Nepali TV channels. Nepali celebrities too have endorsed our products. You can see the advertisement of Kansai Nerolac paints in almost all major newspapers and magazines from time to time. We are also doing lots of ATL and BTL activities. In my view, advertisement is only a means to communicate our presence; ultimately quality will speak. We always wanted to be a trustworthy brand which people can depend on.
How has the merger with Shalimar paints helped your business?
There may be different backgrounds for mergers and acquisitions. In Nepal, Shalimar Paints was a recognized company locally. By acquiring Shalimar, we got an immediate network, though the manufacturing plant, machineries and equipment have to upgraded or replaced to make it most modern international standard manufacturing unit. It was good for the dealers as well because earlier they were selling local paint and after this acquisition they have now International brand and best in Class quality to offer to their consumers.
You have recently removed your hoarding boards. Why ?
In the Kathmandu Valley, the Metropolitan authority ordered to remove all hoarding boards and signage. So, every hoarding board has been removed from the city including ours. I think it’s good; the city looks clean now. Though you can see our presence in hoarding boards in every corner of Nepal including national highways except Kathmandu.
Is there any problem you are facing in doing business in Nepal?
Not really. It’s a very peaceful country. We are manufacturing high quality products and are getting support from everyone including the consumers.
The housing industry which is one of the major buyers of paints is not growing as expected in Nepal. So, what is fueling your growth?
You are right to some extent. The high-rise building segment is not growing, but we cannot say the overall housing industry is not growing. We can see the bungalow segment is doing well. Apart from that, paint is a material which is required not only for new buildings but also for re-painting. So, even though the construction industry is not growing the way it should, the paint industry is certainly growing.
Which categories of paints are selling the most?
We have paints for all surfaces and all income groups. For the high-income group, we have luxury premium emulsions for exterior and interior. Likewise, we have very good products with value for money for the middle to lower income groups. We have EXCEL TOTAL, EXCEL as premium exterior paint with superior finish and life. Similarly, we have Suraksha Plus, an economy exterior paint, which gives value for money. Likewise, in the interior segment we have superior products like Impression 24 Caret Luxury Emulsion , Lotus Touch and Beauty Gold Premium Emulsion paint, and in the economy segment we have products like Little Master Emulsion paint which is worth paying to upgrade from distemper. In Nepal’s major cities where the money-flow is reasonably better, the premium emulsion range is selling high. In the hills, demand for the economy segment is more. So far as our overall portfolio is concerned, we are certainly getting better share in the premium emulsion range.
In one of you previous interviews, you mentioned producing eco-friendly paints, and holding events like Birgunj and Hetauda idols as CSR activities. Do you think these are really CSR activities or there could be more meaningful way to carry out such activities?
We consider any activity which can positively contribute to society, besides the day-to-day business, as a CSR activity. The Hetauda Idol event created a platform for the local talent to come forward and show their competence and capability, and the same goes about the Birgunj Idol. Those Idols are now contributing to the Nepali film industry. There are other activities as well, for example, we are contributing to various organizations and schools in different remote areas. A big programme was held at Hotel Annapurna by the British School students to raise fund for renovating schools in the remote areas and arranging study material for the students. We contributed to that fund. When the Pashupatinath Temple, a world heritage site, was being renovated, we contributed by way of providing paint at no cost. There are several social activities where we have been trying to contribute.
Can you share with us your annual profit?
We will certainly share our annual profits as and when our audited report comes. I don’t think it’s the right time to speak about that.
What about the profit of the previous year?
It’s good, but we are not talking much about profits in our initial years. It’s true that any company has to be profitable for existence. But our prime objective is to prove ourselves as the main driver to uplift the Nepali paint industry by bringing in modern technology and high quality paints in the market.
What percent of your profits do you spend on CSR activities? Is there a company policy regarding CSR?
Yes, we have a CSR policy not only in Nepal but in all the countries where we are operating. We believe in contributing to society for its development. Any good organization will always be concerned for its stakeholders and the society where it works.
You are also fighting a legal case related to you brand name. Where has that reached?
When a big brand from any part of the world is copied, we need to think why it’s being copied. Why does one want to have a brand name which resembles a prominent brand? Aa prominent brand is copied to create spurious products and ultimately the innocent consumer is going to be misguided. We have faced a similar issue. I am sure we will get full support from the government and other agencies. It’s the responsibility of any government to make sure that the name of a famous international brand is not copied and consumers’ interests are protected. I am sure the Government of Nepal is fare enough on these issues and will certainly take initiatives to create an environment where international brands come forward to invest in Nepal and contribute to upgrade the quality standards.
Will you say something about the ‘Meet with the Don’ offer of your company?
As you know, the most popular superstar Shahrukh Khan is our brand ambassador. He will be coming to Nepal most likely in the second week of March 2015. It’s going to be certainly a big moment for all of us to welcome him in Kathmandu. We will invite our dealers and select consumers to meet Shahrukh Khan who have purchased our products. As per the offer, lucky draw winners among the consumers who have registered their purchase with the code through SMS will be invited. To make the entire process transparent and fair, we organised this lucky draw live on TV channel in the presence of the president and patrons of the Paint Dealers Association.