Kansai Nerolac targets sizable construction chemicals business

Kansai Nerolac Paints Limited said on November 5, 2026, that construction chemicals were growing above 60%-70% from a small base and, together with waterproofing growing above 30%, could become a sizable business within the next two to three years. Management plans to use Perma technology, broader penetration and its dealer network to support that expansion.

How fast are Kansai Nerolac's waterproofing and construction chemicals businesses growing?

Kansai Nerolac said waterproofing was growing upward of 30%, while construction chemicals were growing upward of 60%-70% from a small base. Management separated the categories by application: waterproofing is typically a paint application, whereas construction chemicals cover repair work and core construction-chemical uses in large projects and infrastructure projects.

The reported growth rates show construction chemicals are expanding faster in percentage terms than waterproofing, but they do not show that the category is larger. Management explicitly described construction chemicals as a small-base business and did not disclose category revenue, profitability, market share or the sales base used to calculate the 60%-70% growth rate.

Management said penetration was increasing month by month nationally and in Kansai Nerolac's stronghold markets. That expansion is relevant because waterproofing can use a paint-application route, while construction chemicals address project-oriented repair and infrastructure requirements that differ from conventional decorative-paint sales.

Kansai Nerolac placed these categories within its business-to-consumer, or B2C, expansion plan. In the same November 5 call, management said decorative value growth was nearing double digits as it corrected its mix and avoided low-end products, with sequential improvement over the preceding three quarters, though it did not provide a precise decorative growth rate.

How will Kansai Nerolac use Perma technology to grow construction chemicals?

Kansai Nerolac plans to leverage products and technology from Perma, which management said it acquired six or seven years earlier, to expand construction chemicals. Management described Perma products as technologically strong and said the company now intends to use that technology as it broadens its presence in repair, project and infrastructure applications.

Management said the Perma strategy was also discussed in its February 2026 strategy presentation. The stated objective was to use acquired technology to create additional business pillars and segments that support the B2C area, with the current above-60%-70% construction-chemicals growth and rising geographic penetration presented as evidence of progress.

The two-to-three-year objective remains a management ambition rather than a quantified financial target. Kansai Nerolac did not disclose planned capital expenditure, a product-launch timetable, expected segment revenue, segment margins or the proportion of construction-chemicals sales derived from Perma products.

The product distinction defines the intended role of the acquisition. Waterproofing remains associated with paint application, while construction chemicals are used for repairs and hard-core construction work in larger projects; management is therefore seeking to use Perma technology beyond an extension of the decorative-paint range.

Can Kansai Nerolac's dealer network support wider category penetration?

Kansai Nerolac said it added about 3,000 dealers, of which roughly 75%-80% were machine dealers. Management did not say how many of those outlets stock waterproofing or construction chemicals, but it linked its broader distribution effort with monthly increases in penetration across the country and in its stronghold markets.

Management said its normal network-expansion objective is at least 10% annually, and described a typical range of 10%-15%. This numerical expansion is paired with pruning dealers that are not performing or are declining, as Kansai Nerolac seeks higher productivity, throughput, extraction and same-store growth rather than dealer-count growth alone.

Management did not allocate its dealer additions by category, geography or project channel. As a result, the call does not establish how much of the 3,000-dealer expansion is directly available to Perma products, waterproofing, construction chemicals or the large-project and infrastructure segment.

The network strategy is being executed amid high competitive intensity in decorative paints. Management said competition was broad across regions and affected dealers, painters, contractors and architects, while it did not identify eastern India or any other specific region as experiencing distinctly greater competitive pressure during the quarter.

What could determine whether Kansai Nerolac reaches its two-to-three-year goal?

Kansai Nerolac's ability to make these categories sizable will depend on scaling from the disclosed small construction-chemicals base while extending penetration in repairs, projects and infrastructure. Management identified West Asia tensions, possible supply-chain disruption, high crude and derivative prices, and currency volatility as risks to input costs and procurement planning.

Input-cost pressure was evident in industrial operations during the November 5 discussion. Management said it had secured price increases of about 7%-8% in some accounts, effective from April 1 or June 1, while inflation was above 25%; further discussions continued for categories directly exposed to crude-linked costs.

Management also said industrial dealer-segment price increases announced at the end of September would flow into the third quarter, while original equipment manufacturer settlements could take longer. It said the industrial pipeline should support good growth in the third quarter, but this was a separate near-term comment and not a forecast for waterproofing or construction chemicals.

The adhesive business illustrated another cost-related issue. Nerofix, now part of Kansai Nerolac, delivered double-digit revenue growth, but management said its restated accounts reflected a profit reduction of about Rs 4 crore to Rs 5 crore because of the business, citing vinyl acetate monomer costs and inventory carried at elevated prices.

Conclusion

Kansai Nerolac is seeking to create an additional B2C growth pillar through waterproofing and construction chemicals, which management said are growing above 30% and above 60%-70%, respectively. The faster-growing construction-chemicals category remains small, but its repair, project and infrastructure applications give it a different addressable channel from waterproofing's typical paint-application use.

The next disclosed markers are management's two-to-three-year aim for a sizable business, monthly penetration gains in national and stronghold markets, and annual dealer-network growth of at least 10%. Management is scheduled to address investors again in the February third-quarter earnings call, when it may update on distribution, the industrial pipeline and progress in the newer categories.