G 3 inclusive growth - by h.m. bharuka
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The document discusses inclusive growth in the Indian paint industry. It outlines four key aspects (4 P's) of inclusive growth: participants/players, place, people, and products. It notes that while the organized sector makes up 70% of the market, the unorganized sector accounts for 30% and efforts should focus on bringing this sector into the organized fold. It also emphasizes improving profitability across the supply chain, including for dealers, retailers, and painters, to promote inclusive long-term growth.
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G 3 inclusive growth - by h.m. bharuka
- 1. INCLUSIVE GROWTH By H.M. Bharuka Kansai Nerolac Paints
- 2. 4 P’s OF INCLUSIVE GROWTH PARTICIPANTS/PLAYERS PLACE PEOPLE PRODUCTS
- 3. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 4. 70% -ORGANIZED SECTOR 30%- UNORGANIZED SECTOR MANUFACTURERS UPGRADED MARKET OFFERINGS SUSTAINABILITY WORK ENVIRONMENT TECHNOLOGY PROXIMITY TO CUSTOMER ADAPTIBILITY OFFERS AFFORDABLE SUBSTITUTES BENCHMARK
- 5. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 6. VENDORS ORGANIZED UNORGANIZED VALUE 65% VOLUME 52% VALUE 35% VOLUME 48%
- 7. TECHNOLOGY INNOVATION INDIGINEOUS COLLABORATION/EDUCATION CAPACITY INCREASE CAPACITY IN SYNC WITH INDUSTRY SERVICE INFRASTRUCTURE I.T LOGISTICS SUSTAINABILITY COMPLIANCE AWARENESS SURVEY – INVESTMENT IN R&D, IT AND SHE FOCUS ON ADVANCED TECHNOLOGY INCREASED CAPACITY WORLD CLASS SERVICE SUSTAINABILITY
- 8. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 10. CURRENT SCENARIO SMALL SIZE DEALERS Sales Value< 10 Lakhs No. of Dealers 20800 Net Profit 8 % MEDIUM SIZE DEALERS Sales Value< 50 Lakhs No. of Dealers 11000 Net Profit 6% LARGE SIZE DEALERS Sales Value > 50 Lakhs No. of Dealers 3200 Net Profit 5% With Establishment Cost Net Profitability 3% With Establishment Cost Net Profitability 3% With Establishment Cost Net Profitability 3% NET PROFIT > Rs. 5 lacs NET PROFIT Rs. 1 – 3 Lac NET PROFIT < 1 Lac
- 11. DEALER SURVEY DEALER 71% 62% Less Profitable No Second Generation
- 12. AMBIENCE CURRENT
- 13. THE WAY FORWARD ATTRACT THE NEXT GENERATION DEALERS IMPROVED PROFITABILITY OF DEALERS MODERN RETAIL FORMATS FOCUS ON SERVICE
- 14. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 15. GOVERNMENT NEEDS A FRESH PERSPECTIVE Be seen as a Protector
- 16. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 17. ASSOCIATION UNITY Government- Change of Approach Systematic Registration Approach Focus on Accurate data collection Holding for Small Players Research for Common Cause Talent pool Providers
- 18. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 19. SOCIETY VIEWS OF SOCIETY INCONVENIENCE SUBSTITUTES
- 20. PARTICIPANTS/PLAYERS MANUFACTURERS SOCIETY GOVERNMENT ASSOCIATION DEALERS/RETAILER PAINTERS VENDORS
- 21. PAINTERS PETROL PUMP CASE STUDY 1900’s 2011 POVERTY HEALTH
- 22. 4 P’s OF INCLUSIVE GROWTH PARTICIPANTS/PLAYERS PLACE PEOPLE PRODUCTS
- 23. REACH ALL INDIA Population 117 Cr Per Capita Consumption 1.5 Kg URBAN INDIA Population 32.7 Cr Per Capita Consumption 3.6 Kg RURAL INDIA Population 84 Cr Per Capita Consumption 0.7 Kg
- 24. 4 P’s OF INCLUSIVE GROWTH PARTICIPANTS/PLAYERS PLACE PEOPLE PRODUCTS
- 25. TOTAL SHARE OF POPULATION & PAINT DEMAND 2005 2025 Total Population: 1107 mn Total Population: 1429 mn Paint Consumption for Middle class to super rich 1107 mnLiters Paint Consumption for Middle class to super rich 12289 mn Liters Low Quality / Economy Paints Economy / Medium Quality Paints Premium Paints Super Premium Paints RKM Population growth 27% CAGR-13%
- 26. 4 P’s OF INCLUSIVE GROWTH PARTICIPANTS/PLAYERS PLACE PEOPLE PRODUCTS
- 27. CHINA COATINGS MARKET INDIA COATINGS MARKET Other Segments like Industrial, Powder ,Refinish should contribute more to the industry and be in sync with the World Paint Market
