introduction about paint industry
TRANSCRIPT
Introduction
Business Plans and Organizational Strategy
Introduction
Interior design has played a vital role in property pretty much since man began
living in caves. The endless debate between art and design could of course rear its' head
again, however when caveman decorated his cave interiors with scenes from hunts and
feasts, surely these can be seen as enhancing the interior!?
From those early days on we've been celebration to interior designers from every
walk of life decorating property with materials from all round the planet, with antique
furniture and contemporary furniture, luxurious interior paints and tiles, fantastically modern
fixtures and fittings, kitsch doilies and window coverings from glamorous plantation shutters
to interior designed be spine shutters……………………………………...The list is truly
endless!
Interior design can be floral and romantic like the flowing lines of a song. Materials
used for interior design have played a great role in the development of this discipline of
design as an interest, obsession and way of life for many people today and historically. In
medieval times the decorated wall hangings which adorned castle walls were not simple
amazingly detailed items of interior design, but played an enormous role in education,
heating and decoration - take the world famous Bio tapestry. Religious icons which have
decorated churches together with stained glass windows for centuries could only come about
as molten lead, gold leaf and other skills were introduced and these served to educate,
provide light, offer hope and inspiration to every pair of eyes which viewed them.
In the early part of the 20th century concrete was invented - not only were exteriors
transformed, but interiors were captivated by this hard, cold new material, think Layer Cake
and a luxurious male styled bathroom in dark concrete... Glass, metal, plastic, fabric, paint...
Just about every material known to man has been utilized to design or interiors.
Business Pl
2
Business Plans and Organizational Strategy
The beauty of interior design as a subject and interest, there are no boundaries, form
and beauty can meet in function, as long as we're talking of items for the home or
workplace, which serves to fulfill a function, interior design, meets its needs.
The Use of Colour in Interior Design
The biggest influence on the human
state of mind with the possible
exception of the weather is colour. We
are surrounded by references: "a red
rag to a bull", "blue with cold", "green
with envy", "in the pink". The
psychology of colour and how colour affects human behavior is now a
serious course of study at universities. Hospital rooms, classrooms, fast
food restaurants and offices are painted in colours to influence the
behavior and mood of the people who use these spaces. Even the
products on the shelves of your local supermarket have been packaged in
colours carefully chosen to attract your attention and encourage you to
buy. So why are people so hesitant to use colour in their home
environments? Why is the neutral space currently the ideal? Why are we
afraid of colour?
The first step to relinquishing fear in the use of colour is to understand
the psychological effects it has on us. Red is known to stimulate the
appetite - so it’s an excellent colour for dining rooms. Both blue and
green are fresh and calming. They are the colours of nature and could be
popular choices for bedrooms. Yellow and orange are energizing like the
sun, so are good choices in rooms where your energy may need boosting
- the kitchen perhaps. Orange in its toned down terracotta form can be
Business Pl
3
Business Plans and Organizational Strategy
ideal in a home office; it has the energizing effect of
both red and orange but isn’t so bright that you won’t be able to stay at
your desk! Scientists have studied the effect of color on our mood, health
and way of thinking for many years. Our preference of one color over
another may have something to do with the way color makes us feel.
Light is absorbed by the eye and converted into another form of energy,
which enables us to see color. This energy affects and is felt even by
people without sight. Light energy stimulates the pituitary and pineal
glands, which regulate hormones and other physiological systems in the
body.
We know that red stimulates, excites and warms the body, increases the
heart rate, brain wave activity and respiration. Mothers are encouraged
to stimulate infants' brains by dangling mobiles containing bright red
balls on them.
If high blood pressure, hypertension or poor coordination afflicts a
person, they should not decorate their rooms with the color red.
Pink has a soothing effect and can even relax the muscles. Pink's
tranquilizing effect has gained its entrance in prisons, hospital rooms and
drug centers.
Are there finicky eaters in your kitchen? Try using an orange tablecloth or
placemats. Orange stimulates the appetite and reduces fatigue. Of
course, if you're on a diet, avoid orange.
Yellow is a memory stimulator. A touch of yellow in every room might just
help you remember where you left your keys or eyeglasses. Yellow also
raises blood pressure and pulse rate but not to the degree that red does.
Business Pl
4
Business Plans and Organizational Strategy
Green reminds us of spring and therefore new
beginnings. It brings feelings of calm, anticipation and hope, and it has a
soothing, relaxing effect on the body as well as the mind. Still on that
diet? Green is good as it could help control the anxiety associated with
the discipline of controlling yourself from impulsive and over-eating.
Maybe that avocado green refrigerator isn't such a bad thing after all.
Blue is another relaxing color. Pleasant dreams might be the end result of
coloring the bedroom in shades of blue. It has a calming effect on the
body: it lowers blood pressure, heart rate and respiration and in hot,
humid weather has a cooling effect.
Another study shows that blue in the classroom can be a good thing.
