Introduction The Indian Paint Industry has been growing at a rate of near about 15% for the past few years. The industry is estimated at around Rs. 21000 Cr. The per capita consumption in India is 1.5kgs p.a., as compared to the global average of 15kgs p.a.
History of Paints The Indian Paint Industry was initiated in 1902, when Shalimar Paints set-up its first factory in Kolkata. After liberalization, as the excise duties got drastically reduced (from 40% to 16%), the industry recorded a healthy growth of 12-13% annually.
Segmentation of Paint Industry Indian Paint Industry Decorative Industrial Emulsions Distemper Automobiles Marine Paints & othersGenerally Mainlyin Cities Villages
Market SegmentationDecorative: Major segments in decorative include exterior wallpaints, interior wall paints, wood finishes and enamel andancillary products such as primers, putties etc. Decorative paints account for over 70% of the overall paint market in India. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (September-December) is significant, as compared to other periods. Contd.
Market SegmentationIndustrial: Three main segments of the industrial sector includeautomotive coatings, powder coatings and protective coatings. User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment.
Price of Products (Exterior) Segment Product Price (per lt.) CompanyWalls (Emulsion) Apex Ultima Rs. 350-400 Asian PaintsWalls (Emulsion) Dulax weather Rs. 350-400 ICI Dulax Shield MaxWalls (Emulsion) Apex Rs. 250-300 Asian PaintsWalls (Emulsion) Dulax weather Rs. 250-300 ICI Dulax ShieldWalls (Emulsion) Weather coat All Rs. 250-300 Berger Paints Guard
Mechanism of Paints Major Major Inputs End User Products DecorativeRaw Materials Products: Paint Households, (56%) Emulsions, Enamels, Construction Distempers, Wood Finishes, Metal firms (70%) Finishes etc. Selling &Administration expenses Automobiles (23%) Industrial Products: Consumer Goods Powder Coating, Floor Coating, Marine IndustryEmployee Cost Surface Coating etc. (30%) (12%)
Components of PaintsRaw Materials: On an average, raw materials constitute 56% ofthe total expenditure in paint companies.• Titanium dioxide is one of the major raw materials and price fluctuations in its cost have direct and substantial impact on the cost of production.• Crude oil derivatives are the other major raw materials and have similar impact.• Apart from these a large number of other raw materials are used for adding/giving specific properties to the wide product range offered by the industry. Contd.
Components of Paints• End-User: The decorative paints segment products find use in households and construction whereas the industrial segment products find use in automotive industry, consumer durables industry.
Sales of Companies Net Sales(FY2011) in Cr. 7000 6000 5000 Quantity 4000 3000 2000 1000 0 Asian Kansai Berger Shalimar ICI Paints Paints Nerolac Paints PaintsNet Sales(FY2011) in Cr. 6607.2 2266.2 2096.2 1087.6 404.4
Distribution Process of Paints Paint Manufactures Regional Warehouses Company Dealer Customers
Factors affecting Paint Industry• Increasing level of income & education• Increasing urbanisation• Increasing share of organised sector• Development of the Realty, Automobile and Infrastructure sector• Availability of financing options• Increasing Penetration in the Rural Markets
New concepts of Paints• Multi coloured room concept.• Lead free colour.
Conclusions• Over the next few years, the ratio of industrial paints to decorative paints is expected to be 50:50, more in line with the global trend. Currently it is 30:70.• Decorative paints segment is expected to witness higher growth going forward. The incentives given by the government to the housing sector have benefited the housing sector immensely. This will benefit key players in the long term.• Within the decorative coatings segment, considerable growth is being observed in the exterior coatings segment. Paint manufacturers have launched premium products in this category, which are doing well due to superior quality and durability.