2. 2
Contents
Market Characteristics
History of the Indian Paints Industry
Industry Overview and Outlook
Trends in the Industry
Porters Five Forces Analysis
The Business Process
Consumer Purchase Behavior
Player Profiles
Brands
3. 3
Market Characteristics
Decorative paints
• Caters to the housing sector
• Premium paints (acrylic emulsions) used mostly
in the metros.
• Medium range (enamels) popular in cities and
smaller towns.
• Economy paints (distempers ) demanded in the
suburban and rural markets
• Distribution network is the key
Industrial paints
• Include powder coatings, high performance
coating, automotive and marine paints
• Two-thirds of the industrial paints produced in the
country are automotive paints
• Technological superiority and tie-up with
automobile manufacturers
4. 4
Indian Paints Industry: A Brief History
1902 – Shalimar Paints, Calcutta
1920-45: Asian Paints, Nerolac started operations
1965-91: Paints looked upon as luxury item
1983: Demand for automotive paints picked up with
entry of Maruti
1991: Reduction in excise duty and many controls on
the industry removed.
After 1991: Steady growth, slow disappearance of
unorganized sector units and industry fragments.
5. 5
Industry Overview
Four main players
• Asian Paints- 42%
• Goodlass Nerolac-20%
• ICI Paints- 14%
• Berger Paints- 15%
Asian Paints dominates decorative segment
Goodlass Nerolac dominates industrial segment
6. 6
Industry Characteristics
Demand for paints linked to the industrial and
economical growth
Decorative paints market naturally price-elastic
Industry majors maintain a vast dealership network
High inventory levels
7. 7
Key Success Factors
Costs and price drivers – raw materials
Working capital management
Heavy seasonality of demand
Brand building
Stocking and distribution
Access to latest technologies
8. 8
Trends in the Industry
Reduction in excise duties and taxes – larger scale
plants
Customer power !
Proliferation of industrial use
Super premium decorative segment – better margins
Niche marketing strategies
India – an exporter
Industry expected to further consolidate
9. 9
More Trends…
Increased emphasis on attractive packaging, more
sturdy packaging, lighter SKUs, etc.
From tin cans to plastic tubs
Asian Paints introducing “sub-stockists”
Focus on rural markets
Computerization and ERP
Less seasonality
10. 10
Market Practices
Discounting is the norm
Dealers operate with the company on credit – 2 to 6%
Stock sometimes “undervalued” to “save” taxes and excise
Bulk purchasers and “key accounts” are given additional
discounts
Distinct Segmentation in the Market
• Super economy segment – cement based - <Rs 100 per litre
• Economy segment - oil based – Rs 100/- per litre
• Medium segment – Rs 200 per litre
• Premium segment- Rs 300 per litre
• Super premium segment – Rs 1200 for a four litre pack
11. 11
Industry Prospects
Market slated to grow from 9000 crores to 18000
crores in the next five years !
Per capita consumption of paint is India is around 800
gram, compared to 15-25 kgs in most developed
countries.
Organized sector will grow 16 to 20% per annum
30 million new homes, millions of cars and vehicles,
Infrastructure projects all will fuel huge demand !
12. 12
International Players in India
International retailers had until January 2006 been
able to operate in India only through franchise
arrangements with local partners
The Indian Government passed a regulation in
January 2006 allowing entry of foreign single retail
brands without the need for franchise arrangement
Starting February 2006, foreign single retail brands
are allowed to:
• open their own stores in India;
• own upto 51% of local joint ventures
13. 13
Porter’s Five Forces Analysis
Buyers power: High
Supplier’s power: High
Threat of entry
Low
Threat of substitutes
Low
Thus, overall the
industry is profitable
Industrial rivalry :
High
14. 14
Business Process
Factory - nimbleness in the supply chain, efficiency and speed of
the production very important , since inventory turnover periods
are significantly high.
Depots - normally owned by company, strict quality control
essential to prevent loss of inventory due to product
deterioration leading to them not meeting the product
specifications.