Children prone to tantrums and aggressive behavior became calmer after
being in a classroom painted blue. Both blind and sighted children
reacted the same when placed in blue surroundings.
More likely than not, if a particular color is preferred, it most likely is
needed by the body. The pleasant and appealing response the body gives
is a sort of "thank you" from body to brain.
COLOUR PSYCHOLOGY AS THERAPY
Several ancient cultures, including the Egyptians and Chinese,
practiced chromo therapy, or using colors to heal. Chromo therapy is
sometimes referred to as light therapy or colourology and is still used
today as a holistic or alternative treatment.
In this treatment:
Business Pl
5
Business Plans and Organizational Strategy
Red was used to stimulate the body and mind
and to increase circulation.
Yellow was thought to stimulate the nerves and purify the body.
Orange was used to heal the lungs and to increase energy levels.
Blue was believed to soothe illnesses and treat pain.
Indigo shades were thought to alleviate skin problems.
Most psychologists view color therapy with skepticism and point out that
the supposed effects of color have been exaggerated. Colors also have
different meanings in different cultures. Research has demonstrated in
many cases that the mood-altering effects of color may only be
temporary. A blue room may initially cause feelings of calm, but the
effect dissipates after a short period of time.
A BRIEF HISTORY OF MILK PAINT - IN THE BEGINNING
Paint has been used by mankind since before recorded history, first as
decoration, and much later as a protective coating. The oldest painted
surfaces on earth were colored with a form of milk paint. Cave drawings
and paintings made 8,000 years ago, even as old as 20,000 years ago,
were made with a simple composition of milk, lime, and earth pigments.
When King Tutankhamen's tomb was opened in 1924, artifacts including
models of boats, people, and furniture found inside the burial chamber
had been painted with milk paint.
Because the original formula for milk paint was so simple to make and
use, it was for thousands of years a major form of decoration throughout
Business Pl
6
Business Plans and Organizational Strategy
the world. Over time, and in various places, different
recipes, including milk protein (casein), lime, and pigments were tried,
producing varying results in durability. Many of these coatings also
provided weatherproofing, while others disintegrated, leaving only a
permanent stain on the painted surface. The variations included adding
substances such as olive oil, linseed oil, eggs, animal glue, or waxes.
Over the centuries, better recipes were found that could produce a
durable coating, which could last indefinitely. The colors on the walls
painted at Dendaras, even though exposed to the open air for centuries,
are as vivid today as they must have been 2000 years ago.
RENAISSANCE
The first revolution in the make-up of paint came with the Flemish artists
in the fifteenth century. The Greeks and Romans had some earlier
success with adding olive oil to their paint mixture, but had difficulty with
it drying properly. The first use of a good oil- based paint has been
accredited to the Flemish artist, Jan van Eyck, around 1410. While not the
first to use oil paint, he was believed to be the first to establish a stable
varnish as a pigment binder. His innovations produced an art that set the
standard for a long time to come.
Jan van Eyck's varnish was improved upon later in the fifteenth century
by such Italian masters as Leonardo da Vinci, Tintoretto, and Antonello da
Messina.
In the early seventeenth century, the recipe was improved again by
Rubens while studying in Italy. He used warm walnut oil and also copied
da Messina in using lead oxide in his pigments.
Business Pl
7
Business Plans and Organizational Strategy
COMMERCIAL PAINT
Over the next 200 to 300 years, the old water-based milk paint, as well
as the newer oil paint remained relatively unchanged. Artists mixed their
own paints, as did house painters and furniture makers. Recipes for oil
paints were closely guarded secrets. Milk paint continued to be made the
way it had been for thousands of years before.
In Colonial America, as earlier in Europe, itinerant painters roamed the
countryside, carrying pigments with them, which could be mixed with a
farmer's or householder's own milk and lime. Often, the itinerant painter
would be a tinker or farrier, or have some trade in addition to his
knowledge of paint. Practically every household had their own cow or
goat, and each community had its own lime pit. Even though there exist
many examples of early American furniture that was painted with some
form of oil paint, the look associated most widely with the country homes
and furniture of the 17th, 18th, and 19th centuries is that of the soft
velvety, rich colors of milk paint.
This scene doesn't change much until after the Civil War. In 1868, the
first patent was given for the metal paint can with its tightly fitting top.
With this development came the commercial oil paint industry. For the
first time, paint could be manufactured in great mass, packaged in the
new patented cans and shipped to stores throughout the country.
But this kind of operation does not lend itself to the use of milk paint.
Made from natural milk protein, it will spoil just like whole milk.
Therefore, from the very beginning of the commercial oil paint industry,
up until 1935, the only paint sold commercially was oil-based paint, to
which was added lead, mildewcides, and other poisonous additives. Other
types of casein paints were developed that could not be considered milk
paint.
