Paint Industry India

February 2015

Executive Summary

Market

The paint industry in India was estimated to be valued at around INR x bn and is expected to
attain a CAGR of about xx% to reach INR y bn by 2018
In 2013, decorative paints accounted for about aa% of the overall market
The overall decorative paint segment is price sensitive, whereas the industrial paint segment is
heavily technology oriented

Challenges

Drivers
Drivers &
Challenges

Trends

Growth in Real-estate Construction

Growth in Automotive Industry
Increase in Disposable Income
Increased Government Expenditure
on Infrastructure
Growth in Industrial Sector
Low Penetration
Color experimentation
Customer participation with value added
services
Environment friendly paint

Increase in input prices

Stringent environmental regulations

New trademarks and patents flood the

sector
Increasing demand for emulsions
Small size packs
Major Players

Competition

Company A

Company B

Company C

Company D

Company E

Company F

PAINT INDUSTRY IN INDIA 2015. PPT

Macro Economic Indicators

Introduction
Market Overview
Import-Export

Drivers & Challenges

Trends

Competition
Strategic Recommendations

Appendix
PAINT INDUSTRY IN INDIA 2015. PPT

Economic Indicators (-/-)

GDP at Factor Cost: Quarterly
INR tn
c4
b4
a4

15
14 d1
c1
13 b1

c3
b3
a3

d2
c2
b2
a2

12 a1
11
Q1

Q2
2010-11

2011-12

Q3
2013-14

2012-13

Q4

Inflation Rate: Monthly

%
2.0

1.5

s
q

1.0

t
r

0.5
0.0

Jun 2013 - Jul 2013

Jul 2013 - Aug 2013

Aug 2013 - Sep 2013

Sep 2013 - Oct 2013

PAINT INDUSTRY IN INDIA 2015. PPT

Oct 2013 - Nov 2013

4

Indian paints industry has been successful in registering

double digit growth figures
Paints Industry India Overview
The Indian paints market is poised to grow at a steady CAGR of about xx% during 2013 18, wherein the decorative
paints segment will continue to dominate the overall market
Currently, about x% of the overall market is dominated by the decorative paints segment, wherein the demand for such paints mainly
arises from household paintings, architectural and other display purposes
The demand curve reaches its peak during the festive season in India

The remaining market comprises mainly of the industrial paints, wherein the demand comes mostly from automotive engineering and
consumer durable segments

The overall decorative paint segment is price sensitive, whereas the industrial paint segment is heavily technology
oriented

Paints Industry India Segmentation (2013)

Paints Industry India Market Size

INR bn

600
500
400

a6

a1

a2

a3

XX

a5
a4

YY

300
200
Y

100
0
2013

2014e

2015e

2016e

2017e

2018e
PAINT INDUSTRY IN INDIA 2015. PPT

Paint Industry Supply Chain

Major Inputs

Major Products

End User

Decorative Products:
XX
XX
XX
XX
XX

Industrial Products:
XX

XX
XX
XX
XX

PAINT INDUSTRY IN INDIA 2015. PPT

Sales and distribution channels that organizations have

established towards maximizing revenues
X

Modern Retail Format

Dealers

XX
XX
XX
XX
XX
XX

XX
XX
XX
XX
XX
XX

XX

PAINT INDUSTRY IN INDIA 2015. PPT

Indian Paint Industry Exports & Imports

Paints Industry India Imports
2010 - 2011

E
D
C

2011 - 2012

2012 - 2013

a4

b4

a3

b3

2013 - 2014

HS Code

Total Import Last 4 years (INR bn)

c4
c3

XX

XX

c2

XX

XX

XX

XX

HS Code

Total Export Last 4 years (INR bn)

XX

XX

XX

XX

XX

XX

a2

a1

b1

c1

HS Code XX

HS Code XX

HS Code XX

b2

0%

Paints Industry India Exports

2010 - 2011

E
D
C
B
A

2011 - 2012

2012 - 2013

a4
a3

b4
b3

a2

b2

2013 - 2014

c4
c3
c2

a1

b1

c1

HS Code XX

HS Code XX

HS Code XX

0%

PAINT INDUSTRY IN INDIA 2015. PPT

Boom in Indian real estate sector, specifically housing, has

been a key driver for growth of decorative paint
Growth in Real - estate Construction

