ASTUDYON:

INDIANPAINTINDUSTRY

PRESENTEDBY

ADITYAYADAV
BHAWNAJANGRA
MANASIJETHANI
NIKHILPURI
RISHAVGUPTA
YASHIKAGERA
PAINTINDUSTRYINTRODUCTION
ThemarketsizeoftheIndianpaintssectoris
estimatedtobeRsRs40,600crore.
Itmeasuresabout2millionmetrictonsby
volume.
Ithasbeenwitnessingrobustgrowthtothetune
of17%to18%CAGRoverthepastsevenyears.
Theindustryisexpectedtogrowat20%forthe
nextyear
Thiscanlargelybeattributedtotheincreasein
demandfromtheconsumeraswellasthe
industrialsectors,whichformtheprimary
segmentsinthisindustry
TYPESOFPAINTSAVAILABLE

AcousticPaint:Itisspeciallydesignedforacoustictiles
DriplessPaint:Thispaintisthickerandismostsuitablefor

applicationonceilings
LatexPaint:Theapplicabilityofthispaintiseasierthanmost

otheranditdriesmuchquickly.Itisalsoeasiertobewashed.
OneCoatPaint:Itisthemoreexpensiveversionofthelatexand

alkydpaintsandismostlychosenforsurfacesthatrequire
flawlessnessincolor.
Primers:Thispaintistheinitiationforallinteriorpaintworks.
RubberBasePaint:Thisisbestforconcreteandbricks.
TexturedPaint:Ifneedistocoveranyflawedsurfaceinyour

housegetthispaint.Itworkswellonceilings.
 SEGMENTATION OF PAINT
INDUSTRY

Indian Paint
Industry

Madeby:VikramDahiya
Decorative Industrial

Emulsions Distemper Automobiles

Marine Paints
& others

Generally in Mainly
Cities Villages
 UNIQUE?

Indiahasalargenumberofpaintshopsoroutlets,morethan50,000.

Therearenocompanyownedoutletsorlargeretailformats.However,thisis
slightlybeginningtochangeassomehavebeeninoperation(ASIANPAINTS
SIGNATURESTORE).

ThedistributionpolicyofIndianpaintcompaniestodirectlycatertomostof
these.Eachcompanyhasalargenumberofdepotstoservicetheseoutletsand
alargesalesforceforthispurpose.

Alargenumberofshopshaveautomated/manualdealertintingsystems.
Therearemorethan20,000inoperation,probablythehighestforany
country.Incontrast,thereareonlyapproximately7,000tintingsystemsin
ChinaforamarkettwoandhalftimesIndia'ssize.

ThehighvolumesoflowcostdistemperssoldinIndia,whichamountsto
approximately200,000tonsperannumatanaveragecostofRs35perkg.This
issignificantlylowerpricedthananythingsoldelsewhereintheworld.

Indiansdependontheskilledpainterlargelyonaccountoflowerlaborcosts,
greaternecessarysurfacepreparationandaninherentlazinessamongthe
Indianconsumerwhenitcomestopainting.Hencetherangeofproductssold
andthemannerinwhichtheyaresoldandusedareverydifferentinIndia.
 HISTORYOFPAINTINDUSTRY

TheIndianpaintindustryisover100yearsold

FirstpaintfactoryinIndiawasestablishedin1902by
ShalimarPaintsatCalcutta.

In1990s,growthof1213%annuallywasrecordedmainly
duetoadrasticreductioninexciseduty(from40%to16%).

TheLPGpolicieshelpedIndianmarkettoexpandandgrow
significantly.
 GROWTHOFPAINTINDUSTRY
BoominIndianHousingSector,Increasingurbanization,cheaper
housingloansandashiftfromsemipermanenttopermanent
housingstructureshavebeendrivinggrowthindecorativepaints
segment,(constituting70%ofpaintindustryinIndia).
AccordingtoIndianPaintAssociation(IPA)'sreport,Indianpaint
marketisexpectedtoreachRs.70,875croreby201920from
aroundRs.40,300crorein201415.
Growthrateof17%CAGRfrompast7years.

Traditionallytheindustryhadbeendominatedbythe
unorganizedsector,butwiththeforayofforeignfirmsas
wellastherapidindustrializationandinstitutionalization
ofthecountrytherehasbeenarestructuring,thepacthas
nowbeenledbytheorganizedsector,withthesmallerand
unorganizedplayerseitherbeenamalgamatedorintegratedas
suppliersofthelargerindustrychain.
 MARKET
STRUCTURE
Theunorganisedsector35%ofthepaintmarket
2,000unitshavingsmallandmediumsized
paintsmanufacturingplants
theorganisedsector65%ofthepaintmarket

ToporganisedplayersincludeAsianPaints(50+
%marketshare),KansaiNerolac(17%market
share),BergerPaints(16%marketshare)and
ICI(12%marketshare).

