Home Industry Trends Waterproofing becomes new battleground for supremacy

Waterproofing becomes new battleground for supremacy

Attractive margins and presence of unorganised sector which is up for grabs post GST and even more so after lockdown, make waterproofing business new battle ground for the players. Thus, the supremacy of Pidilite which was unquestioned and unconquered leader of the industry for all these years is now being challenged by relatively newcomers. Noted among them is the leading paints company, Asian Paints followed by another paint maker, Berger Paints. These paint manufacturers have already established wide distribution network and also have established brand names in the paint industry which they are aiming to capitalise by expanding the product portfolio.

Demand is seasonal

Usually in case of individual homes waterproofing is done just before the onset of Monsoon. So, the period from April to June is crucial for the industry and most of the business, that is, B2C business, takes place during this period. People usually waterproof their house to protect their house during Monsoon from rains. If they fail to do so during this period, for whatever reason, they will postpone the same for next year and not to immediate post Monsoon period. In such cases, for the waterproofing companies that business is lost for the year. On the other hand, in case of B2B business its from developers and builders and waterproofing is done during the construction itself. Such business comes to suppliers usually throughout the year and as such not seasonal. However, such business depends upon health of real estate industry and accounts for 25-30% of the sales. If the health of the real estate industry is not good as is the case now, it will impact the waterproofing industry too.

Institutional demand not yet visible

In the post lockdown period, most of the demand has come, according to waterproofing chemical manufacturers, from single house owners and there is not much demand from developers and builders. Even from the single house owners it’s the pent-up demand just before the onset of Monsoon and is not indicative of the trend.

April-June crucial period

Also, month of March is crucial for waterproofing business as retailers start stocking up in the second half of the month to meet the increased demand in the summer season. This year that didn’t take place due to lockdown which was announced all of a sudden. Also, April was a complete wash out and May and June saw some pent-up demand.

Construction work not yet picked up

Construction work has not yet started in full swing as some parts of the country are still under lockdown and others are facing labour issues due to reverse migration of migrant workers. Realtors are withholding the launch of new projects till the normalcy returns and demand situation becomes clear. What’s even more disturbing is the fact that funds crunch is stopping many developers from restarting their construction activity.

Demand is coming from smaller towns

After lockdown demand is emerging in small towns and rural areas with some large Metros and cities are still grappling COVID-19 pandemic. So, the players with wide distribution network are the ones who are able to reap the benefits of pent-up demand in the post lockdown period.

Competition is heating up

With more and more players entering the waterproofing and construction chemicals business, competition in the market is heating up. For example, in Lucknow, Asian Paints’ Damp Proof was in heavy demand during pre-Monsoon due to strong advertisements during April-May. Damp Proof is preferred in retail segment while Dr Fixit still has its hold in wholesale segment. In Ahmedabad, products like Terrace Master of British Paints, Damp Proof of Asian Paints and Kool and Seal of Berger Paints seeing demand. On the other hand, Dr Fixit despite its brand name is overshadowed by the relatively new entrants. Dealers say that Damp Proof is becoming highly visible due to aggressive publicity campaign by Asian Paints. Further, its portrayed as temperature cooler (keeps temperature down by 10 degrees as claimed by the company) and also gives 10-year warranty, which no other company has matched in the market.

However, Pidilite, the market leader, says that it has been able to maintain and strengthen its market share last year despite the existence of some aggressive new players in the market. However, sooner or later, the company has to wake up to the new reality – reality of the presence of newcomers in the market who are aggressive in their approach and are capable to match the market leader both in terms of reach and resources.

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