With India’s GDP to clock 7 to 7.5%, the Indian Paints Industry is expected to grow rapidly in the coming years. The decorative paints segment has been the main revenue driver. In the decorative segment, customer preferences are changing, and companies are using innovation to cater to the demand. However, there will be an upstick in demand for industrial paints in the months ahead, on the back of the massive infrastructure moves by Government of India – from roads to ports; from smart cities to urban mission. This CMR IMG report will help readers to get the big picture on the Indian Paints Industry. Readers will be able to understand current demand and supply drivers in the paints market, and spot future trends. This IMG report analyzes Asian Paints, Kansai Nerolac, Berger Paints, Akzo Nobel and Shalimar Paints.

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PAINTS

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Sharp
decline
in
crude
oil
prices,
and
a
consequent
decline
in
raw
material
prices.
Rising
demand
in
Urban
India,
a;ributable
to
increased
purchasing
power
and
changing
consumer
preferences.
Government’s
sharp
focus
on
infrastructure:
Make
in
India;
Housing
for
All;
Smart
CiGes
Mission;
Sagarmala
Project;
Bharat
Mala
Project;
Rurban
Mission.
FY15:
In
Perspective
Improved
economic
growth
and
lower
inflaGon
levels
resulted
in
increased
consumpGon.
Historically,
Indian
paint
industry
has
grown
close
to
1.2
Gmes
of
GDP
growth.

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Industry
Overview
[Source:
CMR
Analysis
and
Industry
EsGmates]
Indian
paints
Industry
is
esGmated
at
~Rs.406
Bn,
out
of
which
organized
sector
accounts
for
~65%
(~Rs.264
Bn)
of
the
total
market.
• Organized
Sector:
Top
organized
players
include
Asian
Paints,
Kansai
Nerolac,
Berger
Paints
and
ICI.
Top
5
companies
control
80%
of
the
organized
market.
• Unorganized
Sector:
In
the
unorganized
segment,
there
are
about
2,000
units
having
small
and
medium
sized
paint
manufacturing
plants.
65%
ORGANIZED
MARKET
35%
UNORGANIZED
MARKET
DECORATIVE
PAINTS
INDUSTRIAL
PAINTS
72%
28%

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Demand
Side
View
#1
Rising
demand
in
Urban
India.
#2
Rural
India
undergoing
transformaGon;
demand
rising
in
Tier
II
and
III
ciGes
#3
Reduced
duraGon
of
painGng
cycles
from
about
6-­‐8
years
earlier
to
about
3-­‐3.5
years
now
#4
Increased
purchasing
power
and
changing
consumer
preferences
Rising
demand
in
the
auto
industry,
due
to
falling
crude
oil
prices,
new
product
launches,
expected
interest
rate
cuts.
Government’s
mega
push
on
infrastructure
#5
#6

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Supply
Side
View
Titanium
Dioxide
(TiO2)
is
the
single
most
important
pigment
in
paints,
forming
around
25-­‐30%
of
the
total
raw
material
cost.
TiO2
prices
in
India
fell
~11%
YoY
and
~1%
MoM.
Mineral
TurpenGne,
a
petroleum
disGllate,
is
the
most
widely
used
solvent
in
paint
manufacturing.
Its
prices
depend
on
crude
oil.
The
containers
for
carrying
paints
are
made
from
various
crude
oil
derivaGves.
A
drop
in
crude
oil
prices
translates
into
savings.
#1
#2
#3
Major
paint
players
are
focusing
on
product
InnovaGon,
customer
Experience
enhancement
and
special
offerings.
Some
recent
examples
include
brands
like
Green
&
Eco
friendly
from
Nerolac
Impressions
Eco
Clean
and
Berger
Breathe
Easy,
Dulux
Weathershield
etc.
IniGaGves
such
as
Asian
Paint’s
ColorNext
(annual
colour
forecasGng
iniGaGve)
and
Berger
Paint’s
Lewis
Berger
Preview
also
underline
differenGaGon.
#4

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Market
Share
(in
%)
[FY15]
• Turnover
represents
Sales
net
of
excise
duGes
• Turnover
includes
Joint
Ventures
&
Subsidiaries
in
India
but
excludes
overseas
operaGons
54.1
17.5
15.4
2.1
[Market
Share
in
%]
10.9
[Source:
CMR
Analysis
and
Industry
EsGmates]

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Revenue
Segmentation
(in
%)
4
96
Chemicals
CoaQngs
55
31
DecoraQve
CoaQngs
AutomoQve
CoaQngs
14
General
Industrial
and
Performance
CoaQngs
80
20
DecoraQve
CoaQngs
Industrial
CoaQngs
82
5
DecoraQve
CoaQngs
Industrial
CoaQngs
13
InternaQonal
Ops.
[Source:
CMR
Analysis
and
Industry
EsGmates]

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DecoraGve
paints
segment
will
witness
higher
growth,
thanks
to
Government
focus
and
incenGves
to
the
housing
sector
A
normal
monsoon
will
be
vital
to
the
growth
prospects.
VolaGlity
of
the
Indian
currency
and
internaGonal
oil
prices
will
also
challenge
the
paints
industry.
FY16:
Outlook
Industrial
paints
segment
will
see
growth,
as
auto
industry
demand
picking-­‐up.
The
Government
focus
on
infrastructure
will
be
a
key
growth
contributor.

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