Market Research Report: Paint Industry in India 2011
Janne KekäläinenAugust 2011Paint Industryin India
Introduction• India is the fastest growing paint market in Asia Pacific.• India’s paint industry size is estimated to be €3.5bn.• The following paints are available in the market• Acoustic Paints• Resin Paints (Alkyd)• Dripless Paints• Latex Paints• Single Coated Paints• PrimeryRubber based Paints• Texture oriented Paints• The decorative paints to industrial paints ratio is 70:30 both in value and volumeterms.• Almost half of the revenues earned by the Indian paint industry are throughenamels.• The demand in the paint industry is seasonal to some extent. While the demanddips in the monsoon season, it is the maximum in the festive season.
Growth• Market has been growing on average 15 % annually during thelast five years and thus it is growing 1.5-2.0 times faster thanGDP.• The expected CAGR is 13-15 % for the period FY11-13.• 30 % of the paint business is comprised of new constructionprojects.• The paint industry growth drivers are:• Repainting demand fuelled by the real estate boom over the past fewyears• Changing consumer preferences, from pure aesthetics to value addedfeatures• Raising demand for industrial paints• The organized section of the industry is growing faster thanthe unorganized sector.
Decorative Paints• The key drivers of decorative paints are• Robust economic growth leading to higher disposable income• Continued growth in real estate• Change in perception towards painting• Launch of affordable houses• Shift in demographic profile resulting in increase in number ofhouseholds• Various innovations by market players
Industrial Paints• The Industrial Paint Segment isdominated by organized sector.• Automotive paint form approx. 45 %of industrial paints.• Performance coating forms approx.25 % of industrial paints.• Consumer durables and auto ancillaryproducts use power coating.• Coil coating are used in industrialconstructions, electric equipment andinteriors of trains & buses.45%25%15%15%Industrial Paint SegmentAuto paintsProtectiveCoatingsPowerCoatingsOtherIndustrialCoatings
Major Players• The unorganised sector with about2,000 units having small and mediumsized manufacturing plants controlsaround 35 % of the paint market.• Out of the rest, most is controlled by thetop 5 companies and they are:• Asian Paints (Overall market leader due toleadership in decorative segment)• Kansai Nerolac (Market leader in automobileindustrial paint segment, also into decorativesegment)• Berger Paints (Major revenue from decorativesegment, also into industrial paints)• AkzoNobel (Major revenue from decorativesegment, also into automotive paints)• Shalimar Paints (Mainly into decorative andnon-automobile industrial coatings)33%11%11%6%3%36%Market ShareAsian PaintsBerger PaintsKansaniNerolacICI (AkzoNobel)ShalimarPaintsUnorganisedSector &others
Opportunities• Indian GDP is expected to grow 8.5-9.0 % annually thenext few years. Because of the high correlation betweenGDP and paint volume growth, decorative paints areexpected to grow on the back of strong economicmomentum.• Real estate boom in the past few years will lead to strongdemand for repainting.• At the moment the per capita consumption of paint inIndia is merely around 1 kg (20 kg in the developedcountries, global average 15 kg) so the absoluteconsumption of paint in India is expected to rise.• The paint demand in tier II and tier III cities is growing ata faster rate than the tier I cities.• Expected decrease in the use of distemper in future.
Key challenges• All the manufacturers have their own manufacturing unitsto maintain the quality.• Paints have high volume-to-value ratio and requiremanufacturing near the market.• Entry barrier is very high because the top five playershave maintained market share despite of entry of newforeign players.• Outsourcing is limited and only for the low-end paints.• The competition in the paint industry is becoming moreintense with the entry of new foreign players like Jotun,Nippon & Sherwin Williams.• Crude prices have been in an upswing and this is raisingthe cost burden of the industry players.