PAINT INDUSTRY ANALYSIS

Presented By,
Rarichan Mathew
 PAINT INDUSTRY
• Paint is any liquid or mastic composition that, after
application to a substrate in a thin layer, converts to a
solid film. It is most commonly used to protect,
colour, or provide texture to objects
• First company in paint Industry - Shalimar Paints, Color
& Varnish Company,
• The paints was generally imported from the Britain
• In India Asian paints has the greatest market share of
49%
• Growth rate - 17% CAGR over the past seven years
• In FY12, the paint industry stood at Rs 26,040 cr.

Source : http://www.moneycontrol.com/news/business/indian-paint-industry-
INDIAN PAINT ASSOCIATION (IPA)
• Came into existence on the 1st of July, 1960

• To promote and protect the interest of the

industries engaged in the manufacture of
paints, enamels, varnishes and all other
materials associated with the production and
sale of those commodities.

• President Ramakanth Akula

 PAINT INDUSTRY
Major Inputs Major Products End User

Decorative Products:
Raw Materials Paint Emulsions, Varnishes,,
(71%)
(56%) Enamels, Distempers, Wood
Households,
finishes, Metal finishes,
Construction firms
Specialized paints (weather
protection, Non-Toxic)
Selling &
Administration Industrial Products:
Expenses (23%) Powder coatings, Surface (29%)
coatings, Floor coatings, Automobile OEM’s,
High performance coatings, Consumer Goods
Specialised coatings(thermo Manufacturers, Marine
Employee Cost protective, rust protective, Industry
(12%) non-combustible, etc.)
 INDIAN SCENARIO
Indian Paint
Industry

Decorative Industrial
Segment(71%) Segment (29%)

Consumer
Premium Range Automotive
Medium Range Distemper Range Durables, Marine
(High end acralic sector(about 2/3
(Enamel paints) (Low end paints) Paints & Other
emulsions) rd share)
OEMs

Metro & Large Sub-urban &

Small Cities
Cities Rural Areas

Source : http://www.indiainfoline.com/article/news/indian-paint-market
5 MAJOR PAINT COMPANIES
 Competitor Analysis
Company Business Model Founded on Headquarters Net Sales Net Profit
Growth Growth
Rate Rate

ASIAN Overall market leader due to 1942 Mumbai, 22% 32.53%

PAINTS leadership in decorative segment Maharashtra

KANSAI Market leader in automotive 1920 Mumbai, 15% 13.59%

NEROLAC industrial paint segment Maharashtra

BERGER Major revenue from decorative 1923 Kolkata 16% 16.04%

PAINTS segment, also in industrial paints

AKZO Major revenue from decorative 1911 Gurgaon, 5% 17.63%

NOBEL segment, also in automotive segment Haryana
INDIA
SHALIMAR Mainly focuses on decorative & non- 1902 Mumbai, 13% 27.23%
PAINTS automobile industrial coatings Maharashtra

Others Decorative segment and Industrial - - -

paints
Source: Company reports, Bloomberg, BP Equities Research (www.bpwealth.com)
 Market Share in India (2013)

9%
5%
6% Asian Paints
49%
KANSAI NEROLAC
14%
BERGER PAINTS
AKZO NOBEL INDIA
17% SHALIMAR PAINTS
Others

Source: Company reports, Bloomberg, BP Equities Research (www.bpwealth.com)

 Global Scenario

Source : http://www.moneycontrol.com
 PESTEL ANALYSIS
POLITICAL FACTORS
 India, the largest democratic country in the world
 The political situation is more or less stable in nature
 Export oriented Economy

ECONOMIC FACTORS
 Market based economy
 Second fastest growing economy in the world
 India is the third largest in term of purchasing power
 Introduction of FDI in paint sectors
SOCIAL FACTORS
 India is the second largest populated economy in the
world
 Rise in price of raw material
 Import of raw material

TECHNOLOGICAL FACTORS
 Emerging of IT sector
 Modernization of paint like (waterproof paints,
Teflon coating, creating colors shops etc.)
 Lead free paints
ENVIRONMENTAL FACTORS
 Impact of volatile organic compounds (VOCs)
 Lead free paints
 Season and climate changes

LEGAL FACTORS
 Pollution Control Law
 Health and Safety Law
 Environmental Law
MICHAEL PORTER’S FIVE FORCE
MODEL ANALYSIS OF PAINT
INDUSTRY
 THREAT OF NEW ENTRANTS
 Paint market in India is dominated by few players, making
it difficult for anyone newly entering the industry to
compete.

 It is estimated that 18-20% of the total raw materials used

in the industry are imported

 Working capital needed is high-causes difficulty to local

players & big firms enjoy economies of scale

 Big players have high brand image & quality products &
good promotional activities to attract customers

Threat of new entrants is Low

 THREAT OF SUBSTITUTES
 In rural areas lime wash is used as substitute

 Another alternative for decorative wall paints available today

is Wallpaper

 Availability of Paint varieties are there

 Buyer propensity to substitute is low

 Relative price performance of Decorative walls is High

Availability of substitutes is Low

BARGAINING POWER OF SUPPLIERS
 Raw material intensive production- over 300 raw materials
make the final product

 Raw materials-pigments, binders, additives, solvents, etc.

 Titanium Dioxide is one of the key pigment used in he

production of paint and is facing a global supply shortage.
Thus supplier of this material has solid bargaining power.

 Other raw materials-crude derivatives-have high price

fluctuations affecting industry profits

Bargaining power of suppliers is Medium

BARGAINING POWER OF BUYERS
 Households and Industrial Users are the main customers of this
industry.

 For housing requirements, the buyers are building contractors

who buy in bulk and end people who paint their house.
Customers are more price sensitive because for them number of
options are available and decisions are made based on quality,
price and differentiating factors like weather protection,
environment friendly paints

 Industrial segment is low margin high revenue business and

buyers of these segments are knowledgeable about their needs.
Therefore, price comparison is done effectively by the
customers. However, The leading Industrial paint suppliers have
their expertise in their favour, which limits the bargaining power
of buyers.

Bargaining power of buyers as a whole is Medium.

 COMPETITIVE RIVALRY
 About 80% of organized sector contributed by top 3
players

 Current market growth rate can provide ample room of

opportunity for all the players of the industry to flourish.

 Asian Paints is the only paint company that manufactures

PAN(phthalic anhydride) which is one of the main raw
material for paint industry.

 Presence of unorganized sector –can cause competition

Competitive rivalry is Low

 Porter’s Five Force Model for Paint
Industry
Threat of Substitutes:
Low

Bargaining Power of Bargaining Power of

Suppliers: Competitive Buyers:
Medium Rivalry: Low Medium

Threat of new
Entrants:
Low
 FUTURE PROSPECTS
• Indian paint market is expected to reach 49,545
Cr. by 2016 - 17

• Use of water based paints is growing in the Indian

paint market, new trends are catching up
including paints with low VOC, no added Lead,
Mercury, Chromium, odourless paints

• Decorative paints segment is expected to witness

higher growth going forward. The fiscal incentives
given by the government to the housing sector
have immensely benefited the housing sector.
This will benefit key players in the long term.
http://www.indiainfoline.com/article/news/indian-paint-market