India Paint Industry Report
1. GENERAL DESCRIPTION OF THE PAINT INDUSTRY
• India’s paint industry currently stands at 85 billion rupees and has shown steady double digit growth since 1991. The organized sector consists of 65-70% while the unorganized sector still controls a large part of 30 -35%.
• The growth of the national paint industry is attributed to the boom in the housing sector and strong growth in the automobile sector. The automotive sector has performed well in the last 10 years with an average growth of 7-8%. The automotive sector is likely to grow 8-10% due to healthy growth in the 2-wheelers and automobiles segments. However, the volume growth in the paint industry may not be in line with the growth of the automotive sector, as the amount of paint per vehicle is decreasing over a period due to continuous innovations.
• About 70% of the revenues of the national paint industry come from the decorative segment, while the industrial segment constitutes about 30%. In fiscal 2005, the manufacturing sector has shown good activity with new projects in highways, ports and industrial segments.
• The Indian paint industry has enormous potential as the per capita consumption of paint in India is 800-900 grams compared to 15-25 kg in developed countries. The national paint industry is poised for good growth in the coming years.
• India’s paint industry is governed by 4 major players and is highly dependent on crude oil prices as most of the raw materials are derived from crude oil. The prices of crude oil derivatives rose more than those of crude oil due to the lag effect. Despite the sharp rise in crude oil prices in fiscal 2005, the industry has reported good growth.
• India’s paint industry has grown at a CAGR of 10% or GDP growth of 1.5 to 2.0x. With the expected GDP growth of 7-8% in fiscal 2006, the industry is likely to grow at 10.5-12.0%.
• The decorative segment is likely to outperform the industrial segment. The decorative segment is likely to grow 12%, while the industrial segment is expected to grow 8-10%.
2. TYPES OF PAINTINGS
Two main classifications of paints are:
Decorative paints
• Serves the housing sector
• Premium decorative paints are acrylic emulsions that are used mainly in subways. The mid-range is made up of enamels, popular in smaller cities and towns. Distempers are inexpensive products in demand in suburban and rural markets.
• The distribution network is the key
• Almost 20 percent of all decorative paints sold in India are distressed.
Industrial Paints
• Include powder coatings, high-performance coatings, and automotive and marine paints.
• Two thirds of the industrial paints produced in the country are automotive paints.
• Technological superiority and links with car manufacturers
3. TECHNOLOGY
Distributors and contractors play a very important role in the paint purchase decision, as they are great influencers.
Mapping the network of distributors by city is required to ensure an increase in the width of the network, that is, the number of distributors throughout the country; and depth, that is, to offer consumers a better choice of products.
The installation of dyeing machines has been an important initiative to increase penetration and help distributors better serve consumers, while reducing inventory costs. This will increase the decorative sale.
The latest value-added service provided by the dealer network is the magic eye or spectrophotometer. With the help of this system, the customer can walk in with a shadow in mind and walk out with the paint in a matter of minutes. The machine can evoke up to 60,00,000 different colors, as many as the human eye can detect. This goes with a commitment to providing technology advancements to consumers and will definitely give consumers an edge in the marketplace.
4. INDIAN PAINT MARKET
• The organized sector can be divided into 2 different segments
– Industrial segment growing at 15% (US $ 230 million)
– Architectural segment growing at 8% (US $ 500 million)
• Overall growth is 10 to 12%
• Basic competence in the Architecture segment
– distribution
– Brand image
– Product range
• Basic competence in the Industrial Segment
– Access to technology
– Technical service
• Compound growth in the sales volume of the Organized Sector was 12% in the last six years.
• Entry barriers to import of decorative paints
– Brand value of current players
– Distribution network
– Cost of modifying products
• The top six manufacturers have expanded capacity by 50% to meet peak demands.
• However, after the opening of the Indian market, some multinational paint companies are making efforts to gain a foothold in the Indian market.
4.1 Market segment
• Architectural 70%
• Industrial 30%
4.2 Composition of the architectural sector
• Enamels 50%
• Distemper 19%
• Emulsions 17%
• Exterior coatings 12%
• Wood finishes 2%
4.3 Characteristics of the architectural sector
• Enamels Constant growth
• Emulsions Change of distemper and enamels to emulsions. High growth area
• Distempers High growth in low-priced, low-quality distempers as consumers improve lime washing
• Exteriors Exterior emulsion fastest growing segment in the Indian paint market.
