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Paint Industry
TheIndianpaintindustryhasevolvedalotinrecenttimes,bothinterms of industry structure and product portfolio. Not long ago, paints were largely consideredtobealuxuryitem.Suchamindsethaschangedsignificantlyoflate due to the growing awareness on preventing corrosion through paints, by providing a massive fillip to the paint industry. Indian paints industry is Rs.15,000croremarket. Basedonthese11majoreconomies,theAsiaPacificpaintmarkethasbeen ratedatalmost13.9milliontonsin2009,andisforecasttogrowbyabout7.9%per yearintheperiodto2014. Country China India Japan SouthKorea Indonesia Thailand Vietnam Philippines Taiwan Singapore Malaysia Total MarketSizein2009(Tons) 7,566,300 1,813,500 1,418,400 867,000 636,700 406,300 280,800 277,700 256,800 219,000 140,000 13,882,500
China and India are the major growth drivers in the region with paint demandinthesetwocountrieslikelytocontinuegrowingatmorethan10%pain thecomingyears. www.ghallabhansali.com 1
PaintIndustry
Product
Industrial 25% Decorative 75% Organized 65%
Sector
Unorganized 35%
CoilCoatings
Enamels
PowderCoatings
Distempers
AutomotivePaints
Emulsions
MarinePaints
ExteriorCoating
HighPerformance
WoodFinishes
Decorative paints contribute nearly 75% of the pie with Industrial paints accounting for the rest. Nearly 65% of the market is accounted by organised players. Structuralgrowthstorywithstronglinkagestoeconomy The Indian Paint Industry is a direct play on the growing India Consumption story. Analysis of the past data trends suggest strong correlation betweenpaintsvolumegrowthandIndiaGDPgrowth.
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11% 17%
AsianPaintsenjoysleadershippositionintheIndianPaintsindustry,with nearly55%shareoftheorganizedsegment. GrowthdriversforIndianpaintsindustry Per capita consumption at 1.5kg is way below the developed (20kgs) as wellasthedevelopingmarketstandards.Usageoflimeextracts(chuna)inrural andsemiurbanmarketsaswellaslesserawarenessoftheprotectiveattributesof paintscanbeoneofthereasonsforlowerconsumptionlevels. With growing income levels, both in urban as well as rural India on the back of various government initiatives like NREGS, Farm loan waivers, pay commission led salary hikes etc, we expect the per capita consumption to improveinthemediumaswellaslongterm. o Risingincomelevels: According to McKinsey, proportion of low income groups is expected to declinefrom24%inFY05to10%inFY10e.Thiswill actasasignificantcatalyst fordemandgrowthindecorativepaints. www.ghallabhansali.com 3
o Increaseinnuclearfamilies: Thisisaconsequenceofyoungerdemographics(60%ofIndiaspopulation is below 30 years of age), with proportion of working population expected to increasefrom40%inFY05to48%inFY15e. %ofpopulationin1564agegroup
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o GrowthinAutoSector With production of passenger cars expected to grow, demand for automotivepaintswillcontinuetoremainhealthyassalesareexpectedtogrow in doubledigits. And with realty majors launching new projects, construction activity is expected to gain momentum and generate demand for decorative paints. Globally, the industrial paints segment accounts for a major share, indicatingthatthissegmentoffersmanyopportunitiesforpaintmanufacturers. GrowthinAutoSegments(FY0610)
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Jun.2009 %Var. Mar.2010 1164.82 20.96 257.51 242.55 164.45 28 4 23 21 22 5125.08 19.71 1140.09 1079.35 774.5
KansaiNerolacPaintsLtd GoodlassNerolacPaintsLtd.(GNPL),theIndiansubsidiaryofJapanbased KansaiPaintCo.Ltd,isthesecondlargestpaintcompanyinIndiawithpresence in decorative paints as well as industrial paints & marine paints, enamels, varnishes, coatings,resinsetc. Itisthe secondlargest coatingcompanyinIndia. The company markets its products under the brand names Nerolac, Glossolite, Goody,Allscapes,Excel,indecoratives. KansaiNerolaccommissioneditsgreenfielddecorativepaintplantwitha capacityof1,500tonnespermonthatHosurinTamilNaduearlyFebruary2010. The full rampup of this decorative capacity will be achieved in FY 2011. The companyhasincreasedtheshareofrevenuefromdecorativepaints,constituting nearly50%ofthetotalrevenue.Ithasreceiveditsboardapprovalforbrownfield capacityexpansionoftheBawalunitinHaryana,withacapexofRs68crore.The estimatedspendoncapitalexpenditureisaroundRs300crorebyFY2013. Particulars Sales OPM% PBDT PBT NP QuarterEnded Jun.2010 525.08 15.38 85.68 74.46 51.92 Jun.2009 %Var. 412.91 14.5 68.06 58.45 42.3 27 6 26 27 23 1706.38 15.51 282.87 238.61 165.5 YearEnded Mar.2010 Mar.2009 %Var. 1374.52 11.53 177.8 140.19 98.59 24 34 59 70 68 7
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AkzoNobelIndiaLimited(ICILtd) I AkzoNobel India, formerly ICI India Ltd, manufactures and markets paints and speciality chemicals. Their manufacturing activities in India commenced in 1939 with the setting up of Alkali and Chemical Corporation of India Ltd inRishra, WestBengal.AkzoNobelsPaintsbusiness inIndia owesits successtoinnovativetechnologyandstrongbrandssuchasDuluxandDuco. AkzoNobelplanstosetupa50millionlitreplanteitherinTamilNaduor KarnatakaatRs100crore. Particulars Sales PBDT PBT NP QuarterEnded Jun.2010 282.65 64.64 59.41 43.94 YearEnded Mar.2009 %Var. 900.1 400 378.7 294.59 4.27 45 47 45 8
Jun.2009 %Var. Mar.2010 238.55 89.43 83.82 69.16 18 28 29 36 938.53 221.2 200 159.26
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