Indigo Paints Management Discussions


The Indian economy demonstrated resilience amid geopolitical tensions and high inflation-induced global economic headwind and, according to the final advance estimates of the National Statistical Office (NSO), is set to register a growth of 7.2% in FY23. The better-than-expected performance in FY23 can largely be attributed to the relatively strong performance of the economy in the fourth quarter.

The Reserve Bank of India (RBI) is maintaining a stable monetary policy stance given the sliding inflation trajectory, positive macro tailwinds and increasing consumer aspiration. It decided to keep the repo rate unchanged for the second consecutive time, opting for a hawkish pause.

The Indian governments initiatives, such as the PM Gati Shakti (National Master Plan), the National Monetisation Plan (NMP) and the Production Linked Incentive (PLI) plan, helped in fostering economic growth. Additionally, stronger prospects for manufacturing, services, agriculture, and related industries, along with improved business and consumer confidence, are expected to support domestic consumption. These factors, coupled with accelerated credit expansion, are anticipated to contribute to the overall economic growth in the near term.


In this turbulent global economic environment, India has experienced macroeconomic and financial stability with a steady pick-up in growth momentum. This reflects a sound macroeconomic policy environment and the innate resilience of the economy which fortified it against recurring global shocks.

India stood out as one of the few countries that exhibited lower corporate debt-to-GDP ratio. This robust debt profile of Indian companies has played a crucial role in maintaining the overall macroeconomic stability of the Indian economy.

The countrys sustained growth momentum has positioned the country favourably, making it an attractive investment destination.

Medium-term prospects for the country have been brightened by the demographic dividend, the digital revolution, policy initiatives to transform India into a global manufacturing hub and a resurgence in services sector competitiveness.

INDUSTRY OVERVIEW Paint and coating

The Indian paint industry is undergoing a gradual transition in consumer preferences from conventional whitewashing methods to a preference for high-quality paints such as emulsions and enamel paints. This shift in consumer choice serves as the fundamental catalyst for the growth and stability of the Indian paint industry.

The industry was valued at Rs.62,000 Crore in FY23. Further, it is anticipated to exhibit substantial growth and reach a market size of Rs.1 lakh Crore by FY28. This trend aligns with the sectors consistent attainment of a Compound Annual Growth Rate (CAGR) in the double digits over the past few years.

Decorative Paint segment remains dominant in Indian paint & coating market. C-

Due to Indias robust economic fundamentals, promising growth prospects and renewed enthusiasm for the "Make in India" initiative, the Indian Paint Industry is poised for a prosperous and vibrant future.

Construction chemical

The market for construction chemicals has exhibited consistent growth in recent years and is expected to maintain this trajectory in the coming years. Among the many factors, the key factor driving this growth is growing demand in construction activities and corresponding use of construction chemical that offer both durability and sustainability. As the construction industry increasingly prioritises environmentally- friendly building practices and sustainable construction, there is a rising requirement for construction chemicals that enhance the longevity and resilience of structures while minimizing their ecological impact.

The construction chemicals market in India, currently valued at US$ 1,6178 million in 2023, is projected to witness a substantial compound annual growth rate of approximately 13.1%, reaching a market valuation of US$ 5,541.8 million by the conclusion of 2033.


The decorative paints have gained significant popularity in recent times due to their distinctive finishes and textures. The growth of the decorative paints industry can be attributed to various factors such as the increasing demand for interior decorations and renovation of residential houses.

The use of decorative paint in smart homes enables seamless integration with electrical and heating controls, along with the ability to display digital content on painted surfaces. By applying these integrated paints, the aesthetics and functionality of spaces can be significantly enhanced, thereby augmenting their immersive quality.

Digitalisation is expected to play a pivotal role in the future of decorative paints. By leveraging virtual reality or augmented reality tools, consumers will have the ability to visualise and personalise their paint selections. This advancement significantly enhances the overall customer experience, enabling individuals to preview various colour schemes and finishes prior to finalising their decisions. Such technological integration empowers customers to make well-informed choices and contributes to an enhanced level of customer satisfaction.


