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Chapter 2-1 PDF

The document provides an overview of the global and Indian paint industries. It discusses that the global paint industry is valued at $60 billion and growing at 3% annually, with the largest players being ICI, Akzo-Nobel, PPG, Nippon, and BASF. In India, the paint industry is growing at 10% annually but per capita consumption is low at 0.32kg compared to over 20kg globally. The Indian paint industry produces more decorative paints than industrial paints, unlike international trends. Kerala has a higher than national average per capita paint consumption.

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0% found this document useful (0 votes)
95 views10 pages

Chapter 2-1 PDF

The document provides an overview of the global and Indian paint industries. It discusses that the global paint industry is valued at $60 billion and growing at 3% annually, with the largest players being ICI, Akzo-Nobel, PPG, Nippon, and BASF. In India, the paint industry is growing at 10% annually but per capita consumption is low at 0.32kg compared to over 20kg globally. The Indian paint industry produces more decorative paints than industrial paints, unlike international trends. Kerala has a higher than national average per capita paint consumption.

Uploaded by

Ashwin vk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Indigo Paints

CHAPTER 2

PROFILE OF THE INDUSTRY

2.1 INDUSTRY AT A GLANCE

Paint is a mixture of four elements: Solvents, Binders, Pigments, Additives, and

Solvents. Generally paints and coatings are applied to products to protect them from

Environmental Corrosion Protection of Food and Beverages in metal cans. Improve

aesthetic appeal. Paints are classified into two broad categories.

 Decorative or Architectural finish paints.

 Industrial Paints.

Decorative or Architectural finish paints: This market can be further segmented on

the basis of the following Customer types:

 Institutional / retail or domestic use

 Product features / categories: Distempers, Enamels, emulsions etc.

 Price: Premium, Medium, Economy etc.,

Industrial Paints: This market can be further divided into the following four sub

segments depending on the end user profile.

 Automotive paints.

 Marine Paints.

 Powder Paints.

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Indigo Paints

2.2 WORLD SCENARIO

The global demand for paint is estimated at over 21mtpa. At valued at about

$60 bn. The industry is expected to grow at 3% over the next few years. The high growth

regions are the developing countries of Southeast Asia and Latin America. While the

mature markets of North America and Western Europe are likely to witness very low

growth. The largest player is ICI of UK with a share of around 10% followed by Akzo-

Nobel (Netherlands), PPG (US), NIPPON (JAPAN), BASF (GERMANY), KANSAI

(JAPAN). Over the last few years the industry has been consolidating with an objective

to strengthen the product lines and distribution chains. This has led to series of mergers

and acquisitions. India’s market is only 0.65 mn tones, roughly 2.7% of world demand,

but is growing at annual clip of 10%. Tonnage gains in the industrial coating segment

will be constrained by a shift in trend towards higher solid coatings (such as powder

coatings), which often weigh less per kilo than solvent brone coatings, and require

generally fewer, thinner coats. On the other hand, the architectural segment is seeing a

continuous shift towards water-based paints, which weigh more than their solvent-brone

counter parts, and will promote stronger tonnage gains. These trends have evident around

the world but have had the most impact in more mature markets. Most of developed

world has already effected such as switch to water-based formulations for most

architectural applications. The developing world is also experiencing this trend- India

included.

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Indigo Paints

The world paint and coatings industry is becoming increasingly dominated by a

small group of highly focused, globally positioned firms. For many of these companies

(E.g. Sherwin Williams, Kansai Paints, and Nippon Paints) coating represents the

primary line of business. In other cases (e.g.; AKZO NOBEL, ICI, HOECHST DUPONT

and COURTALDS) the firm strong position has arisen from involvement in various

upstream petro chemical activities, including production of many of basic raw material

used in coating production.

The most rapid gain in paints and coatings production will be registered in the

developing regions of Latin America and Asia-Pacific. Meeting environmental regulation

is another challenge for paint companies in developed world. Even companies in

developed regions should be prepared in this area, as paint product as soon adopting

global standards, hence all paint companies will have to comply the environmental

regulations. Global production of paint and coatings can be divided in two broad sectors:

Architectural Paint and Industrial Coatings. The most basic division is between

architectural coating and industrial coating. AKZO NOBEL, the world’s top player has a

strong presence in both the segments. (60:40 in favor of industrial coating) Sherwin

William, ICI, Asian Paints, and Benjamin Moore focus primarily on architectural paint.

