Paint Industry Analysis

1. PAINT INDUSTRY
Saurav Kumar
ANALYSIS

2. CONTENTS
1. INTRODUCTION
2. GLOBAL SCENARIO FOR PAINT INDUSTRY
3. INDIAN SCENARIO
4. MICHEAL PORTER FIVE FORCES MODEL
5. HERFINDAHL INDEX
6. PERFORMANCE ANALYSIS
7. FUTURE OUTLOOK

3. INTRODUCTION
The Paint Industry is divided into two major segments:
 Decorative Paint-
 Industrial Paint-
The Paint industry impacts on Indian economy
 Paint market to grow 20% annually in next two years Source : Assocham
 Current market size of Paint industry is 40,600 crore in 2014 which is expected to
grow at a CAGR of 20% and expected to reach Upto 62,000 Crore by 2016
Source ipaindia.org

4. GLOBAL SCENARIO OF PAINT
INDUSTRY
• One of the key factors of the paint market growth is the rapid development of the global construction
industry.
• The paint and coatings industry largely depends on the purpose of the market, such as the need to meet
the key industrial sectors are construction, steel, marine, automotive and wooden furniture.
• The global paint consumption, total sales of $ 120 billion, an output of 39.82 million tons shows there is
rise in consumption of paint in 2012 which is grown at 5.43% in 2013 and 2014.
• The Asia-Pacific region is still the world's largest paint consumption ranked first in a yield of 42% in
2012. Asia, China accounted for more than half of consumption, and the slowdown in the rapid expansion
of the past.
Wold Paint and Coating Industry Association

5. WORLD'S TOP TEN PAINT COMPANIES
Sr No Company Country Website Revenue
1AKZONOBEL Netherland www.akzonobel.com $ 18.29 billion
2PPG Industries United States www.ppg.com $ 14.83 billion
3SHERWIN-WILLIAMS United States
www.sherwin-williams.
com $ 7.94 billion
4DUPONT United States www.dupont.com $ 5.35 billion
5BASF Germany www.basf.com $ 4.99 billion
6RPM Inc United States www.rpminc.com $ 4.08 billion
7DIAMOND Paints United States www.diamondpaints.us $ $ 3.73 billion
8VALSPAR United States www.valspar.com $ 3.57 billion
9SACAL United Kingdom www.sacalpaint.com $ 3.35 billion
10NIPPON Paint Japan www.nipponpaint.com $ 2.98 billion
Source : World Paint and Coating Industry Association

6. GLOBAL SCENARIO OF PAINT (PRODUCTION) AND (REVENUE)
Source : World Paint and Coating Industry Association

7. INDIAN SCENARIO
1. The current market size of Indian Paint Industry is 40,600 Crore which is
expected to grow Upto 62,000 crore by 2016
2. Asian paints dominates the Indian Paint industry followed by Berger Paints
and Nerolac.
3. The paints sector is raw material intensive, with over 300 raw materials
(50% petro-based derivatives) involved in the manufacturing process. Since
most of the raw materials are petroleum based, the industry benefits from
softening crude prices.
4. The major drivers of Paint industry are rapid urbanization, GDP, IIP, progress
in real-estate.
Source- Assocham

8. TOP PAINT COMPANIES BY MARKET SHARE
Companies Price Sales Mcap Net Profit Sales % M Cap % Net Profit %
Asian Paints 632 10,925.22 60,583.07 1,165.77 50% 67% 69%
Berger Paints 399 3,384.82 13,836.18 233.72 15% 15% 14%
Kansai Nerolac 1,889.00 3,334.69 10,179.28 204.67 15% 11% 12%
Akzo Nobel 1,271.00 2,417.90 5,932.12 99.8 11% 7% 6%
Shalimar Paints 147 520.77 278.85 -8.55 2% 0% -1%
Asian PPG Indus. 0 382.33 0 32.95 2% 0% 2%
Jotun India 0 304.54 0 -41.02 1% 0% -2%
NCL Alltek & Sec 0 142.18 0 8.12 1% 0% 0%
Grand Polycoats 0 81.86 0 4.34 0% 0% 0%
Cipy Poly Uretha 0 78.96 0 5.66 0% 0% 0%
Source Capitaline.com

