Intermission E01 - Asian Paints [PART 1]

ELI5/TLDR

Asian Paints was started in 1942 by four young Gujarati friends mixing paint by hand in a Bombay garage. Locked out of the industrial paint market by bigger, foreign competitors, they did the only thing available to them: sell cheap paint in tiny cans to rural India through small shopkeepers nobody else cared about. That forced march into the hinterland turned out to be the greatest strategic advantage in Indian corporate history. By 1967 they were number one, and they stayed there by building a culture that hired hungry IIM graduates, gave them real responsibility instead of big salaries, and let them innovate from the ground up.

The Full Story

The Day the Dream Died (and Was Reborn)

On July 30, 1997, Champaklal Choksey — the last surviving co-founder of Asian Paints and chairman of its board — sold most of his 9.5% stake for about 128 crores. That same day, he called his grandson Ankur and told him: “Now you have to create the next Asian Paints.” The approximate value of that stake in 2026, had he held on? 20,000 crores. The company is worth 2.3 lakh crores.

But the story the hosts Rohin Dhammakumar and Seetharaman Ganesh of The Ken want to tell is not what Asian Paints is worth. It is how a garage paint-mixing operation became a company that controls nearly 60% of the Indian decorative paints market, has been the market leader for 60 consecutive years, and pioneered modern management, supply chain logistics, and brand-building in India — all while being dismissed as a “laala company.”

Bombay Made This Possible

To understand Asian Paints you have to understand Bombay, and to understand Bombay you have to understand Gujaratis. The hosts trace a line from Bombay’s origins as seven islands traded as a dowry to King Charles II in 1662, through Shivaji’s raids on Surat that pushed the East India Company (and waves of Gujarati merchants) to Bombay, through the cotton boom triggered by the American Civil War, all the way to a young cotton jobber named Champaklal Choksey who slept on Chowpatty Beach after fighting with his father.

Bombay was a city built on migration and trade. By the turn of the 20th century, only a quarter of its million residents were born there. Gujaratis brought an ethos captured neatly in the phrase “dhandha dharm” — business is religion. A Gujarati saying holds that the prospect of gain is what makes them get out of bed, and they haggle not to save money but because they enjoy understanding the true worth of things.

Four Friends, a Garage, a World War

Champaklal and his friend Suryakant Dani were offered a paint dealership through their trading agency, Neptune. They sold someone else’s paint for a few years, grew unhappy with the quality, asked the supplier to improve it, were refused, and walked away. To raise capital they brought in two more partners: Chimanlal Choksi (different spelling, no family relation) and Arvind Vakil (Dani’s brother-in-law). Asian Oil and Paint Company was founded on November 9, 1942 — the name reportedly picked from a phone book.

Their timing was absurd. World War II had led Britain to ban paint imports to India. The domestic market, mostly industrial paint for ships, suddenly needed local supply. Four young men with no formal paint training, mixing pigments by hand in a garage, had product-market fit handed to them by global conflict. A fifth partner, Jamnadas Vora, briefly held 36% of the company before falling on hard times and selling back to the original four — a pattern of stake buybacks that would recur.

The Four Squeezes

By the late 1940s and 1950s, post-independence Asian Paints found itself squeezed on every side:

Competitors. The paint market was dominated by foreign companies — Shalimar (which had built India’s first paint factory), ICI, Jenson & Nicholson, British Paints. All headquartered in Kolkata, all with decades of advantage.

Segments. The real money was in industrial paint, sold to the government on the basis of lowest bid. The decorative market barely existed. Homes were painted with distemper or whitewash — chalk, lime, and color mixed at a price point close to zero.

Distribution. Large distributors had exclusive relationships with the big foreign brands and credit periods of 6 to 12 months. A small company handing over a thousand cans and waiting a year for payment would die. Small shopkeepers existed, but nobody gave them the time of day.

Consumers. Urban consumers already had options. Rural consumers were poor, often living in non-pucca homes that didn’t need paint at all. Or so the logic went.

If the Game Is Rigged, Build a New Game

Champaklal Choksey’s response was essentially: fine, we’ll go where nobody else wants to go. Rural India. Small shopkeepers. Tiny quantities.

“A poor person will definitely paint their threshold well even if they cannot paint their entire home.”

This observation — that aspiration exists even at the bottom of the pyramid — led to 50 and 100 ml paint cans. Cough syrup bottles of color. The brand name was Tractor Distemper, chosen to resonate with rural India (tagline: “Don’t lose your temper, use Tractor Distemper”). They launched another brand called Three Mangoes, whose salesmen became known as “mango salesmen.” Three Mangoes aluminum paint, remarkably, still exists.