The burgeoning demand for waterproofing chemicals across diverse end-use sectors, including construction and infrastructure, serves as a pivotal catalyst propelling the growth of the waterproofing chemicals market. The escalating urbanisation and robust construction activities have amplified the necessity for water-resistant infrastructure, thereby intensifying the demand for waterproofing chemicals. Moreover, the increasing awareness regarding the advantageous attributes of waterproofing, such as shielding against water- related harm and preventing the growth of mold and mildew, further augments the market value of waterproofing chemicals in the foreseeable future.


Sustainability and environmental responsibility

Sustainability and responsibility for the environment are becoming more and more important in the paint business. By creating paints with low or no Volatile Organic Compounds (VOC), water-based formulas, and utilising eco-friendly raw ingredients, manufacturers are putting more emphasis on minimising the environmental effect of their goods. Government policies supporting environmentally friendly practices and rising consumer awareness are the driving forces behind this trend.

Smart and functional coatings

Smart and functional coatings are a rising trend in the Indian paint and coating industry due to their adaptive properties and improved performance. These coatings, capable of responding to external stimuli like heat, light, and pressure, offer superior durability and longevity compared to conventional products. With increased efficiency and customisable properties, they meet a broad range of specific needs. Their demand is expected to rise due to growing urbanisation and infrastructure projects, coupled with the expanding industries such as consumer goods in India.

Waterproofing solutions

The imperative need to protect growing global infrastructure from water damage, exacerbated by unpredictable weather conditions due to climate change, is driving the waterproofing segment growth. Consumer demand for robust waterproofing solutions is also increasing, as awareness of water-related damage and its prevention grows. Additionally, technological advancements have led to improved, durable, and versatile waterproofing products.


Increase in urbanisation and infrastructure

India is currently undergoing urbanization at a brisk pace, leading to a significant upsurge in construction and infrastructure projects. This phenomenon presents a substantial opportunity for the paint industry, as these projects typically consume substantial quantities of paints and coatings.

Increasing middle-class population

The rising middle-class population with improved purchasing power will boost the demand for decorative paints for homes and offices. As these consumers look to improve their living standards, higher quality and more aesthetically pleasing paint options may see increased demand.

Innovation and R&D

There are opportunities to develop new, innovative paint products. This could include environmentally-friendly paints, paints that help with heat insulation, anti-microbial coatings, or long-lasting paints that resist weathering.

Digitalisation and E-commerce

Online sales platforms provide an opportunity to reach a broader market. Brands that can successfully navigate the e-commerce space and provide online services (such as colour visualisation tools, virtual home decoration apps, and online consultations) will likely have a significant advantage.

Government initiatives

The Governments focus on initiatives like Smart Cities and the Housing for All scheme, which aim to boost manufacturing and infrastructure while providing affordable housing, could significantly increase the demand for paints and coatings.


Raw material pricing and availability

The price and accessibility of essential raw materials such as titanium dioxide, pigments, resins, and solvents, predominantly reliant on imports, are susceptible to volatility caused by global economic dynamics, trade policies, and geopolitical events. These fluctuations have the potential to exert a substantial influence on the cost framework and profitability of paint companies.

Infrastructure challenges

The transportation and storage of paint products can pose significant challenges in India, particularly in rural areas, where infrastructure may be insufficient. These logistical hurdles have the potential to escalate costs and hinder access to potential markets.

Consumer awareness

Despite the industrys growth, consumer awareness about the different types of paints and their applications remains low, especially in the rural and semi-urban areas of the country. This lack of awareness can affect the demand for specialised and value-added products.

Environmental regulations

In response to the growing global focus on environmental conservation, stringent regulations have been implemented to control the emission of volatile organic compounds from paints. Compliance with these regulations necessitates the development of novel, environmentally friendly formulations, which can be a resource-intensive and time-consuming undertaking.