Impact

XX
XX
XX
XX
XX
XX
XX

Real - estate Market Size & Growth

Real - estate Market Segregation

INR tn
a6

Real-estate

a5
a4

Residential

Commercial

B
a1

XX
XX
XX

XX
XX
XX

a2

a3

0
2013
PAINT INDUSTRY IN INDIA 2015. PPT

2014e

2015e

2016e

2017e

2018e
9

Increased spending by government on infrastructure

provides a fillip to paint sector
Increased Government Expenditure on Infrastructure

Impact

Post 2014 general elections, there has been a solid stabilization political scenario, which in turn
has initiated the roll out of an array of infrastructural projects across the country
With more Government spending on infrastructure and higher manufacturing activities, paint
industry is expected to be uplifted
Growth in infrastructure activities would refer to more demand for industrial paints

Furthermore, the decision of encouraging the adoption of public private partnership based
models for the ongoing projects is expected to drive faster completion of the projects

Government Investment Infrastructure Sector

INR tn
XX

D
x

C
B
A

XX
XX
XX
XX
XX
XX
XX
XX
XX

0.0
2013-2014

2014-2015
PAINT INDUSTRY IN INDIA 2015. PPT

10

Environmental regulations pose as a deterrent to this

market

SAMPLE

Stringent Environmental Regulations

Impact

There are certain environmental regulations that govern the paint sector in India
In India, there are some agencies that conduct standard and quality checks regularly to
determine whether standards are being met by the players or not
Some such environmental agencies include the Ministry of Environment and Forests, Central Pollution
Control Board, National Referral Centre on Lead Poisoning, and other state government agencies
Various companies in this segment need to comply with the set standards in order to remain in business and be competitive

National Referral Centre for Lead Poisoning in India (NRCLPI)

X

Concerns

Bureau of Indian Standards (BIS)

X
Department of Industrial Promotion and Policy (DIPP)
X

PAINT INDUSTRY IN INDIA 2015. PPT

11

Colour is the most expressive option of personalizing ones

home and giving it an individualized touch

SAMPLE

Colour experimentation
Consumers look to develop a unique identity and have shown interest in experimenting with
colours
This is forcing paint companies to look at new colors and different finishes

Recent trends show that conservative paints make way for unique preferences

Exclusivity
drives color
preferences

Emulsion paints for interiors are being preferred more than distempers
For exteriors, emulsion based coatings are preferred against conventional cement based coatings

With continuous lookout for superior quality as well as diversified products, consumers are
switching to marginally higher priced emulsions with higher durability and wider range of colors
Geography, fashion and home architecture primarily determines color preferences in India
XX

AA
AA
AA

XX

BB
BB
BB

XX

CC
CC
CC

PAINT INDUSTRY IN INDIA 2015. PPT

12

In a bid to garner high revenues, players are turning

towards water based paints

SAMPLE

Increasing demand for emulsions

Major players are seen to shift their focus towards emulsions with a view to expand operating
margins in the future
Demand for emulsions continue to outnumber enamels and distempers as water based paint is
not only a high growth category but also generates higher margins compared to solvent based
paints

Emulsions to
overpower
enamels and
primers

XX

PAINT INDUSTRY IN INDIA 2015. PPT

13

Porters Five Forces Analysis

SAMPLE
Impact
XX
Threat of New Entrants
X

Impact
XX

Bargaining Power of Suppliers

X

Impact
XX

Competitive Rivalry

Impact
XX

Bargaining Power of Buyers

X

Impact
XX
Threat of Substitutes
X

PAINT INDUSTRY IN INDIA 2015. PPT

14

Competitive Benchmarking (-/-)

SAMPLE

Public Trading Comparables (FY 2014)

Company A

Company B

Company C

Market Capitalization
(INR mn)

XX

XX

XX

Share Price (INR)

XX

XX

XX

EV/EBITDA (x)

XX

XX

XX

EV/Revenue (x)