The System They Built

The hosts identify four pillars of what they call Asian Paints’ new system:

1. Retail-first. Go directly to small shopkeepers instead of through distributors. This was radical. Paint became the only mass market product category in India where the retailer gets products directly from the manufacturer, bypassing the multi-layered FMCG-style distribution chain entirely. Today, 97% of all paint sold in India goes directly from manufacturer to retailer.

2. Open Market Policy. Anyone could stock Asian Paints regardless of size, with a short credit period. No exclusive relationships, no volume commitments. Large distributors who had initially ignored them eventually signed up because their dealers were signing up anyway. An early executive called this the “Muhammad Ghazni tactic” — capture the surrounding territories first, and the big players have no choice but to join.

3. Kitchen Relationships. By cutting out the middleman, Asian Paints’ people met shopkeepers directly. They talked about families, gave tours of Bombay when dealers visited, brought gifts for their children. The term “kitchen relationships” appears repeatedly in their history. Dani would personally ensure visiting dealers were treated well. CEOs of Asian Paints to this day know retailers by name. You will not find a single FMCG CEO who knows shopkeepers.

4. Distributed Supply Chain. Selling to hundreds of small shops across rural India meant you couldn’t run a centralized warehouse model. They had to figure out distributed logistics decades before GPS, before computerization, before the concept of “dark stores.” Their one factory was in Bandra, and they were delivering paint to shops 10-12 hours away by road.

The Mascot and the Brand

In the mid-1950s, R.K. Laxman (yes, the famous cartoonist) created Gattu — a mischievous boy in shorts holding a dripping paintbrush. The name was crowdsourced from customers. The winner got 500 rupees. Gattu ran for nearly 50 years, until 2002, when the company retired the mascot because India had changed and a disheveled village boy no longer represented what consumers wanted from premium paint. The Amul Girl, for reference, came 12 years after Gattu.

When Laxman died in 2015, Asian Paints ran a black-and-white full-page ad: “For the one who saw every color of life in black and white.”

Community as Superpower

The hosts keep returning to one word: community. Community brought the four partners together. Community got them into business. Community provided capital, employees, dealer networks. By 1967 — just 25 years after founding — Asian Paints was number one in India, dethroning Shalimar. Revenue was 4.5 crores.

But 4.5 crores as the number one player meant the pie itself was small. Growing market share was not enough. They needed to grow the pie by orders of magnitude. Community alone could not do that.

The Talent Problem

Gujaratis, as the hosts note with some affection, are “great businessmen, not employees.” A Magsaysay laureate once said that for a Gujarati, being an employee was “a distant third in priorities” behind farming your own land and running your own business. There is a saying: Gujaratis consider themselves MBAs already — “mane badhu aavde chhe” (I know everything).

The founders needed professional managers who would stay. Their first outside hires were brilliant but short-lived. Jeram Nadkarni, a gold medalist from the Institute of Chemical Technology, joined in 1952, set up the R&D lab, designed the Bandra factory, developed synthetic enamels at a fraction of international costs, pioneered resin chemistry that made paint dry faster — and left after 8 years to start his own company. D. Madhukar, a political science lecturer hired by Champaklal at 34, rose to executive director — then left in 1971 to become CEO of British Paints.

But Madhukar’s friend from Osmania University, K. Rajagopalchari (“Chari”), joined and stayed until he died. Fifty years. He became the go-between who could speak both the founders’ language of frugality and the professionals’ language of ambition. Multiple sources credit him with creating “the most professional rule book for family-owned businesses in India.”

The IIM Pipeline

In 1961, the government set up IIM Ahmedabad (with Harvard) and IIM Calcutta (with MIT Sloan). First batches graduated in 1964. Asian Paints visited IIM Ahmedabad in 1968 — Champaklal Choksey and D. Madhukar made the trip. Within a decade, they were a top-five recruiter.

The hosts draw a parallel to two Malayalis who built institutions in Gujarat: Verghese Kurien at Amul and Professor John Matthai at IIM Ahmedabad (Kurien’s cousin). Both temples of modern India. Both created by outsiders.

The IIM recruits were what the hosts call “Swiss Army knives” — containers of ambition, curiosity, ethics. They were mobile (willing to be posted to Sangli or Kapur), salary-driven rather than entrepreneurship-driven, and trained to expect structured problem-solving. Asian Paints never paid the highest salaries. Champaklal was explicit about this:

“When I bring these boys from business schools, there is a price that they have to pay to get experience here. I know some of them will leave after getting trained because they will be offered a better salary within the first 3 to 5 years of joining. But those that remain with me over the longer term will be looked after well by the organization on all fronts.”

