Akzo Nobel Seeks Long-Term Partnership with JSW Paints, Focusing on Aerospace Coatings

Akzo Nobel NV, a Dutch multinational in the paints and coatings industry, is pursuing a long-term collaboration with JSW Paints. CEO Greg Poux-Guillaume emphasised the company's commitment to maintaining a significant presence in India, particularly in sectors like aerospace coatings. Akzo Nobel will continue its powder coating business and R&D operations in India after transferring its stake in Akzo Nobel India Ltd (ANIL) to JSW Paints.

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The partnership involves Akzo Nobel remaining as JSW Paints' technology partner, with a 4.5% royalty and licensing agreement. Guillaume stated, "So India remains a large and important presence for us." He highlighted the potential for growth in areas where Akzo Nobel was not previously active in India, leveraging their diverse business applications.

Focus on Powder Coatings and R&D

Akzo Nobel has retained its powder coatings business and International Research Centre R&D. These units were transferred by ANIL to Akzo Nobel NV in February through a Rs 2,143-crore deal. Guillaume noted that powder coatings are expanding rapidly worldwide, especially with new applications like electric vehicles (EVs). He mentioned that many major EV companies, such as BYD in China, are clients.

The company sees significant potential in the powder coatings sector, where it holds a leading position globally. Guillaume expressed confidence in further expanding this business. Additionally, Akzo Nobel is exploring growth opportunities in aerospace coatings within India, where it is already a global leader.

Exploring Aerospace Coatings Market

Guillaume explained that Akzo Nobel leads the aerospace coatings market globally. "If you take a plane, the likelihood that that plane is coated by Akzo Nobel is roughly 50 per cent," he said. The company plans to establish a physical presence in India as the aircraft maintenance market grows there. They are considering whether to do this independently or through partnerships.

Regarding the R&D centre in India, Guillaume clarified that JSW Paints will manage the decorative paints R&D centre while Akzo Nobel retains control over its powder coating research facility. This centre remains integral to their global operations.

Financial Strategy and Share Buyback

Last week, Akzo Nobel NV announced it expects around 900 million euros from selling its ANIL stake. Approximately 500 million euros will be used for deleveraging, with plans for a 400 million euro share buyback programme. Guillaume clarified that this initiative targets their global investor base, with 60% of investors based in the US.

He explained that share buybacks are part of standard capital allocation strategies for large companies. "In this case, we felt that it was a good message to buy back some of our shares because we feel that right now we are undervalued," he added.

JSW Paints' Strategic Synergies

JSW Paints Managing Director Parth Jindal highlighted synergies between Akzo Nobel's other businesses and their newly acquired decorative paints segment. He noted JSW Paints' leadership in coil coatings within India and how ANIL's strong position will enhance their market dominance.

Jindal also mentioned potential growth in auto refinish with partners like MG Motor and others. He emphasised JSW's commitment to sustainable and competitive growth across various sectors, including marine coatings.

India remains unique as the only country where Akzo Nobel has a listed entity. Globally, Akzo NV is listed on the Dutch exchange with a market cap exceeding 10 billion euros. The collaboration with JSW Paints aims to unlock further growth opportunities and strengthen their market presence across multiple segments.

With inputs from PTI