Dealers
• Dedicated dealers
- Terms of trade more favourable
- Higher margins , exclusivity of distribution , greater variety of product
lines stocked , technical support in terms of MIS
• Independent dealers
- Form a large part of the distribution process in paints industry
Customer
Factory
Depot
Dealer
Customer
15. 15
Factors affecting purchase are price, finish, durability,
range of colours/ shades
Maximum demand from the household sector who uses
paint as a decorative medium
Purchase decision influencer-regarding the above
parameters - the dealer or the painter- whose view is
given major importance
Consumer Behaviour –
Decorative Paint
16. 16
The major factors affecting purchase decision:
• Brand, price, quality, durability, timely supply, credit and
discount terms, logistics service, relationship with supplier
Access to technological parameters assist paint
companies to customize their products as per needs of
specific industrial sectors
Consumer Behaviour –
Industrial Paints
17. 17
The organized sector
Asian Paints
Goodlass Nerolac
ICI Paints
J&N
Shalimar Paints
Players in the Industry
18. 18
Asian Paints
US $ 680 million Asian Paints Group has a presence in
23 countries
Ranks among the top 10 decorative coatings companies
in the world
Subsidiaries - Berger International Ltd., Apco
Coatings, SCIB Paints and Taubmans
Market leader in the decorative segment
19. 19
Asian Paints
Asian Paints CSF – Supply Chain
Market driven strategy
Colour World – Paint retailing of the future
ColourNEXT 2006 , Kids World
Royale Play – readymade special effects
Bye Bye Gattu
20. 20
Asian Paints
Promotional campaigns
Point of sales activities and dealer incentives
Shift from individual branding to umbrella branding –
building the Asian Paints brand
Messages of durability, excellent finish, wide range
of colour availability – shade combinations
21. 21
Asian Paints
Asian PaintsAsian Paints
ApexApex
Asian PaintsAsian Paints
Ace ExteriorAce Exterior
Asian PaintsAsian Paints
Premium GlossPremium Gloss
Asian PaintsAsian Paints
Apcolite PremiumApcolite Premium
Asian PaintsAsian Paints
Premium EmulsionPremium Emulsion
23. 23
ICI Paints
Multi-divisional company dealing in rubber
chemicals, paints, polycarbonate, others
Revenues in 2004 - $157.51 million (paints business)
Mainly auto refinishes and decorative paints
Present in all categories
Brands - Dulux, Duco, and 2K
Only Indian decorative paint manufacturer producing
paints that are totally free from toxic metals
24. 24
ICI Paints
Promotional campaigns/positioning
Premium brands advertised through television
Dulux Interior - Washability, durability, fungal
resistant, smoothness and exclusiveness
Weathershield (exterior wall finish) – Prevents
exterior walls from cracking and eroding due to high
rutile content
27. 27
Goodlass Nerolac
Goodlass Nerolac is the second largest paint company
Gross group turnover of approximately Rs 1200
crores
Undisputed leader in industrial segment with a
market share of 45% in industrial paints
28. 28
Goodlass Nerolac
Five strategically located manufacturing units and a
strong dealer network of over 11,500 dealers across
the country
As opposed to the Asian Paints strategy of hitting the
entire gamut of paint segments, GNPL - mainly
concentrated on industrial paints segment, which is
technology driven
29. 29
Goodlass Nerolac
Industrial
• Automotive coatings
• General industrial coatings
• High performance coatings - DIMETCOTE
• Powder coating
Company Product Category
Kansai Paint Co., Japan ED Primers, Automotive & Industrial
Coatings
Nihon Parkerizing, Japan Pre-Treatment Chemicals
Oshima Kogyo, Japan Heat Resisting paints
Ameron, USA High Performance Coatings
30. 30
Goodlass Nerolac
Decorative paints
• "Nerocem" which is cement paint
• "Suraksha" the value pack
• "Nerotex" which is a texturized paint
• "Excel" the premium exterior paint
• “Impressions” the premium interior paint
• “Wonderwood” can be used for wooden surfaces