Whereas PPG, KANSAI Paint, courtyards, NIPPON Paint and RPM focus heavily on the

industrial segment. BASF, DUPOINT, LILY industries and DAI NIPPON focus entirely

on industrial coatings.

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Indigo Paints

2.3 NATIONAL SCENARIO

Foundation for paint was laid in the year 1902 with the setting up of Shalimar

Paints in Calcutta. It was during the and after the World War II. That large number of

paint manufacturing units was set up in India. Since then the Indian paint industry has

made substantial progress. The paint industry has come to the recognition as an important

sector in the national economy in producing industrial coating and decorative paints.

Decorative paints available in wide range of combination account for 70% of the coatings

total production. While industrial paints share the balance of 30%. This rate is

diametrically opposite to the trend in the industrialized countries where industrial paints

account for 70% and Decorative paints for the balance of 30%. With paint majors shifting

their focus from decorative to technology-intensive industrial paints and also venturing

into unexploited rural markets, the paint industry is headed for good times. The country’s

per capita consumption of paints at 0.32 kilograms (kg) is a fraction of the world average

at 21 kg.

While developed nations like USA, Japan etc. have per capita consumption in

excess of 20 kg. even developing nations like Taiwan and Philippines have higher per

capita consumption than India. Such a low level is mainly due to poor awareness about

preservation of assets in India. With increasing disposable income, this figure is bound to

go up which is good news for paint companies as it implies higher demand for their

products. However, it also need to be noted that consumption patterns across nations

cannot be exactly compared. The per capita consumption of paints in India is

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Indigo Paints

significantly lower than the developed countries such as U.S.A., U.K., Japan, Germany

etc. This is so because of low per capita GNP and higher prices of paints. The present

installed capacity in the organised sector is 282 lakh tonnes (1989-90). The Indian paint

industry is marked by the high cost and erratic availability of various raw materials. More

over certain synthetic raw materials such as some resins, high performance pigments and

additives are either proprietary or specific to certain formulations and their exact

equivalents are not available indigenously. The in-house R&D Centres of various paint

manufacturers and institutional R&D laboratories in India have done considerable work

in the paint field, especially in areas such as development of new products and processes,

absorption of foreign technologies and improvements in the existing manufacturing

processes. The R&D expenditure in the Indian corporate sector, is, however, quite low, as

compared to the major foreign paint manufacturers. Small scale units continue to play a

vital role in the paint industry by manufacturing a large range of products and mainly

catering to localized customers. The high purchase price of raw materials (due to low

volumes) adversely affects the cost of the finished products. The technology transfer

from the larges sector to the small sector may improve, in view of the recent policy

announcement allowing equity participation (up to 24%) by the organized sector units in

the small sector units. The comparative ration analysis of the organized sector paint

manufacturers in India and abroad shows that certain Indian companies are comparable to

the international leaders in terms of various profitability, inventory ratios etc. The major

drawback is on account of higher raw material costs and its percentage of selling price

which is significantly higher for the Indian companies.

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Indigo Paints

INDIAN PAINT INDUSTRY

DECORATIVE SEGMENT INDUSTRIAL SEGMENT

Premium Medium Distemper Automotive Consumer


range range range sector (2/3rd durables,
(high end enamel (low end share) marine
acrelyc paints paints) paints, other
emulsion

Metros Small Sub


and large cities urban and
cities rural
areas

Chart 2.1 - flow chart of Indian paint industry segments.

(Source: Company Records)

2.4 STATE SCENARIO

The number of small-scale units in the State had considerably increased in the

last few years particularly due to the high per-capita consumption of paints in Kerala,

which is four times ahead of the national average, according to Mr.M.T.Antony, former

chairman, Indian Small Scale Paint Association, Kerala Region.

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Indigo Paints

According to him, by resolving the intrinsic problems faced by the paint sector,

the scope for expansion of the sector can be fully realized. The national average was

about 0.25 kgs whereas the per-capita consumption in Kerala was 1 kg. At present, there

were about 150 units in the State providing employment to 2500 people. Out of the total

market share of Rs. 275 crores, the contribution from the organized sector was Rs. 200

crores (73 per cent) while the share of SSI sector was up to Rs. 75 crores (27 per cent).

