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Products
The Paint Manufacturing Industry produces a huge number of products for various types
of protection and coatings. It can be broadly categorized into two segments.
PAINT MANUFACTURING INDUSTRY ANALYSIS
Decorative Products
Paint Emulsions
Water based paint that can be washed and are durable
Varnishes
A type of Wood Finish used to protect and shine wood
Enamels
Provides a good finish to metal along with atmospheric protection
Distempers
Used for interior walls and ceilings to protect concrete, brick and plastered
surfaces
Metal Finishes
Used to protect and shine metal
Specialized Paints
Used for special requirements such as Weather Protection and Non Toxicity
Industrial Products
Powder Coatings
Electrostatically applied coating that is mixed before application for increased
longevity and durability of a product.
Surface Coatings
A type of synthetic paint used to protect surface of an object from effects of its
surroundings.
Floor Coatings
High quality tough protective layers used in industries where high wear and tear
of the floor is expected to occur
Specialized Coatings
Used for special requirements such as Thermal Protection, Rust Protection etc.
This category is more technologically sensitive compared to decorative products and its
demand arises significantly from automobiles engineering and durable goods production.
Major Markets
The market size of the Indian paints part has been pegged at Rs 170 bn in esteem terms
and is exceptionally divided. India's share of the world's paint market is only 0.6%. The
unorganized division controls around 35% of the paint advertise, with the organized area
representing the remainder. In the unorganized sector, there are around 2,000 units having little
and medium estimated paints producing plants. Top players incorporate Asian Paints, Kansai
Nerolac, Berger Paints, Akzo Nobel and Shalimar Paints.
The Market share of the top 10 companies for the 2010- decade can be observed below.
Asian Paints is the industry leader, growing its market share by almost 5% during this period,
while the market share of Nerolac Paints dropped by about 3% during the same period.
PAINT MANUFACTURING INDUSTRY ANALYSIS
However, in the Industrial paints sector, Kansai Nerolac leads the race, followed by Asian
Paints. It is a more technological advancement-based sector and with its higher technological
expertise and foreign collaborations, Nerolac makes for a better player and leads the market.
Similar Industries
Wallpapers
An aspect of interior decoration where a material as plain as "lining paper" used to cover
and decorate interior walls of buildings. Generally sold in rolls and put onto a wall
using wallpaper paste. Apart from cost optimisation benefits it also helps cover uneven surfaces
and minor wall defects thus giving a better surface finish for instance, textured with a regular
repeating pattern design, or a lesser used, single non-repetitive large design carried over a set of
sheets.
Limewash
Similar to Distemper, this is a breathable finish used to decorate and protect porous stone
and lime-rendered surfaces but is very traditional finish suitable for old and dampened walls.
Limewash is problematic as it penetrates the surface and the colour has to be built up through
applying successive coats but has some advantages like it is water-based, environmental friendly
and it covers approximately 6 square metres per litre (a single coat)
Glass walls
A structural material used as a continuous elevation of frameless structural glass units
connected and joined together with precision through use of specialist silicone joints. It creates a
modern design aesthetic to any structure. A large elevation of glass will bring in abundant rays of
natural light and help connect internal space with the outside
with no interrupting frames.
Market leadership varies with segment too. Asian Paints is the market leader with around
60% share in decorative paints sector, while Kansai Nerolac is the market leader in industrial
paints sector with a share of more than 70%.
Major players, apart from Shalimar Paints, have shown a growth of more than 7% in the
year 2016-17 over 2015-16, because of changing customer preferences for high quality products
and market boom in real-estate, industrial and infrastructure sectors.
Industry Outlook
The growth of the Indian Paint Industry has been appreciable as it has been growing at
around 12-13% over the last 5-6 years. The decorative paints segment experiences sales peaking
in festive seasons in the months of September to December.
The top 5 companies make up for more than 80% of the market share of the organized
sector, and the penetration of organized sector is increasing because of changing customer
preferences for high quality branded products.
Asian Paints is the market leader in India, particularly in the Decorative paints segment,
mainly due to its strong brand equity and strategic distribution network. Over the last 5 years, the
company has attained a CAGR of 22% for Net Sales and 27% for Net Profit. Kansai Nerolac
comes second in India, and is the market leader in the industrial paints segment, where it’s
market share is more than 60%. Berger paints, Akzonobel India and Shalimar Paints are other
major players in the organized sector.
