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India Paint & Coatings Industry

Fast Facts
Insights from Market Research conducted by Sannam S4
Research Team

November 2014

Industry Overview
2

The Paints & Coatings industry in India has grown at a CAGR of


10.5% in the period from 200809 to 201415(E).
It is expected to grow at the rate of 1213% annually over the next
five years from 3,758mn in FY14 to 6,180mn by FY18.
In 201314, the consumption was recorded at 4mn tonnes of
which 80% was contributed by decorative paints and 20% by
industrial paints.
The top players in the industry todayAsian Paints, Berger Paints,
Kansai Nerolac Paints, and Akzo Nobel control over 70% of the
market share.
Earlier the demand for premium decorative paints was restricted
to the urban areas. However, growing awareness and increasing
disposable income levels have aided the growth of this category
of paints in the rural and semi-urban areas.
In the recent past the industrys per capita consumption in India
has been around 4kg which is relatively lower than the developed
countries.

The Market Size


3

Market Revenue (GBP Million)


4,500

4,220
3,758

4,000
3,500
3,000
2,500
2,000

Market Composition (%)

3,172
2,562

3,416

2,832
Unorganized
30%
Unorganized
30%

1,500
1,000
500

Organized
70%

Source: Company reports, Tata Securities, BSE India, Sannam S4

Market Segmentation
4

By Product Category
Automotive
Paints

65%

Powder
Coatings

20%

Replacement
Demand

65%

Protective
Coatings

15%

New Demand

35%

By Demand

Industrial Paints
20%

By Product category
Decorative Paints
80%

Medium range
paints

60%

Premium range
paints

25%

Distemper
segment

15%

Source: Company reports, Ambit Capital, Tata Securities, BSE India, Sannam S4

Areas of Consumption
5

Industrial/
Performance
Paints

Areas of
Consumption

Decorative Paints

Areas of Consumption

Automotive paints
(1k, 2k, solvent,
water base)

Automotive industry

High income urban


households, especially
metropolitan cities

Powder coatings

White goods, furniture,


luminaries, hospital
items, garden tools,
power solutions
(generators), invertors,
batteries, control panel
manufacturers, and
aluminium extrusions
used in real estate etc.

Premium range
(Textured emulsions,
textured enamels,
exterior emulsions.)
Medium range
(economy emulsions,
primers, premium
enamels, wood
care.)

Middle income
households in urban
areas, smaller cities and
towns

Distemper segment
(distempers,
economy primers.)

Middle income and lower


income households in
semi-urban and rural
areas

Protective coatings

Power plants, heavy


engineering, chemical,
petrochemical and
fertilizer plants, and
refineries and marine
segments.

Competitor Market Share


6

Market Share of Major Players (%)


Others
21%
Akzo Nobel - Dulux
6%
Asian Paints
47%

Kansai Nerolac Paints


12%

Berger Paints
14%

Source: Company reports

Pros & Cons


7

Pros

Cons

Relatively lower per capita


consumption indicates the
untapped potential of the
market.
Favourable government
policies to boost real
estate development in
India.
Burgeoning automobile
sales in India.
Rising number of affluent
middle class population.
Improving economic
conditions and stabilisation
of the inflation rate.

Intense competition by
already established
manufacturers/marketers
sets a higher level of
expectation.
Below average monsoons
in a particular year may
restrict the demand for
paints, especially in the
rural areas.
Unstable crude oil prices
may lead to fluctuation in
the price of raw materials
used for manufacturing
paints.

Mergers & Acquisitions


8

Year

Acquiring company

Target company

Type

2007 Berger Paints India


ltd

Nippon Bee Chemical


Co Ltd

Merger

2010 Akzo Nobel

ICI, Dulux

Acquisitio
n

2011 Berger Paints

Sherwin Williams Paints, Acquisitio


India (Decorative
n
paints segment)

2012 Asian Paints

PPG Industries, Inc.

Merger

2012 Kansai Nerolac

Nepal Shalimar

Acquisitio
n

2013 Asian Paints

Berger International
ltd. (Singapore)

Acquisitio
n
Source: Company reports

Future Outlook
9

The
revenue
is
further
anticipated to grow at a
Projected Revenue
CAGR of 13.6% from 201516
(GBP Million)
to 201718.
7,000
6,180
The industry
players
will
6,000
benefit with higher profit
5,503
margins due to positive
4,794
5,000
measures
taken
by
the
government to control the
4,000
inflation rate.
3,000
As the established players
seek to control the market
2,000
demand and thus scale
operations
to
lesser
1,000
penetrated areas, one can
0
expect
consolidations
2015-16
2016-17
2017-18
between
the
organized/unorganized paints
and coatings manufacturers. Source: Company reports, Tata Securities, BSE India, Sannam S4

Industry Trends
10

Increasing urbanization: As a considerable portion of the population is


shifting to urban areas, the consumption of premium decorative paints
is expected to scale up in the future.

Manufacturing boost: With the anticipated growth in the manufacturing


sector, the demand for industrial paints is also expected to grow.

Automobile sector: Increasing automobile sales (annual growth of 10%


15%) in the country presents bright prospects for industrial paints.

Favorable real estate policies: The new favorable changes made by


the UPA government to boost the real estate sector in the country, is
projected to aid the growth for all category of paints.

Ease of doing business in India: The Make in India campaign followed


by one day registration window for international organizations is likely to
encourage foreign businesses to come into India.

Shift to organic pigments: Perceptible shift towards organic pigments in


premium paints expected to be a key success factor for manufacturers.

Burgeoning affluent middle class population: Growing disposable


income of the middle class population, likely to boost the demand for
real estate properties and hence, result in a higher demand for
premium and middle range decorative paints.

Thank You
11

Adrian Mutton

P S Krishna Kumar

CEO
Sannam S4

Director and Head, Research &


Partnerships
Sannam S4, India

D: +44 (0) 203 303 0025


E: adrian.mutton@sannams4.com

D: +91 80 6792 0790


M: +91 98 8025 8417
E: krishna.kumar@sannams4.com

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