XX

XX

XX

PE Ratio

XX

XX

XX

Note: Top 3 Public companies based on the revenue; Market Capitalization and Share Price is as on 27/10/2014; PE Ratio is as on 5/11/2014

PAINT INDUSTRY IN INDIA 2015. PPT

15

Competitive Benchmarking (-/-)

SAMPLE

Key Ratios of Top 3 Companies Operational Basis (FY 2014) (1/4)

Gross Margin

a1

Operating Margin

Net Margin

b1
c1

C
B

a2

a3

b2

b3

c2

c3

0
Company A

Company B

Company C

XX
XX
XX

XX

PAINT INDUSTRY IN INDIA 2015. PPT

16

Public: Domestic Company Company A (1/5)

Company Information
Corporate Address

XX

Tel No.

XX

Fax No.

XX

Website

XX

Year of Incorporation

XX

Ticker Symbol

XX

Stock Exchange

XX

SAMPLE

Offices and Centres India

Gurgaon

Products and Services

Head Office

Category

Products/Services

XX

XX

Key People

XX

XX

Name

Designation

XX

XX

XX

XX

XX

XX

PAINT INDUSTRY IN INDIA 2015. PPT

17

Public: Domestic Company Company A (2/5)

SAMPLE

Financial Snapshot
Total Income

INR bn
30

20
10

Net Profit/Loss

INR bn

1.5

2.2

2.0

1.8

Key Ratios

2
13.1

22.7

26.1

25.0

1
0

2011

2012

2013

2014

Financial Summary
The company earned a net profit of INR 1.5 bn in FY 2014, as
compared to net profit of INR 2.2 bn in FY 2013
The company reported total income of INR 26.1 bn in FY 2014,
as compared to INR 25 bn in FY 2013
The company earned an operating margin of 6.01% in FY 2014,
a decrease of 0.10 percentage points over FY 2013

Particulars

y-o-y change
(2014-13)

2014

2013

2012

-0.10

6.01%

6.11%

6.43%

9.42%

-2.99

5.75%

8.74%

8.89%

13.49%

-3.37

7.79%

11.15%

10.85%

16.79%

-2.08

17.72%

19.80%

14.00%

16.18%

3.83

16.66%

12.83%

9.56%

10.59%

20.46

61.92%

41.45%

15.35%

13.55%

1.07

7.70%

6.63%

6.61%

8.01%

-3.75

29.43%

33.18%

39.32%

78.84%

0.37

93.46%

93.10%

92.60%

88.66%

0.28

25.23%

24.96%

25.48%

29.90%

-0.34

0.02%

0.36%

0.15%

0.07%

2011

Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios
Current Ratio
Cash Ratio

-7.50%

1.23

1.33

2.39

3.42

-31.02%

0.64

0.93

1.58

2.70

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

1269.1%

261.50

19.10

48.63

154.13

Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

Key Financial Performance Indicators

Indicators
Market Capitalization (INR mn)
Total Enterprise Value (INR mn)
EPS (INR)*
PE Ratio (Absolute)*

Value (27/10/2014)
63,106.2
56,598.2
36.55
35.15

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover

-6.33%

4.50

4.81

5.31

6.95

22.60%

1.18

0.96

0.89

0.71

19.05%

1.78

1.49

1.21

0.85

57.73%

9.47

6.01

2.07

1.19

41.37%

2.83

2.00

1.37

1.00

Improved

*: Data corresponds to 05/11/2014

PAINT INDUSTRY IN INDIA 2015. PPT

Decline

18

Public: Domestic Company Company A (3/5)

SAMPLE

Key Business Segments

Coatings

Key Geographic Segments

Others

India

Outside India

100%

100%
50%

98%

96%

96%

96%

50%

100%

97%

96%

98%

0%

2%

4%

4%

4%

0%

0%

3%

4%

2%

2011

2012

2013

2014

2011

2012

2013

2014

Business Highlights (1/2)

Description

News

Overview

XX
XX
XX
XX
XX

PAINT INDUSTRY IN INDIA 2015. PPT

19

Public: Domestic Company Company A (4/5)

SAMPLE

Business Highlights (2/2)

Description

News

Product Portfolio

XX

Prior Investors

XX

Current and Pending

Subsidiaries/ Investments

XX

PAINT INDUSTRY IN INDIA 2015. PPT

20

Public: Domestic Company Company A (5/5)

SAMPLE
XX

XX

Strength

Weakness

Opportunity

Threat

XX

XX

PAINT INDUSTRY IN INDIA 2015. PPT

21

Private: Domestic Company Company B(1/5)

Company Information

Corporate Address

XX

Tel No.

