If I ask you about paint brands, your answer will be Asian Paints or Burger Paints. What if I give you a hint: Indigo. You will laugh at me and will try to correct me with the fact that Indigo is an Airline, not a paint company. You are correct but you also can’t deny a fact that Indigo Paints also exists. Let’s go through the interesting journey of Indigo Paints.
In Jharkhand, Hemant was taking care of his family industry of Chemical unit. In the same industrial area, there were cement paints factories of other businessmen. Hemant was surprised to see the profit made by them instead of no sense of business.
He asked himself, “if they can do it, then why not me”. Rest is history. Yes, we are talking about Indigo Paints Founder Hemant Jalan. He started a paint brand with a joke.
Initial Journey of Indigo Paints
In 2000, Hemant Jalan started a cement paint plant in Jodhpur. He started the Indigo Cement brand journey in the same year. In the urban area, people were switching to the emulsion. He observed that still there is a big market for cement paints.
First 10 years were not easy for the growth of Indigo. Already, there were established brands in the market. He achieved a revenue of Rs 10 crore at the end of the first decade. It was a landmark for Indigo paints.
Indigo paints did not have the budget for advertisement. Not only ads budget, but the company also had nothing new to offer. Without different products or better products, why the dealers will join Indigo? Why the customers will leave their existing brands for indigo? Scalability became a headache for the company.
The company had 3 options to scale up the business. First, provide a big margin to dealers compare to other companies. Second, provide cheap products to customers so that they will switch. Third, provide different products that are not available in the market.
Implementing the first and the second options can’t bring any profit to the company. Indigo chose the third option of a differentiation strategy.
In 2009, indigo started metallic finish paints. Dealers showed more enthusiasm to promote the new product. It reached to masses without any penny spend on advertisement. Riding high on the success of Metallic paint, indigo introduced tiles paints, ceiling paints, and driveways paints.
These products helped indigo to create a vast dealer network throughout India. These different products occupy only 25-30% of total sales. But, with the help of these products, dealers sold other general products. That made the difference.
Reasons Behind the Success of Indigo Paints
Sequoia Capital is one of the major investors in Indigo Paints. One of the Sequoia directors said that Competing against Asian Paints, Berger Paints is not child play but Indigo showed consistency. After a major investment of Rs 140 crore by Sequoia, Indigo started advertisement as well.
The company also signed Ex Indian Cricket Captain MS Dhoni as Brand Ambassador of Indigo paints.
Another major reason for Indigo’s success is the hiring of young energetic staff. Indigo staff were provided the opportunity to grow parallelly with the company. Most of the staff used to earn 60-70% more than their salary through reward systems. Unique reward systems made the employee permanent. They are not interested to leave the company. Achieving zero attrition by Indigo is commendable.
The company saw a compounding growth of more than 40% every year. In 2018, Indigo crossed Rs 450 crore sales. Like Asian paints and Berger paints, Indigo is also using machines to make the extra shade of paints for customers in their premises. Though the number of machines is very less compare to its competitors, it played a great role in growth.
Indigo is very popular in Southern India. In southern India also, they get maximum sales from Kerala. The company acquired a mid-size paint company in Kerala. The acquisition helped Indigo to become the leader in Kerala.
Indigo IPO and its Presence All Over India
A few years back, the company started strengthening itself in North India. Currently, Indigo exists in 27 out of 28 States in India. It is a proud feeling for the founder of Indigo. The company is competing against the heavyweights of the paints industry.
Indigo has started its Initial Public Offering(IPO) on 20 January 2021. The share price band of Indigo IPO is between Rs 1488-1490. 58,40000 equity shares of Indigo are up for sale. Indigo Paints IPO is worth Rs 1170 crore.
As per the Business Line report, the indigo share is highly valued with stiff competition from market leaders Asian Paints and Berger Paints. In the last three years, the company’s revenue has grown at the rate of 16% to 625 crores, whereas the profit in the last three years has reached Rs 48 crore with 55% annual growth.
The market share of Indigo is just 2%. Asian Paints is the market giant with a 42% share. Berger is having 12% of the market share in the paint industry. Indigo paints has a market capitalization of 7000 crores.