Indigo Paints, founded in the year 2000, stands as a prominent paint company in India, recognised for its progressive and distinct product strategy. With its headquarters situated in Pune, Maharashtra, the Company commenced its operations as a modest producer of economical cement paints. However, over time, it underwent a transformation, expanding its portfolio to encompass a diverse assortment of decorative paints.

The Company has established an extensive distribution network that spans across India, facilitating the convenient availability of its product range to customers. Additionally, the Company possesses and operates three manufacturing facilities strategically located in Jodhpur (Rajasthan), Kochi (Kerala) and Pudukkottai (Tamil Nadu). The Companys emphasis on research and development, aimed at introducing innovative and distinctive products, has played a pivotal role in driving its growth trajectory.

Indigo Paints has successfully surmounted the high entry barriers of the Indian Paints industry through its patient and multi-pronged strategy, comprising:

1) Introduction of differentiated products,

2) Focusing on specific cities,

3) Creating brand equity through strategic investments in advertising and promotions

4) Rapidly driving the penetration of tinting machines, and

5) Engaging with influencers (painters/contractors) to build trust.

During the initial two decades, the Company had expanded its distribution network largely in Tier 3, 4 cities. With a strong presence in the Tier 3,4 cities and the rural areas, the Company started focusing on expanding its presence in Tier 1,2 cities as well. The Company is also increasing the engagement with the dealers and influencers with the aim to improve the throughput per dealer. These initiatives have started yielding good results.


Brand image and recognition

Over the years, Indigo Paints has built a reputable brand for itself in the Indian paint industry. The Company has focused on effective marketing strategies and brand-building activities to enhance its visibility and create a strong brand recall.

Innovation and differentiation

Indigo Paints has positioned itself as a Company that emphasises innovation and differentiation in the highly competitive paint industry. It has introduced unique products to target specific customer segments and address their specific requirements.

Product portfolio

The Companys product portfolio includes interior emulsions, exterior emulsions, enamel paints, wood coatings, distempers, primers, putties, and cement paints. It has continuously strived to introduce new and unique products to the market, distinguishing itself from its competitors.

Strong distribution of network

Indigo Paints has established a robust distribution network, comprising a mix of direct and indirect channels. This network helps the Company reach a wide customer base and ensures efficient product availability and delivery.


Indigo has recently* completed the acquisition of a majority stake of 51% in Apple Chemie India Pvt Ltd. Apple Chemie is a rapidly expanding company operating in the field of construction chemicals and waterproofing. It has achieved an impressive compound annual growth rate (CAGR) of approximately 30% over the past five years in terms of revenue. The Company specialises in the manufacturing and distribution of its products in the business-to-business (B2B) segment, catering to renowned infrastructure projects in the Western states of India. This strategic move has provided the Company with the necessary expertise in the field of waterproofing and construction chemicals, expanding its product portfolio in this domain.

Apple Chemie offers an extensive range of products that effectively complement Indigo paints. Additionally, the Company has garnered a marquee clientele comprising prominent engineering and construction conglomerates throughout the country. With the governments substantial investment in infrastructure development and a well-established customer base, Apple Chemie is positioned to emerge as a leading player nationwide.

*(On April 3, 2023)


Indigo Paints had raised Rs. 1,16,912.39 Lakhs during the IPO in FY 2020-21. Out of the proceeds, the Company had received Rs. 28,711.21 Lakhs for the following objects: Funding capital expenditure for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu by setting up an additional unit adjacent to the existing facility; Purchase of tinting machines and gyroshakers; Repayment/prepayment of all or certain portion of the borrowings; and General corporate purposes

Rs. in Crores

Sl. No Item Head

Amount as proposed in Offer Document Utilized up to March 31, 2023 Un-Utilized up to March 31, 2023

