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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

and all other materials associated with the production and sale of those commodities. • President Ramakanth

PAINT INDUSTRY

Major Inputs

Raw Materials

(56%)

Selling & Administration Expenses (23%)

Employee Cost

(12%)

Major Products

Decorative Products:

Paint Emulsions, Varnishes,, Enamels, Distempers, Wood finishes, Metal finishes,

Specialized paints (weather

protection, Non-Toxic)

Industrial Products:

Powder coatings, Surface coatings, Floor coatings, High performance coatings, Specialised coatings(thermo protective, rust protective,

non-combustible, etc.)

End User

(71%)

Households, Construction firms

(29%)

Automobile OEM’s, Consumer Goods

Manufacturers, Marine

Industry

INDIAN SCENARIO

Indian Paint Industry Decorative Segment(71%) Industrial Segment (29%) Consumer Premium Range (High end acralic
Indian Paint
Industry
Decorative
Segment(71%)
Industrial
Segment (29%)
Consumer
Premium Range
(High end acralic
emulsions)
Medium Range
Distemper Range
(Enamel paints)
(Low end paints)
Automotive
sector(about 2/3
rd share)
Durables, Marine
Paints & Other
OEMs
Metro & Large
Sub-urban &
Small Cities
Cities
Rural Areas

Source : http://www.indiainfoline.com/article/news/indian-paint-market

5 MAJOR PAINT COMPANIES

5 MAJOR PAINT COMPANIES
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 leadership in decorative segment

1942

Mumbai,

22%

32.53%

PAINTS

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 segment, also in automotive segment

1911

Gurgaon,

5%

17.63%

NOBEL

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% 49% 14% 17%
9%
5%
6%
49%
14%
17%

Asian PaintsMarket Share in India (2013) 9% 5% 6% 49% 14% 17% KANSAI NEROLAC BERGER PAINTS AKZO

KANSAI NEROLACShare in India (2013) 9% 5% 6% 49% 14% 17% Asian Paints BERGER PAINTS AKZO NOBEL

BERGER PAINTS(2013) 9% 5% 6% 49% 14% 17% Asian Paints KANSAI NEROLAC AKZO NOBEL INDIA SHALIMAR PAINTS

AKZO NOBEL INDIA6% 49% 14% 17% Asian Paints KANSAI NEROLAC BERGER PAINTS SHALIMAR PAINTS Others Source: Company reports,

SHALIMAR PAINTSAsian Paints KANSAI NEROLAC BERGER PAINTS AKZO NOBEL INDIA Others Source: Company reports, Bloomberg, BP Equities

OthersNEROLAC BERGER PAINTS AKZO NOBEL INDIA SHALIMAR PAINTS Source: Company reports, Bloomberg, BP Equities Research

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

Global Scenario

Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com

Source : http://www.moneycontrol.com

Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
Global Scenario Source : http://www.moneycontrol.com
PESTEL ANALYSIS
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 Competitive Buyers: Rivalry: Low Medium
Threat of Substitutes:
Low
Bargaining Power of
Competitive
Buyers:
Rivalry: Low
Medium

Bargaining Power of

Suppliers:

Medium

of Competitive Buyers: Rivalry: Low Medium Bargaining Power of Suppliers: Medium Threat of new Entrants: Low

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