Paints major Asian Paints has for the first time forayed into branded adhesives in select cities in India, a sector where Pidilite is a leading player. Industry analysts said this could be ``potentially negative'' for Pidilite.
In a report, Abneesh Roy, research analyst at Edelweiss Securities said ``Currently Asian Paints can easily tap into its existing distribution of paint dealers (approximately 36,000). However lot of the adhesives are also sold via the 'kirana' shops which will be a key challenge for Asian Paints and will be needed to be built by Asian paints.''
Pidilite is currently the market leader in adhesives with a lion's share of over 70%. It also has a strong distribution in kirana shops. ``In our view, this is likely to be one of the most potent threat to Pidilite in adhesives till now. Till now Pidilite has been quite successful to ward of competition from global biggies and local players due to superior distribution and brand - both of which may not be a big issue for Asian Paints. However diversification to non-paints has not been easy till now for Asian Paints with both Sleek and Ess Ess facing growth challenges,'' he said.