1 Funding capital expenditure for the Proposed Expansion

15,000.00 15,000.00 -

2 Purchase of tinting machines and gyroshakers

5,000.00 4,858.11 141.89

3 Repayment/prepayment of certain borrowings of our Company

2,500.00 2,500.00 -

4 General corporate purposes

6,211.21 6,211.21 -


28,711.21 28,569.32 141.89

The proceeds have been utilized for the intended objects. The construction of additional unit at Pudukkottai, Tamil Nadu is complete and is in trial production phase. The residual amount of Rs. 141.89 Lakhs was also subsequently utilized by May 31, 2023.

OPERATIONAL OVERVIEW Sales and product mix

The sales growth in Tier-1 and Tier-2 regions has exhibited nearly twice the rate compared to Tier-3 and Tier-4 regions, including rural areas. This trend is expected to gain momentum in the future. Additionally, there is a renewed emphasis on enhancing the throughput per Tinting Machine, aiming to maximise efficiency and productivity.

Value growth

Product category

:2020-21 2021-22 FY 23

Cement paints+ putty

23.22% 7.91% 33.19%


11.65% 39.80% 18.20%

Enamels+ wood coatings

19.57% 16.03% 30.30%

Primers+ distempers+ others

26.65% 21.42% 18.93%

Volume growth

Product category

:2020-21 2021-22 FY 23

Cement paints+ putty

19.63% 3.86% 25.52%


8.72% 21.66% 5.88%

Enamels+ wood coatings

15.41% 2.87% 18.52%

Primers+ distempers+ others

20.35% 5.37% 13.82%


During the year under review, the Company experienced growth in its active dealer base, reaching a total of 16,496 dealers. Furthermore, the Company augmented its tinting machines to 8,273 in FY23. The expansion of the active dealer network aligns with the Companys long-term business strategy, which aims to attract a greater number of dealers and facilitate the expansion of its footprint.

Product category

2019-20 2020-21 2021-22 2022-23

No. of depots

36 44 47 47

Active dealers

11,230 13,214 15,787 16,496

Tinting machine

3,143 5,472 7,101 8,273


In FY23, the portion of the Companys revenue derived from its unique range of products constituted 31.2%, exhibiting an increase from the previous fiscal year where it accounted for 29.6% of the total revenue.

Product category

2019-20 2020-21 2021-22 2022-23

Sales from differentiated products

28.6% 29.5% 29.6% : 31.2%


The Company has achieved a significant milestone in FY23, surpassing Rs.1,000 Crore in net revenue and concluding the year with a net revenue of Rs.1,07,333.43 Lakhs. The operational income for FY23 has expanded by 18.47%, increasing from Rs.90,597.48 Lakhs in FY22 to Rs.1,07,333.43 Lakhs. The Company has managed to achieve one of the highest gross margin in the industry, standing at 44.54%. This accomplishment can be attributed to a favourable product mix and a prudent material purchase policy. The Company has also experienced healthy growth in EBITDA and PAT compared to FY22 by 33.50% and 56.98% respectively. The EBITDA margin has expanded to 16.91% from 15.01% in FY22, while the PAT margin has increased to 12.18% from 9.17% in FY22.

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor.

The key financial ratios are given below


2019-20 2020-21 2021-22 2022-23

Revenue from operations (in Lakhs)

62,479.20 72,332.47 90,59748 1,07,333.43

Gross margin (%)

48.47 47.95 43.32 44.54

EBITDA (H in Lakhs)

9,098.80 12,251.61 13,598.37 18,153.24

EBITDA margin (%)

14.56 16.94 15.01 16.91

Profit for the year (H in Lakhs)

4,781.50 7,085.01 8,404.80 13,193.94

PAT margin (%)

7.65 9.80 9.17 12.18

Capital employed1 (H in Lakhs)

21,271.69 53,992.27 62,77776 75,251.10

ROCE2 (%)

