Overview of Paint Industry

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* 3. 1. OVERVIEW OF THE PAINTS INDUSTRY • The Indian paints industry is currently placed at Rs. 85.0 billion and has been showing consistent double-digit growth from 1991. The organized sector consists of 65-70% whereas the unorganized sector still controls a large portion of 30-35%. • The growth of the domestic paint industry is attributed to the boom in the housing sector and the strong growth in the automobile sector. The automobile sector has done well over past 10-years with an average growth of 7-8%. The auto sector is likely to grow at 8-10% due to healthy growth in 2- wheeler and car segments. However, the volume growth in the paint industry may not be in line with the auto sector growth, as the quantity of paint per vehicle is declining over a period, due to continuous innovations. • Around 70% of the domestic paint industry revenues come from the decorative segment, whereas the industrial segment constitutes around 30%. In FY05, the manufacturing sector has shown good activity with new projects in roads, ports and industrial segments. • The Indian paint industry has a huge potential, as the per capita consumption of paint in India is 800-900 grams compared to 15-25 kg in the developed countries. The domestic paint industry is poised for good growth in the coming years. • The Indian paint industry is governed by 4 major players and is largely dependent on the crude oil prices as most of the raw materials are derived from crude oil. The prices of derivatives of crude oil rose more than crude oil due to the lag effect. Despite the sharp rise in the crude oil prices in FY05, the industry has reported good growth. • The Indian paint industry has grown at CAGR of 10% or 1.5-2.0x GDP growth. With the expected 7-8% GDP growth in FY06, the industry is likely to grow at 10.5-12.0%. • The decorative segment is likely to do better than the industrial segment. The decorative segment is likely to grow at 12% whereas the industrial segment is expected to grow by 8 -10%.www.siddhimanagement.com Page 3 * 4. 2. TYPES OF PAINTSTwo Major Classifications of Paints are:Decorative Paints • Caters to the housing sector • Premium decorative paints are acrylic emulsions used mostly in the metros. The medium range consists of enamels, popular in smaller cities and towns. Distempers are economy products demanded in the suburban and rural markets • Distribution Network is the key • Nearly 20 per cent of all decorative paints sold in India are distempersIndustrial Paints • Include powder coatings, high performance coating and automotive and marine paints • Two-thirds of the industrial paints produced in the country are automotive paints. • Technological superiority and tie-up with automobile manufacturers3. TECHNOLOGYDealers and contractors play a very important role in the purchase decision forpaints, as they are major influencers.The town-wise mapping of dealer network is required to ensure increase in the widthof the network, that is, number of dealers across the country; and the depth, that is,to give consumers a better choice of products.The installation of tinting machines has been an important initiative in increasing thepenetration and helping the dealers to serve the consumers better, while decreasingthe inventory costs. This will increase decorative sale.www.siddhimanagement.com Page 4 * 5. The latest value-added service being provided by the dealer network is the magiceye or spectrophotometer. With the help of this system, the customer can walk inwith a shade in mind and walk out with the paint within minutes. The machine canconjure up 60,00,000 different colours, as many as the naked eye can detect. Thisgoes with commitment to provide technological breakthroughs to consumers and willdefinitely give the consumers an edge in the market.4. PAINTS MARKET OF INDIA • Organized Sector can be divided into 2 distinct segments - Industrial Segment growing at 15% (US$ 230 million) - Architectural Segment growing at 8% (US$ 500 million)...
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