PAINT MANUFACTURING INDUSTRY ANALYSIS
The Indian Paint market size is expected to grow upto Rs. 70875 crores in 2020 from
around Rs. 40300 crores in 2015, which is equivalent to a CAGR of around 12% during the
period 2016-17 to 2021-22.
Recommendations
The high CAGR of around 12% over last five years shows that the Indian paint market
has got tremendous potential due to rapid urbanization, increasing disposable income levels,
brand consciousness and enhancement in distribution networks of paint companies. For finding
greater success, the paint companies can following aspects as mentioned below.
Innovation in products
Product innovation will help the companies to offer variety of high quality paint products
with features like water-based paints, stain resistant paints, teflon-coated paints, waterproof
paints etc. which may act as product differentiation points, and thus help in market positioning of
the paint products.
Market penetration
Efficient distribution networks expanding into Tier 2 and 3 cities as well the rural
markets will help companies tap the lesser-tapped markets.
Portfolio diversification
Product portfolio diversification with a wide variety of product offerings will help
increase brand market and market sectors for the paint companies, suiting varied paint
requirements.
Competitive landscape
To understand the competitive landscape of any industry, there are several frameworks
that were developed. The two main frameworks are as described below.
Indian paint Industry has significantly developed and gotten the consideration of numerous
global players.
Rapid industrialization along with a parallel growth in the infrastructure has bolstered the
Paints industry further. There has been a constant increase in demand for both the Decorative as
well as Industrial products, which has led to a huge number of indigenous developments and
technological innovations. The nation keeps on getting a charge out of a sound development rate
contrasted with different economies, upheld by the expanding level of expendable pay, and
demand from various sectors such as automotive, industrial and infrastructure.
The competition among the present players within organized sector is low as the
boundaries of market share and other growth parameters are well defined, unless
someone comes up with any innovative product that can change the entire dynamics of
paint industry. Presence of unorganized sector can pose some competition to present
industry players.
Business Locations
In the current scenario, India has about the highest shop operations with about 50,000 or
more outlets operating across the country. The market for paints is expected to grow by 1.5 times
to 2 times the GDP in the next five years. India has always been a slightly different market,
compared to the world markets around. It is unique in the way that it has more than 50000 paint
shops or outlets around the country. Further, unlike the foreign markets, where the companies
operate through distributors; the Indian paint Industry’s distribution caters directly to more than
25000 shops around the country. Each of these paint companies has a large sales force to cater to
its numerous depots necessary to service the outlets.
The major locations of the Indian Paint Industry classified across North, West, East and
South sectors are mentioned below.
North
New Delhi, Jaipur, Ludhiana, Bhilwara, Jodhpur, Rajkot, Noida, Amritsar, Panipat,
Kanpur, Gurgaon, Indore, Ghaziabad, Faisalabad
West
Mumbai, Ahmedabad, Surat, Vadodara, Pune, Thane
South
Coimbatore, Chennai, Bangalore, Hyderabad, Karur, Erode, Thirupur, Madurai,
Alappuzha
East
Kolkata, Varanasi
Operating Conditions
The Paints and Coatings manufacturing is raw material intensive. The manufacturing
process requires over 300 raw materials of which approximately 30% is petroleum based. Thus,
the industry is benefitting highly from the recent decline in crude oil pricing. The Rapid
urbanization in the last 2 decades has led to a significant growth of the industry. The viability of
small scale units has eroded considerably due to a steady decline in the excise duties from 40%
PAINT MANUFACTURING INDUSTRY ANALYSIS
to 16% over the last five years. This regime has led to a larger share for the organized sector
because the unorganized sector can no longer compete on price.
The organized sector currently holds about 65% of the market share with the remaining
35% going to the unorganized sector. About 2000 manufacturing plants make up the small and
medium sized units among the unorganized sector. The per capita consumption of paint in India
is 3.23 kilograms which is significantly lower than the developed nations. After a decade of
steady growth, the industry faced one of worst performances in FY 2016-17.