From the large number of new entrants into the field every year, it should be presumed

that the small-scale sector was willing to face the unfriendly labour situation and other

negative factors in the State Though major paint companies in the country command

good market in Kerala, none of these companies had ventured to start a large-scale paint

manufacturing unit due to various adverse conditions. Some of the factors which failed to

attract big industries in the State were unfriendly labour situation, high cost of labour,

difficult power situation, lack of availability of low cost industrial land and shortage of

adequate infrastructural facilities. There was no indication that the situation regarding the

big industry would change in the near future, he added.

The two main problems affecting the growth of small industries were increased

competition and lack of adequate financial resources. Finance continued to be a major

problem for the SSI sector as most of the banks proceed very cautiously to provide

financial assistance to this sector. The decision of the State Government to increase sales

tax on SSI products from 6 per cent to 8 per cent was the biggest blow to paint

manufacturers in the SSI sector in the State. These three major companies, who account

for more than 50 per cent of the total paint market in the country had achieved

spectacular results by cutting into the markets of SSI units who were hard hit by the

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Indigo Paints

Liberalization policies of the Union Government. While the big units with their divisive

portfolio and financial strength take full advantage of the changed economic scenario,

most of the small-scale units find it increasingly difficult to chalk out a strategy to

overcome the present difficulties.

2.5 MAJOR PLAYERS

The main players: Asian Paints (AP), Good lass Nerolac, ICI (India), Berger and

Jenson & Nicholson are the leading companies in the organized sector. The top six

manufacturers account for about 80% of the market in the organized in value terms. AP is

the industry leader, with an overall market share of 33% in the organized sector. Threat

of global competition is minimal in the industry. AP dominates the decorative segment,

with a 38% market share. Goodlass, a Tata company, is number two with a 14% market

share. Berger and ICI have 9% and 8% shares, respectively

2.5.1 ASIAN PAINTS

Asian Paints was started in 1942 and has over 60 years of industry experience. It

is India’s largest paint company with widest range of wall and wood paints.They offer

products from low cost painting solutions to high end luxury interior and exterior paints.

They are third largest paint manufacturer in Asia serving 65+ countries worldwide. They

have state of the art infrastructure of paint manufacturing plants located across 26

locations around the world. Company has head office in Mumbai and has annual turnover

Rs 140 billion. It is listed in stock market and has talented team of 6000 professionals

that has deep domain knowledge of Paint industry.

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Indigo Paints

Head office - Mumbai

2.5.2 KANSAI NEROLAC PAINTS LTD

Nerolac is leading Paint Company of India. They are 100% subsidiary of Kansai

Paint, Japan. Headquartered in Mumbai, they have 5 own manufacturing plants and 6

contract manufacturing plants located at various strategic locations. They have three

categories of products - Decorative Paints, Automotive Coatings and Performance

Coating. They are leaders in Industrial Paints and Automotive Coatings. They have

outstanding network of dealers and their products are available at remote village retailers

too.

Head office - Mumbai, Maharashtra

2.5.3 BERGER PAINTS INDIA LIMITED

Berger Paints is UK based company which started its India operations in 1923.

They are India’s second largest paint company based out of Kolkata. With years of

expertise and extensive R&D department, they are upgrading their products with time

and are present in all segments of paint industry. They have factories located at 11

locations in India and a nationwide distribution network of more than 15000 dealers.

They also sell their products in 3 countries apart from domestic market. More than 2500

Employees are associated with the company and working hard to product best products of

Industry.

Head office - Kolkata, West Bengal.

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Indigo Paints

2.5.4 DULUX PAINTS

Dulux is an India based arm of US Company, AkzoNobel. The company has

started its Indian operations way back in 1932. They are among top 3 brands of

decorative paints in India. With their international experience, they have launched some

innovative and high-end luxury paints in Indian market which are in demand for various

luxurious projects. They have their head office at Gurgaon and numerous stores spread

across the country.

Head office - Gurgaon, Haryana

Vimal Jyothi Institute of Management & Research Chemperi, Kannur Page | 17

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