34.33 18.84 18.42 20.90


24.26 12.57 12.93 17.00

Debt-equity ratio (in times)

0.25 0.00 0.00 0.00

Debtors turnover3

5.97 6.38 6.16 5.75

Inventory turnover4

4.41 4.39 4.84 5.06

Interest coverage ratio

13.05 26.68 86.91 114.29

Current ratio

1.14 2.37 2.34 1.96

1. Capital employed = Tangible net worth (i.e., paid up capital + reserves - goodwill) + total debt + deferred tax liability

2. Return on capital employed (ROCE) = Earnings before interest and taxes (i.e., profit before tax + finance cost) + capital employed

3. Debtors turnover ratio = Net credit sales (gross credit sales - sales return) + average trade receivable

4. Inventory turnover ratio = Cost of goods sold + average inventory

5. Return on net worth (RONW) = Profit before tax + shareholders equity (i.e. equity share capital + reserves)


2019-20 2020-21 2021-22 2022-23

Discount as a % of revenue from Operations

11.39 12.64 14.22 17.39

Employee costs as % of net revenue

6.72 6.68 6.22 6.81

Advertising and sales promotion as a % of revenue from Operations

12.65 10.65 9.72 7.70

Material costs as a % of revenue from Operations

51.53 52.05 56.68 55.46

Freight and handling as a % of revenue from Operations

10.53 9.93 8.89 8.97

Overhead Costs- Other Expense (excluding Freight and handling, A&P)

4.01 3.74 3.48 4.15

Raw materials & gross margins

While the net revenue from operations increased by 18.47%, the cost of raw materials and components consumed increased by 13.25% from Rs.50,888.16 Lakhs in FY 2021-22 to Rs.57,632.77 Lakhs in FY 2022-23. Favourable product mix, stabilizing raw material prices and prudent purchase policy helped to achieve better realisation thereby increasing the gross margins from 43.32% achieved in FY 2021-22 to 44.54% in FY 2022-23. Once again, Indigo Paints had clocked industry leading Gross Margins.

EBITDA & PAT margins

On an absolute amount, the EBITDA increased to Rs.18,153.24 Lakhs from Rs.13,598.37 Lakhs registering a growth of 33.50%. The increase was driven by both growth in sales and expansion in the margins. The EBITDA margin expanded to 16.91% from 15.01% in the previous year. The margins improved due to better realization at the gross margin level as well as margin expansion due to economies of scale. The reduction in Advertisement & Promotion cost (as a percentage of revenue from operations reduced) by 200 bps from 9.72% in FY 2021-22 to 770% in FY 2022-23 also aided the margin expansion.

The Profit for the year increased significantly from Rs.8,404.80 Lakhs in FY 2021-22 to Rs.13,193.94 Lakhs in FY 2022-23 registering a growth of 56.98%. The overall growth in sales coupled with margin expansion aided the growth. During the year under consideration, an excess tax provision of Rs.1,632.99 Lakhs pertaining to earlier years was reversed. The PAT margin for the FY 2022-23 expanded significantly to 12.18% from 9.17% in FY 2021-22.

Other income, cash and investments

The other income decreased marginally from Rs.1,089.32 Lakhs in FY 2021-22 to Rs.1,006.75 Lakhs in FY 2022-23, primarily due to the decrease in the interest income. Subsequent to the deployment of capital (from both the IPO proceeds and the internal accruals) for setting up a new manufacturing facility in Pudukkottai, Tamil Nadu, the interest income reduced to Rs.103.69 Lakhs in FY 2022-23 compared to Rs.606.00 Lakhs in FY 2021-22. As on March 31, 2023, including the unutilised proceeds from the IPO, the Company had Rs.18,210.84 Lakhs in terms of cash and cash equivalents, Bank balances, short-term and long-term investment instruments.