9. TOP TEN PAINT COMPANY BY SALES
Companies Sales
Asian Paints 10,925.22
Berger Paints 3,384.82
Kansai Nerolac 3,334.69
Akzo Nobel 2,417.90
Shalimar Paints 520.77
Asian PPG Indus. 382.33
Jotun India 304.54
NCL Alltek & Sec 142.18
Grand Polycoats 81.86
Cipy Poly Uretha 78.96

10. TOTAL PAINT COMPANIES IN INDIA
Companies Asian Paints Ind Saurashtra Paint American Paints Keytuo Chemicals
Asian Paints Rajit Paints GNP (Madras) Macfarlane & Co Maha Classic Pai
Berger Paints Jenson & Nich. Beepee Coatings Addisons Paints Mahalaxmi Paints
Kansai Nerolac Nitco Paints Sarika Paints Nilchem Infrastr Mahavir Paints
Akzo Nobel PSL Corrosion Hardcast.& Waud Pelican Paints Sil Business
Shalimar Paints DIC Coatings Killick Nixon Abhi Technocoat
Asian PPG Indus. Deve Paints Special Paints Ashirwad Innovat
Jotun India Berger Auto Ravi Paints & Ch Decorative Paint
NCL Alltek & Sec Mysore Paints Skylon Engineers Esdee Paints Ltd
Grand Polycoats Coimb. Cots Multilac Surface Garnish Paints P
Cipy Poly Uretha Fillon Technolog Incon Protective Hello Paints Pvt
Source: Capitaline.com

11. PORTER’S FIVE FORCES MODEL
Supply Supply exceeds demand in both the decorative as
Major Points
well as the industrial paints segments. Industry is
fragmented.
Demand Demand for decorative paints depends on the housing
sector and good monsoons. Industrial paint demand is
linked to user industries like auto, engineering and
consumer durables.
Barriers to entry Brand, distribution network, working capital efficiency and
technology play a crucial role.
Bargaining power of
suppliers
Price increase constrained with the presence of the
unorganised sector for the decorative segment.
Sophisticated buyers of industrial paints also limit the
bargaining power of suppliers. It is therefore that margins
are better in the decorative segment.
Bargaining power of
customers
High due to availability of wide choice.

12. 'HERFINDAHL-HIRSCHMAN INDEX -
HHI'
• Herfindahl-Hirschman Index is a measure of the size of firms in relation to the industry
• and an indicator of amount of competition among them.
• A HHI index below 0.01 (or 100) indicates a highly competitive index.
• A HHI index below 0.15 (or 1,500) indicates an un concentrated index.
• A HHI index between 0.15 to 0.25 (or 1,500 to 2,500) indicates moderate concentration.
• A HHI index above 0.25 (above 2,500) indicates high concentration

13. HERFINDAHL INDEX
PAINT COMPANIES
Companies Sales Market Share HHI
Asian Paints 10,925.22 0.50642 0.25647
Berger Paints 3,384.82 0.15690 0.02462
Kansai Nerolac 3,334.69 0.15458 0.02389
Akzo Nobel 2,417.90 0.11208 0.01256
Shalimar Paints 520.77 0.02414 0.00058
Asian PPG Indus. 382.33 0.01772 0.00031
Jotun India 304.54 0.01412 0.00020
NCL Alltek & Sec 142.18 0.00659 0.00004
Grand Polycoats 81.86 0.00379 0.00001
Cipy Poly Uretha 78.96 0.00366 0.00001
21,573.27 0.318705
Source=Capitaline.com

14. PAINT INDUSTRY PROFITABILITY ANALYSIS
Companies Net Profit Profit Margin
Asian Paints 1,165.77 68%
Berger Paints 233.72 14%
Kansai Nerolac 204.67 12%
Akzo Nobel 99.8 6%
Shalimar Paints -8.55 -1%
Asian PPG Indus. 32.95 2%
Jotun India -41.02 -2%
NCL Alltek & Sec 8.12 0%
Grand Polycoats 4.34 0%
Cipy Poly Uretha 5.66 0%
1,705.46

15. PAINT INDUSTRY EXPORT
Companies Export
Asian Paints 45.99
Berger Paints 3.23
Kansai Nerolac 11.05
Akzo Nobel 2.01
Shalimar Paints 1.23

16. FUTURE OUTLOOK
• The major drivers of paint industry are cost of raw material, IIP data, GDP
Disposable income of people urbanization and standard of living.
• Asian paints is market leader and expected to come with more innovations
and share price growth.
• Paint industry has a very positive outlook in the coming years.