4.4 Composition of the industrial sector
• Automotive paints: 50%
• High performance coating: 30%
• Powder coating: 10%
• Coil coating: 5%
• Marine paints – 5%
4.5 Automotive sector
High growth sector with a number of new entrants such as Mercedes Benz, Mitsubishi, Daewoo, Hyundai, Honda, Fiat, General Motors, Ford. However, recently there has been some slack in car lawsuits. The two-wheeler market is booming due to demand from the large Indian middle class.
4.6 Powder coatings
Increase growth due to increased sales of home appliances and car accessories.
4.7 High performance coatings
Sustained growth due to increased investments in the refineries and energy sectors, particularly Thermal and Nuclear.
4.8 Growth areas for the Indian paint industry
• Automatic tinting system
• Indian rural market
• Auto OEM finishing
• Automatic refinishing
• Exterior coatings
4.9 New developments
• New Foreign Equities
• Kansai Paints acquired a majority stake in Goodlass Nerolac, India’s second largest paint company. There is talk that other companies are also absorbed by foreign companies. Some foreign companies have opened stores in India.
4.10 Dyeing machines
• Concept accepted by the Indian market.
• More than 1500 machines installed in the last five years.
• The face of Indian Paint Retailing has changed.
4.11 Market size
• Total market size: US $ 1.4 billion
– Organized sector – 55%
– Unorganized sector – 45%
• Organized sector dominated by six major players
• Unorganized sector comprising around 2,500 units that manufacture various categories of paints.
• Total market volume – 600,000MT
4.12 Main national players in brand paints
• Asian paints 37%
• Goodlass Nerolac 15.9%
• Berger Paints 13.8%
• HERE 11%
• Jenson and Nicholson 5.7%
• Shalimar 4%
• Others 12%
5. EXPORT OF PAINT AND RELATED PRODUCTS
(i) India’s exports by segment: India’s exports of paints and related products in 2005-06 grew 30.10 percent over the previous year, when they reached a level of 3,739, 35 million rupees versus 2,874.22 million rupees. The trend of exports by segment during the period 2003-04 and 2005-06 shows that the segment “Synthetic organic coloring matters, whether clinically defined or not” continues to dominate exports, and in the year 2005-06, this segment showed a 32.16 percent growth over the previous year when it reached a level of Rs. 2,896.37 crore versus 2,191.64 crore.
The other segments that showed significant growth during the period were: Prepared dryers (589.74%), Glazier’s putty, Grafting putty, Resinous cements, Caulking compounds and other putties (275.68%), Pigments including metallic powders and flakes) dispersed in aqueous media in liquid or paste (140.76%), Artists. Student or sign painter colors, modifying dyes, fun colors and the like (132.92%), Paints and varnishes (including enamels and lacquers) based on synthetic or chemically modified polymers (110.64%), Pigments, opacities and prepared colors, verifiable enamels and enamels (71.82%) and colored lacquers; preparations based on coloring lacquers (64.23%). On the other hand, the segments that registered a strong decrease during the period included: Paints and varnishes including enamels and lacquers (based on synthetic or chemically modified polymers (50.98%), and Other paints and varnishes (including enamels, lacquers and destempers (26.75%))).
Source: compiled from DGCI & S, “Monthly Statistics of Foreign Trade of India”,
Volume 1, Exports and Re-exports.
(ii) India’s Exports by Country: Export trends by country show that the US remains the largest market for Indian paint and paint product exports, and had recorded growth of 30.10 percent in the year 2007-08 in the previous year when the same increased to Rs. 559.78 crore versus Rs. 404.86 crore in the previous year. The other countries that showed robust growth during the period were: Iran (133.31%), Kenya (117.03%), United Arab Emirates (54.39%), Malaysia (38.57%) and the Netherlands (27 ,twenty%). On the other hand, the countries that registered a strong decrease during the period were: China (26.62%), Italy (21.28%), France (19.90%) and Germany (16.09%).
6. FUTURE PERSPECTIVES
• In the coming 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. With the decorative segment bottoming out, companies are increasingly focusing on industrial paints
• New home paint demand is expected to make up about 30 percent of total demand; the rest comes from repainting, mainly after the monsoon rains and before the festive season. This is a function of disposable income, so improving rural incomes will drive growth in the paint sector. Lending institutions continue to make it easier for the consumer to gather the finances necessary to buy a home.
• Within the decorative cladding segment, considerable growth is being observed in the exterior cladding segment. Paint manufacturers have launched premium products in this category, which are doing well due to their superior quality and durability.
7. CONTACT MORE DETAILS:
Web: http://www.siddhimanagement.com
Email: [email protected], [email protected]
Skype: muthep
Disclaimer: Some of the information comes from published sources and may have changed over a period of time. SMC / Siddhi Management Consultants have no responsibility for the events mentioned in this report.
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