- 28. GDP growth momentum to continue at above 7% YOY for next 3 decades . Per capita income crossing threshold of $1000 Nuclear family to increase as dependency ratio dropping Working population (at 65%) expected for next 3 to 4 decades.. Population in absolute terms increasing from 1100 mn to 1400 mn by 2025 Increase in middle class, upper middle class and rich INDIA – A BRIGHT FUTURE
- 29. KEY TAKEAWAYS The prospects of the Indian Paint Industry look bright Profitability in distribution channels like dealers and painters Unorganized Sections should get Organized rapidly Make Paint Industry appealing for consumers and best talent
- 30. Hence Inclusive Growth is the Answer
Editor's Notes
- A 360 degree approach
- Organized Sector – upgraded market offerings that understand the need of the customer and thus more quality driven, sustainability in which there is a need to be more environment friendly with regulations also making this essential,work environment where labor has dignity, benefits and employment and superior technology Unorganized sectit is close to the customer,can adapt itself according to the customer need,more personal relations with customer and offers affordable substitutes as compared to the pricey organized sector products
- Unorganized Sector though the value is just 35% in term of volume it contributes 48%
- Vendors need to bring superior products through R&D and foster innovation, have capacity to match the needs of the growing paint industry, provide world class silos,logistics that cater to the customer and be sustainable so has to bring a cohesive effort for environment protection. Mining regulations by the government could need the vendors to provide alternate substitutes
- A maximum no of dealers are small size and earn less or negligible profit and this could compel them to find other businesses that are more profit earning and economically feasible. Please Note : For Large Size Dealers Net Profit as been calculated on a sales turnover of 1.5 Cr.
- In a dealer survey of 70 dealers it was found that 71% felt that paints as a business was less profitable and 62% wouldn’t want their next generation to be in this business. Thus this highlights that an important participant is clearly dissatisfied by the industry that itself grows in double digits.
- Higher margins for dealers may attract them to enter or continue with this business .Also there is a need is to adapt , also make the paint store an experience by spreading and introducing modern retail formats like Impression Zones, Colour Stylers and also develop new channels like the building market channel
- The government needs to support this industry and view its importance as a protector of the nation’s assets.
- Talent pool providers -Make the paint industry an attractive industry to attract rich talent just like the Pharma industry which attracts a rich pool of talent .Thus the industry should pool in together and make the industry an attractive industry for both customers and talent.
- Substitutes- Water is a resource that is precious and as society finds ways to conserve water we too need to find products that could contribute to society to conserve its natural resources . Today we have water based paints but that itself would maybe no longer be a viable alternative as we move forward to adapt a substainable environment The harmful effects of lead are well known and both the sectors should make the industry lead free.
- Currently a painter faces irregular employment, is unorganized and faces health hazards. We need to bring about his growth . A professional painter is essential and is economic well being is important as he is big influencer and thus an important participant.
- China has an architectural share of 37% as compared to India which has an architectural share of nearly 76% thus other segments like refinish, industrial and powder should form a major part of the pie have a market like the world paint market
- Improved profitability for dealers and painters is essential, unorganized sections like vendors and manufacturers should get organized rapidly to contribute more to the paint industry. Â