The Asian Paints Induction

Every new hire, regardless of function, went through the same induction: learn the chemistry of paint, memorize product codes (0014 for Tractor Synthetic Distemper, 0908 for standard white), work in factories, do marketing and sales. People who left 20 years ago can still recite the codes. They were given the Branch Operating Manual — a thick tome called “BOM” that specified everything from discount limits to vehicle allowances.

The signature hazing: paint a wall next to an experienced painter. Your wall looks terrible. The professional’s is flawless. The message is clear — you know nothing, and the people you’re about to manage know everything.

“Showmanship is never tolerated at Asian Paints.”

There was a deliberate preference for hiring people who were “country” — grounded, from smaller towns, not flashy. South Indian DNA in a Gujarati company, as one executive put it: do the right thing and results follow.

The RPPD Breakthrough

One of the first problems thrown at the IIM hires: dealers were taking the 1.5% cash discount but not paying on time. Asian Paints’ cash flow was bleeding.

Biji Kurien (IIM Ahmedabad, later CEO of Berger Paints) and colleagues designed the Regular Payment Performance Discount. They raised the discount to 2.5% and extended the credit period to 30 days. But the key change: the discount was no longer deducted upfront. You paid the full amount first. Then you got your discount.

The incentive structure flipped overnight. Dealers who had been ignoring payment deadlines were now chasing Asian Paints to take their money. It was, by every account, beautifully simple. People woken at 2 AM can recite the RPPD formula.

Empowerment in Action

Srikant Rajagoplan (IIM Calcutta, joined in the 1990s) was posted to Tiruchi. He noticed that every December to March, sales of three specific 50 ml paints — golden yellow, bus green, and “PO red” (post office red) — spiked dramatically. Nobody at the company knew why. He went to the villages and discovered it was Pongal season: farmers were painting bull horns and home thresholds.

The real market was far bigger than what Asian Paints was capturing — local, unbranded paint mixed by farmers-turned-painters. He proposed outsourcing manufacture of a cheap product for just those three months, sold under the Gattu brand. The company said yes. He also later proposed Utsav distemper in 1 kg pouches at one-tenth the price of Tractor — the company said yes to that too (though the pouches kept breaking during transport).

The point is not the specific products. The point is that a young MBA in a branch office could identify a market, propose a solution that cannibalized an existing product, and get approval. Multiple former employees told The Ken that their peers at other companies earned more but spent years waiting for that kind of autonomy.

This is why Asian Paints became known as the “CEO factory.” Bharat Puri left for Cadbury and became CEO of Pidilite. Biji Kurien became CEO of Berger Paints. P.M. Murthy (IIM Calcutta, hired 1971) became Asian Paints’ first professional CEO in 2008. KBS Anand succeeded him.

Claude’s Take

This is a genuinely well-researched podcast episode. The Ken has clearly done months of primary interviews and book research, and it shows. The narrative structure — starting with the 1997 share sale, zooming out to 1662 Bombay, then building forward — is effective, if occasionally indulgent with tangents (Jodi flats, HUGME, the etymology of bootstrapping).

The core thesis is sound and well-supported: Asian Paints’ dominance was built not on some brilliant top-down strategy but on being shut out of every attractive market segment and being forced to innovate at the margins. The “squeeze” framework is a useful lens. The progression from community-driven to professionally-managed is told with enough specificity (names, dates, product codes, salary figures) to feel credible rather than hagiographic.

A few things worth noting. The hosts are openly admiring of Asian Paints, and while they do flag that several key hires left to become competitors, they don’t press hard on what that says about the company’s long-term retention strategy. The “CEO factory” label cuts both ways — it means you keep losing your best people. The episode also elides over what must have been substantial family tensions as control was gradually shared with professionals. Chari’s role as “shock absorber” is mentioned but not explored in depth.

The Gujarati cultural analysis is interesting but risks essentialism. Not every business success in Gujarat is because Gujaratis are inherently entrepreneurial, and the hosts occasionally flirt with that line before pulling back. The comparison between “South Indian DNA” (ethical, long-term) and “North Indian DNA” (opportunistic) at rival paint companies is presented as a direct quote from a source, which is useful context, but it is the kind of generalization that should be held lightly.

The biggest gap in this episode is that it is Part 1 of what is clearly a multi-part series. The episode ends just as the company is entering its most interesting modern phase — the transition to professional CEOs, the current competitive threat from Birla Opus and JSW/AkzoNobel, and the revenue and profit declines that opened the episode. The setup is thorough; the payoff is deferred.

One genuinely novel insight: the claim that paints are the only mass market product category in India where 97% of retail distribution is direct from manufacturer. If true, that is a remarkable structural fact about the Indian economy that originated from four guys who couldn’t get distributors to return their calls.