The pace did pick up in the second quarter owing largely to a good monsoon and a good
capital investments environment. However, the third and fourth quarters saw a rapid decline due
to regulatory measures taken by the government along with the Demonetization in November
2016. The trend continued into the first and second quarters of 2017 due to the implementation
of the Goods and Services Tax on 1st July 2017.
The overall consumption of paint in India is estimated to be 42.5 lac tonnes (this figure is
estimated owing to the lack of disclosures by the unorganized sector). The decorative paints have
the highest share of about 74% and the remaining 36% is that of the industrial sector. The
industry has experienced a CAGR of 12.9% from FY 2011-12 to FY 2014-15. Repainting
constitutes 70% of the total demand and with the shortening of the repainting cycle from 6-8
years to 3-4 years presents a rapid growth opportunity especially for decorative paints.
The demand of paints is highly skewed in India with a great majority consumed either
post monsoon or preceding the festive season of Diwali and Eid. Christmas and New Year is also
a high demand period.
Capital Intensity
The Paints Industry is highly raw material intensive with over 300 different raw materials
required. Raw materials constitute about 60% of the total sales value. The raw material sector for
paint industry features high cost and erratic availability. This accompanied with high no. of raw
materials and finished good make it a high working capital industry.
Also, the skewed seasonal nature makes the working capital condition worse as resources
are tied up in buffer inventory and finished goods. High inventory cost is also a feature of the
industry due to importing a lot of raw materials. Also, there is a need to invest significantly in the
distribution channels and supply chain management tools. The investment in the manufacturing
unit is relatively low. A significant investment is also made in the R&D structure.
Annual Change
The paint industry in India has grown from a forty thousand crore rupees industry in
2014-15 to a seventy thousand crore rupees industry in 2019-20 with a CAGR of over 12%. The
tax rate has also constantly gone down from 40% in 2011-12 to 16% in 2016-17. However, the
tax rate has gone up for decorative paints to 28% under the new GST Regime.
Paints have not been classified as a luxury item under the GST Regime, so no Cess to be
levied. The new tax regime is supposed to be beneficial in the medium run. The decorative paint
market is projected to show a CAGR of over 9.5% for the next half a decade.
The per capita consumption is also estimated to grow by 15-20% over the next half a
decade from 3.34 Kg per capita to over 4 Kgs per capita. The organized sector is estimated to
grow to 75% of the total market by end of 2019-20 financial year.
Road Ahead
Indian paint industry market is projected to grow at 1.5 to 2 times the GDP in next five
years, as the expected GDP grows between 5-6% levels. The Indian paint market is expected to
reach Rs.70875 crore by 2019-20 from around Rs.40300 crore in 2014-15.
As per Indian Paint Association (IPA)'s launched report on Indian Paint Market, compiled
by Nielsen Corporation - "Size & Future of coating industry", the decorative paint market is
expected to grow at 12.7 percent and the industrial paint market at 9.5 percent. Indian paint
industry has strong future prospects and the key market players with attractive marketing
strategies and comprehensive product portfolios are expected to gain even greater market share.
Additionally, the increased focus on research and development of the paints will lead to greater
advancements.
PAINT MANUFACTURING INDUSTRY ANALYSIS
References
https://www.slideshare.net/sagarkeshri/the-indian-paint-industry
https://www.equitymaster.com/research-it/sector-info/paint/Paints-Sector-Analysis-Report.asp
https://www.scribd.com/document/290059015/Indian-Paint-Industry
http://shodhganga.inflibnet.ac.in/bitstream/10603/43804/7/07_chapter3.pdf
http://www.indianmirror.com/indian-industries/paint.html
https://www.equitymaster.com/research-it/sector-info/paint/paint-inputs.html
http://www.greenworldinvestor.com/2013/05/12/6-growth-drivers-of-the-indian-paint-industry/
https://www.slideshare.net/rarichanm/paint-industry-porters-five-force-pestel-analysis
https://www.equitymaster.com/research-it/sector-info/paint/paint-inputs.html
https://www.coatingsworld.com/issues/2007-10/view_features/the-indian-paint-industry/7880
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60
50
40
Indian Paint Market size ('000 cr) 30
20
10
0
FY'2013 FY'2014 FY'2015 FY'2016 FY'2017