D&A, property plant and equipment

The D&A expense increased to Rs.3,434.66 Lakhs from Rs.3,125.08 Lakhs in FY 2021-22 primarily due to higher depreciation incurred following the addition in plant and machinery worth Rs.1,963.67 Lakhs for regular upgradation. The Capital work in progress (CWIP) increased significantly from Rs.5,097.27 Lakhs in FY 2021-22 to Rs.25,091.30 Lakhs in FY 2022-23 primarily due to the upcoming plant at Tamil Nadu. On commissioning of the plant, CWIP will be capitalized and transferred to the Property, Plant & Equipment.

Interest coverage ratio and finance costs

Indigo Paints is a zero debt company and the major portion of the finance cost of Rs.137.59 Lakhs pertains to the lease liabilities. The general growth in sales and subsequent improvement in profitability has resulted in significant increase in EBIT to Rs.15,725.33 Lakhs which has catapulted the interest coverage ratio from 86.91 in FY 2021-22 to 114.29 in FY 2022-23.


The Company relies heavily on its human resources to propel its operations, accomplish its objectives, and sustain its competitive advantage. It is committed to establishing a robust leadership succession plan while concurrently cultivating a secure, inclusive, and diverse workforce. Several training initiatives are regularly implemented to consistently engage with employees. The all-encompassing culture plays a pivotal role in fostering high performance among individuals and cultivating a sustainable business environment.


The Companys technology is intrinsically connected to majority of its operations. Over the year, the Company has invested in upgrading technology, enabling it to monitor operations to optimise value for shareholders. Investment in technology-led tools like IT SAP system, enabling seamless management of raw material procurement, finished goods, vendor and supplier payments, and effective receivables management. We have also a robust analytics and reporting system completely built with inhouse team.


Risk management is an integral part of the business strategy for Indigo. The Company employs a structured and disciplined approach to effectively identify, quantify, and manage all potential risks. This approach is in accordance with the Companys Risk Management Policy, which aims to ensure sustainable growth and stability for the business. It also facilitates a proactive stance in reporting, evaluating, and mitigating risks associated with the business. As per the policy, all process owners within the Company bear the responsibility to detect and mitigate key risks within their respective domains. This coordinated approach enables the Company to safeguard its business value from uncertainties and potential losses effectively.

The Risk Management Committee, along with the Internal Audit Committee, periodically reviews and monitors the risks and their mitigation plans. This process ensures that any new material risks are promptly identified, added to the Risk Register, and addressed for mitigation. Such a dynamic approach to risk management contributes to the Companys overall stability and growth, thus reinforcing its commitment to sustaining business value.


The Company has recently introduced a series of waterproofing products that are now being made available to dealers throughout India. This development is expected to make a substantial contribution to the Companys overall growth. Furthermore, the newly established water based paint plant , located in Pudukkottai, Tamil Nadu, has recently commenced trial production and is expected to commence commercial production shortly.

The Company is currently in the planning stages of establishing a new water-based paint plant in Jodhpur, with a proposed capacity of 90,000 KLPA (Kilo Liters Per Annum).


The Company has established internal control systems that are appropriate for the nature of its business, as well as the scale and complexity of its operations. These systems include well-defined policies and procedures designed to ensure the effectiveness and efficiency of its operations, reliability of financial reporting, compliance with applicable laws and regulations, prevention and detection of fraud and errors, and safeguarding of assets.

Regular examinations by internal auditors are conducted to assess the adequacy and effectiveness of these internal controls, following a risk-based audit strategy. The internal audit plan is reviewed and approved by the Audit Committee, which also evaluates the sufficiency and effectiveness of the Companys internal financial controls and monitors the implementation of audit recommendations. The Audit Committee is kept informed of significant audit findings and activities, and appropriate corrective measures are undertaken accordingly.


Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified/ non-identified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, a global pandemic like Covid-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving risk(s), inter-alia, to the Company and the environment in which it operates. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly.

These forward-looking statements represent only the Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.