Indian Paint Industry

The size of the paints marketplace in India is estimated at Rs 110 bn, with the contribution of the organised and unstructured discussion sections in the ratio of 6535. Reduction of excise duties over the come through few eld, from 40% to the present level of 14%, has helped create a level playing field between the unorganised and the organised segments, as the former is not subject to excise duty. As the unorganised vault of heaven loses its competitive edge, it is also losing market shargon to the organised sector impostors.In view of the small(a) per capita annual consumption of paints in India (0. kg, comp atomic number 18d to 4 kg in South East Asian countries, 22 kg in unquestionable countries and a global average of 15 kg), the domestic paints labor has tremendous potential. The paints constancy is working-capital intensive, rather than fixed-asset intensive. As in consumer non-consumer durables, dispersal strengths and firebrand building argon of paramount impor tance. The Indian paint industry witnessed juicy growth in turnover on the back of enlarge volumes during the feast season. Both enhancive and industrial segments performed well during the quarter.Moreover, the margins received a further with the domestic currency continuing to rise against the greenback, causing a genuine reduction in cost of imported inputs. This in turn bring forth some of the players in the industry to reduce the prices of select products to sink on the benefit to the customers. Further, players argon going in for capacity expansions to reap the benefits of the advance demand for paints Segments On product lines, paints can be differentiated into decorative or architectural paints and industrial paints.While the former caters to the housing sector, the self-propelling segment is a major consumer of the latter. Decorative paints can further be classified into reward, medium and distemper segments. Premium decorative paints are acrylate resin emulsio ns used mostly in the metros. The medium melt down consists of enamels, popular in smaller cities and towns. Distempers are economy products demanded in the suburban and rural markets. well 20 per cent of all decorative paints sold in India are distempers and it is here that the unorganised sector has dominance.Industrial paints include demolish coatings, highschool performance oating and automotive and marine paints. But two-thirds of the industrial paints produced in the sylvan are automotive paints. Decorative and industrial paints are the segments within the sector, in a 7030 proportion. Brand equity, a wide range of shades, dispersal strength and efficient working capital management are key success divisors in the decorative paints segment. A strong distribution net profit acts as an entry barrier. Within the decorative segment, enamel is the king-sizest sub-segment, method of accounting for over 50%, followed by wall finishes, primers and wood finishes.The season for decorative paints is from October to March, a period characterised by festivals interchangeable Diwali, and the summer, when scene is normally autoried out. The industrial segment pertains mainly to automobiles. In this segment, technological competence, product range and customised solutions are of utmost importance. Technological strength is another entry barrier. The slowdown in the automobile sector has affected the overall growth of the industrial segment, as the former contributes around 50% of the latters revenues.Other sub-segments are marine paints, mill coatings for white goods like refrigerators and washing machines, and industrial coatings. Within the paints sector, the proportion of the industrial paints segment is likely to increase in the next few years and the ratio is likely to become 5050. The demand for decorative paints is highly price-sensitive and also cyclical. Monsoon is a slack season while the peak fear period is Diwali festival time, when most peopl e repaint their houses. The industrial paints segment, on the other hand, is a high volume-low margin business.In the decorative segment, it is the distribution network that counts while in the industrial segment the deciding factor are technological superiority and tie-up with automobile manufacturers for assured business. The assign of industrial paints in the total paint consumption of the nation is really low compared to global standards. It accounts for 30 per cent of the paint market with 70 per cent of paints sold in India for decorative purposes. In most developed countries, the ratio of decorative paints vis-A -vis industrial paints is around 5050.But, with the decorative segment bottoming out, companies are increasingly focussing on industrial paints. The future for industrial paints is bright. In the next few years, its share would go