XX

Fax No.

XX

Website

XX

Year of Incorporation

XX

SAMPLE

Offices and Centres India

Mumbai

Products and Services

Head Office

Category

Products/Services

XX

XX

Key People

XX

XX

Name

Designation

XX

XX

XX

XX

XX

XX

PAINT INDUSTRY IN INDIA 2015. PPT

22

Private: Domestic Company Company B (2/5)

Shareholders of the Company
Name
Jotun AS

SAMPLE
Ownership Structure

No. of Shares held

Foreign Holdings

136,181,668

Jotun Powder Coatings AS

Total

6,860,000
143,041,668

100.00%

Note: Shareholding pattern as on AGM dated 29th Sep 2013

PAINT INDUSTRY IN INDIA 2015. PPT

23

Private: Domestic Company Company B (3/5)

SAMPLE

Financial Snapshot
Total Income

INR mn
4,000
2,000

Key Ratios

-238.4
2,572.6

-410.2

Net Profit/Loss
-461.9

INR mn

-526.6

-200
3,053.7

2,929.4

2,964.0

-400
-600

2011

2012

2013

2014

Financial Summary

Particulars

y-o-y change
(2013-12)

2013

2012

2011

2010

-0.05

-10.03%

-9.99%

-5.46%

-1.21%

-2.00

-17.77%

-15.77%

-13.43%

-9.27%

-2.68

-8.33%

-5.65%

-5.19%

-1.00%

Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

7.96

-47.79%

-55.75%

-86.95%

-27.04%

-0.46

-12.22%

-11.75%

-7.68%

-1.78%

5.14

-26.10%

-31.24%

-60.47%

-5.55%

-0.19

-9.20%

-9.00%

-5.47%

-1.27%

4.70

-36.49%

-41.20%

-23.25%

-4.34%

-0.23

110.21%

110.44%

105.48% 101.22%

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

20.02%

1.93

1.61

1.14

1.48

13.87%

0.37

0.32

0.03

0.15

-39.67%

1.21

2.00

3.60

0.99

-17.96%

0.55

0.67

0.78

0.50

N.A.

N.A.

N.A.

N.A.

N.A.

-9.41%

3.58

3.95

4.25

3.57

4.45%

0.90

0.86

1.00

1.04

8.84%

1.23

1.13

1.33

1.49

-14.57%

2.56

2.99

11.04

4.57

-21.83%

2.64

3.38

6.46

2.91

Cost Ratios

The company incurred a net profit of negative INR 526.6 mn in FY

2014, as compared to net profit of negative INR 461.9 mn in FY 2013
The company reported total income of INR 2964 mn in FY 2014, as
compared to INR 2929.4 mn in FY 2013
The company earned an operating margin of negative 10.03% in FY
2014, a decrease of 0.05 percentage points over FY 2013
The company reported debt to equity ratio of 1.21 in FY 2014, as
compared to 2 in FY 2013

Operating costs (% of Sales)

Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios
Current Ratio
Cash Ratio

Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover

Improved

PAINT INDUSTRY IN INDIA 2015. PPT

Decline

24

Private: Domestic Company Company B (4/5)

SAMPLE

Business Highlights
Description

News

Overview

XX

Extended Product
Segments

XX

PAINT INDUSTRY IN INDIA 2015. PPT

25

Private: Domestic Company Company B (5/5)

SAMPLE

XX

XX

Strength

Weakness

Opportunity

Threat

XX

XX

PAINT INDUSTRY IN INDIA 2015. PPT

26

Thank you for the attention

Paint Industry India report is part of Netscribes Retail and Services Series.

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PAINT INDUSTRY IN INDIA 2015. PPT

27