 FACTORSDRIVINGGROWTHINDEMAND
INTHEINDIANPAINTINDUSTRY

DEVELOPMENTOF
REALITY,
AUTOMOBILEAND URBANIZATION INDUSTRIALIZATI
INFRASTRUCTURE ON
SECTOR

INCREASEIN
PERCAPITA AVAILABILITYOF
TECHNOLOGY
INCOME FINANCING
COMPETITORSININDIANMARKET
DULUXPAINT

ParentCompanyDuluxIndia
TaglineLetsColour,Apnerangkochalkaane
do
SegmentDecorativesegment

TargetGroupHomeowners,institution
buildings,offices,developingstylish
infrastructure
Theyarequalitycentriccompanywhichhas
helpedthemgrowandsustaintheirbrands.
TheyhadfirstmoversadvantageinDuluxvelvet
touchwhichhadnocompetitiontillalmosta
decade.
SHALIMARPAINTS
ParentCompanyShalimarPaintsLimited
TaglineZarahatkesocho

SegmentDecorativeandIndustrialSegments

TargetGroupInstitutionalandretailcustomers
acrossallpricebands.
ShalimarPaintswasfirstlargescalepaint
manufacturingunitinSouthAsia,hencehasvast
experienceinthisindustry
Withproductsinmarinecoating,High
performanceCoating,packagingandGeneral
Industrial,theyare3rdlargestintheindustrial
paintscategory.
NEROLACPAINTS
ParentCompanyKansaiPaintCompanyLimited
TaglinePaintingagreenertomorrow,Ghar
bulaketohdekho
SegmentMiddleandUpperclasshomeowners;
automotiveindustry;Generalpurpose
TargetGroupAutomobilebrands(2&4wheelers
segment),Homeowners,EngineeringIndustries
Marketleaderinautomotiveandpowdercoating.

Keyfactorstotheirsuccessare:R&D,Innovation,
QualityandAggressiveBrandingandMarketing
strategies.
BERGERPAINTS
ParentCompanyBergerPaints
TaglinePaintyourimagination

SegmentMiddleClassandupperclasssegment

TargetGroupHomeowners,Professionalsand
IndustryUsers
Withnearlyonefifthmarketshareandisranked
oneofthetop2inIndia.
TheCompanyhasinternationalpresence:ithas4
manufacturingfacilitiesabroad;operationsin
Russia,Nepal,EuropeandBangladesh.
BergerPaintsisalonesupplierofprotective
coatingstoNuclearPowerPlants.
 ASIANPAINTSLIMITED
Industry:Chemicals

Foundedin1942

Founders:ChampaklalH.Choksey,SuryakantC.
Dani,ArvindR.Vakil,ChimanlalN.Choksi
Headquarters:Mumbai,Maharashtra,India

Largestmarketshareof54.1%intheIndianpaint
industry.
Worldwidepresence.

Revenue:Rs.15,852Crore(US$2.5Billion)

OperatingIncome:Rs.2,808Crore(US$440Million)

NetIncome:Rs.1,779Crore(US$280Million)

No.ofemployees:6,067
 BALANCINGALLTHE
FEATURESINONEPRODUCT
ASIANPAINTS
Antifungal
Antibacterial

TrulyGreen Stretchand
Product covercracks

Virtually
Hydrophobic
odourless

Nohazardous
StainPhobic
RawMaterials

Silicon
Particles
 THESIGNIFICANCEOF
ECONOMICSINPAINTINDUSTRY
Supply:Supplyexceedsdemandinboththedecorativeas
wellastheindustrialpaintssegments.Industryis
fragmented.
Demand:Demandfordecorativepaintsdependsonthe
housingsectorandgoodmonsoons.Individualpaint
demandislinkedtouserindustrieslikeauto,engineering
andconsumerdurables.
Bargainingpowerofsuppliers:Priceincrease
constrainedwiththepriceoftheunorganisedsectorforthe
decorativesegment.Sophisticatedbuyersofindustrial
paintsalsolimitthebargainingpowerofsuppliers.Itis
thereforethatmarginsarebetterinthedecorative
segment.
Bargainingpowerofcustomers:Highdueto
availabilityofwidechoices.
 WORLDMARKET
COMPARISON
Percapitaconsumptionindeveloped
economies22kg
InIndiaitis0.5kgandinchinaitis
1.6kgs
Unorganizedsectorofindiatakes35
%ofshareofIndianpaintindustry,
organizedsectorAsian
paints(50%)followedbyKansai
Nerolac(17%),Bergerpaints16%
 TopCompaniesinthe
world(2016)
PPG(USA)$14.24BILLION