up to 50 per cent, in line with the global trend. Decorative Sector Composition ( to be check for accuracy of figures) Enamels 50% Distem per 19% Emulsions 17% outside conclusions 12% Wood Finishes 2% Decorative Sector Features Enamels Steady growth. These are oil found paints which are widely used for painting on all surfaces including walls, wood and metals.They also find application in painting of hoardings and signboards and repainting of commercial vehicles. Emulsions Shift from distemper and enamels to emulsions. High growth area. These are premium qualtity oil based wall paints. Distempers High growth in low priced low quality distempers as consumers are upgrading from limewash. These are water based wall paints priced at a much lower range than the supra two. Exteriors Exterior emulsion fastest growing segment in the Indin blusher market.Industrial Sector Composition ( to be check for accuracy of figures) self-propelled Paints 50%High Performance Coating 30% Powder Coating 10% Coil Coating 5% Marine Paints 5% self-propelled Sector High growth sector with a number of sunrise(prenominal) entrants like Mercedes Benz, Mitsubishi, Daewoo, Hyundai, Honda, Fiat, General Motors, Ford. However, recently there is some slackness in Auto demands. Two wheeler market booming due to demend from large Indian middle class. Goodlass and Asian Paints are the leading OEM players and ICI is the leading player in the replacement market PowderCoatings Increase growth due to increased sales of white goods and auto ancillaries.Berger and Goodlass lead in this solid powder coating segment used for decoration and protection of white goods, electronic equipment and auto components. High Performance Coatings Steady growth due to increase investments in refinery segment and power sectors, particularly Thermal and Nuclear. Coil Coatings issue based paints for sheets and coils. ICI and Asian Paints lead this segment. Marine Shalimar and Bombay Paints are the major players in these anti-corrosive, underwater paints used for ships and containers. Chemicals These high performance paints are used in fertilisers, petrochemicals etc. or prevention of corrosion.APIL dominates the decorative segment with a 38 per cent market share. The company has more than 15,000 retail outlets and its brands Tractor, Apcolite, Utsav, Apex and pass are entrenched in the market. GNPL, the number-two in the decorative segment, with a 14 per cent market share too, has now increased its distribution network to 10,700 outlets to compete with APIL effectively. Berger and ICI have 9 per cent and 8 per cent shares independently in this segment followed by J&N and Shalimar with 1 and 6 per cent shares.GNPL dominates the industrial paints segment with 41 per cent market share. It has a lions share of 70 per cent in the OEM passenger car segment, 40 per cent share of two wheeler OEM market and 20 per cent of commercial vehicle OEM market. It supplies 70 per cent of the paint want of Maruti, Indias largest passenger car manufacturer, besides supplying to other customers like Telco, Toyota, Hindustan Motors, virtuos o Honda, TVS-Suzuki, Mahindra & Mahindra, Ashok Leyland, Ford India, PAL Peugeot and Bajaj Auto.GNPL also controls 20 per cent of the consumer durables segment with clients like Whirlpool and Godrej GE. The company is also venturing into new areas like painting of plastic, coil coatings and cans. APIL, the leader in decorative paints, ranks a light second after Goodlass Nerolac in the industrial segment with a 15 per cent market share. But with its joint venture Asian-PPG Industries, the company is aggressively targeting the automobile sector. It has now emerged as a 100 per cent OEM supplier to Daewoo, Hyundai, Ford and General Motors and is all set to ride on the automobile boom.Berger and ICI are the other players in the sector with 10 per cent and 9 per cent shares respectively. Shalimar too, has an 8 per cent share. nude Material scenario The paint industry is raw(prenominal) material-intensive, in terms of value and quantity of raw materials used. Raw material costs ac count for around 70% of total toil costs. Imports constitute around 30% of the raw material requirements. The most hypercritical raw materials used are titanium dioxide (TD) (rutile and anatase grades), phthalic anhydride (PAN) and pentaerithrithol PENTA).Some other raw materials like castor oil, soyabean oil, linseed oil and mineral turpentine are also used. Increasing prices of raw materials, on the one hand, and the inability to pass on the price increases from recession and competitive pressure, on the other, are major areas of concern. Of the 300 raw materials (30% petro-based derivatives), nearly half of them are imported oil products. Thus, any deficit in global oil reserves affects the bottomline of the players.