AKZONOBEL(THENETHERLANDS)
$10.925BILLION
SHERWINWILLIAMS(USA)$10.24
BILLION
HENKEL(GERMANY)$9.748BILLION
SIKA(SWITZERLAND)$5.54BILLION
RPMINTERNATIONAL(USA)$4.596
BILLION
NIPPONPAINT(JAPAN)$4.45BILLION
Supply
Supplyexceedsdemandinboththedecorativeaswellastheindustrialpaints
segments.Industryisfragmented.Inthecountrieslikechina,whereproductionlevelis
high,thepricesarecheapandtheyalsoexporttoothercountrieslikemiddleeastetc

Demand
Demandfordecorativepaintsdependsonthehousingsectorandgoodmonsoons.
Industrialpaintdemandislinkedtouserindustrieslikeauto,engineeringand
consumerdurables.Itdependsonthedisposableincomeoftheperson.Forexample
Indiabeingsuchalargecountryhas0.5kgpercapitaconsumption

ngpowerofcustomers
Highduetoavailabilityofwidechoice.Indiaispricesensitivemarketbutpeopleprefer
buyingAsianpaints.
CHALLENGESFACEDBYINDUSTRY
SeasonalDemand:PaintIndustryisaseasonalindustry.The
demandshootsupduringtheDiwaliseasonorotherfestive
seasonsanditwillbelowintherainyseason.
InventoryManagementatDealerLevel:Theproduct
differentiationisminimalinpaintindustry.Theveryclose
substitutesarereadilyavailable.Itisalsoimportantforbrand
visibilityandoccupyingtheshelfspace.
DistributionCosts:Distributioncostsareimportantforalower
priceproductlikeDistemper.TheDistemperisastiffpaintandis
soldonweightbasis.ItiscalledastheBreadandButterofthe
paintindustryastheconsumptionishighestforthisproduct.
LowPerCapitaConsumption:Thepercapitapaint
consumptioninIndiaisinoneofthelowest.Itstandsatmere
815gmsperpersonperannumascomparedtothe25kgper
personperannuminUS.
 Thepaintcompanieshavetoeducatethecustomers
thattheyshouldgofortherepaintingoftheirhouses
frequently.Thisisaveryuniquefeatureofthe
industrythattheIndianpeoplewillgoforrepainting
eitherforsomefestivalsuchasDiwalioroccasionslike
Marriageorwhentherepaintingisabsolutely
unavoidable

CompetitionfromtheUnorganisedPlayers:Acritical
challengeinthepaintsindustrywasthecompetition
fromtheunorganisedplayers..
PRIMARYRESEARCH
(INTERACTIONSWITHSUPPLIERS)
Q1)Whichbrandsdoyouhaveinyourshop?
A) WekeeptopbrandslikeAsianpaints,Berger,Nerolacand
manymore.

Q2)Whichisthebestbrandamongthoseyoukeep?Why?
B) AsianPaintsisthemostsoldbrand.Itisthebestquality
wiseaswellaspricingwisefollowedbyNerolacandBerger.

Q3)Whatisthemarketscenariointermsofsales
fluctuations?Isitdifferentfrom1015yearsago?
C) Thesalesincreaseby1520%duringtheDiwaliNewYear
Seasonaswelltheweddingseasonbutthatisnottoomuch
asthesalesarealmostequallydistributedthroughoutthe
year.
 Q4)Whatisthegeneralrateofmargininpaint
industry?
A)Thegeneralrateofmarginis47%.Itisnottoo
high.Thebetterthebrand,thelesseristhe
margin.Ourprofitsdependmoreonthesalesmade
ratherthantheprofit.

Q5)Howisthesupplychainmanaged?
A)Generally,inthepaintindustriesthecompanies
havetheirownsupplierstomakeiteasytoreachout
toretailers.Wekeepourstockaccordingtothesales
forecastinourshops.
 FUTURESCOPE
FastGrowthinrevenue70000crore(expectedin2018),20%annually
fornexttwoyears
Moving to more ecofriendly productszero VOCs ( volatile organic
compound),lowVOCsandnaturalpaints(treeresins,water,plantoil
India doesnt have guidelines on such nontoxic paints, we consider
GREEN SEAL STANDARD and US ENIVRONMENT PROTECTION
AGENCY
Asian paints have reduced the VOC content to comply with the GREEN
SEAL STANDARD , Asian has 22 grams/litre VOC in emulsion but the
standardis50grams/litre
Berger doesnt use lead, mercury ETC, and reduced its VOC content
substantially, it makes custommade products for hospitals and
pharmaceuticalsco.
Nerolacisalsoleadfree,ISO14001certified,waterbased,lowVOCs
Thoughtheecofriendlyproductsarecostly,butinlaterstagesduetonew
innovationandRND,companiesareexpectingtoemphasizemoreoneco
friendlynadminimaluseofVOCs
With growth in per capita income it is expected that more growth will
occurindecorativesection