Business Pl
8
Business Plans and Organizational Strategy
Casein was mixed with fromaldehyde, or with ammonia, or with borax, to
create much different types of paint recipes. Around 1935, a new water-
based casein(milk protein) paint was developed with the use of synthetic
rubber and styrene. This was called Kem-Tone, the first latex paint, which
met with great commercial success.
THE GREEN REVOLUTION
After World War II, chemists working for major paint manufacturers began
developing new formulas for paints. Along with these developments came
a burgeoning awareness among American consumers that many of these
developments posed a growing health problem. The lead and mercury in
the paint was highly toxic, as were the many solvents (now called VOCs
and HAPs), mildewcides, germicides, and numerous other additives.
The first Earth Day was celebrated in 1970. This date more than any
other established the determination by a consuming public to execute a
change in American products that were harmful to their users. Since that
time, the use of lead and mercury has been outlawed in paint, as have
many of the solvents (VOCs) traditionally used.
The Old Fashioned Milk Paint Company was established in 1974. We
have made every effort to produce a paint that not only gives the look of
Colonial America, with many historic-based colors, but is also completely
biodegradable, with no VOCS, HAPs or EPA-exempt solvents added.
We've found a safe way to reproduce the old look and make a milk paint
the old-fashioned way. Yes, it will spoil, just like whole milk, but its also as
safe as drinking whole milk. (Not that you'd want to, of course.)
Business Pl
9
Business Plans and Organizational Strategy
PAINTING – INDIAN HISTORY
Indian paintings historically revolved around the religious deities
and kings. Indian art is a collective term for several different schools of
art that existed in the Indian subcontinent.
The paintings varied from large frescoes of
Ajanta to the intricate Mughal miniature
paintings to the metal embellished works
from the Tanjore school. The paintings from
the Gandhar – Taxila are influenced by the
Persian works in the west. The eastern style
of painting was mostly developed around
the Nalanda school of art. The works are mostly inspired by various
scenes from Indian mythology.
History
The earliest Indian paintings were the rock paintings of prehistoric times,
the petro glyphs as found in places like the Rock Shelters of Bhimbetka,
and some of them are older than 5500 BC. Such works continued and
after several millennia, in the 7th century, carved pillars of Ajanta,
Maharashtra state present a fine example of Indian paintings, and the
Business Pl
10
Business Plans and Organizational Strategy
colors, mostly various shades of red and orange,
were derived from minerals.
Bhimbetka rock painting
Ajanta Caves in Maharashtra, India are rock-cut cave monuments dating
back to the 2nd century BCE and containing paintings and sculpture
considered to be masterpieces of both Buddhist religious art and
universal pictorial art.
Madhubani painting
Madhubani painting is a style of Indian painting, practiced in the Mithila
region of Bihar state, India. The origins of Madhubani painting are
shrouded in antiquity.style,. Pahari and Rajput miniatures share many
common features.
Rajput painting
Rajput painting, a style of Indian painting, evolved and flourished, during
the 18th century, in the royal courts of Rajputana, India. Each Rajput
kingdom evolved a distinct style, but with certain common features.
Rajput paintings depict a number of themes, events of epics like the
Ramayana and the Mahabharata, Krishna's life, beautiful landscapes, and
humans. Miniatures were the preferred medium of Rajput painting, but
several manuscripts also contain Rajput paintings, and paintings were
even done on the walls of palaces, inner chambers of the forts, havelies,
particularly, the havelis of Shekhawait.
The colors extracted from certain minerals, plant sources, conch shells,
and were even derived by processing precious stones, gold and silver
Business Pl
11
Business Plans and Organizational Strategy
were used. The preparation of desired colors was a
lengthy process, sometimes taking weeks. Brushes used were very fine.
Mughal painting
Mughal painting is a particular style of Indian painting, generally confined
to illustrations on the book and done in miniatures, and which emerged,
developed and took shape during the period of the Mughal Empire 16th -
19th centuries).
Tanjore painting
Tanjore painting is an important form of classical South Indian painting
native to the town of Tanjore in Tamil Nadu. The art form dates back to
the early 9th century, a period dominated by the Chola rulers, who
encouraged art and literature. These paintings are known for their
elegance, rich colors, and attention to detail.
The themes for most of these paintings are Hindu Gods and Goddesses
and scenes from Hindu mythology. In modern times, these paintings have
become a much sought after souvenir during festive occasions in South
India.
The process of making a Tanjore painting involves many stages. The first
stage involves the making of the preliminary sketch of the image on the
base. The base consists of a cloth pasted over a wooden base. Then chalk
powder or zinc oxide is mixed with water-soluble adhesive and applied on
the base. To make the base smoother, a mild abrasive is sometimes
used. After the drawing is made, decoration of the jewellery and the
Business Pl
12
Business Plans and Organizational Strategy
apparels in the image is done with semi-precious
stones. Laces or threads are also used to decorate the jewellery. On top
of this, the gold foils are pasted. Finally, dyes are used to add colors to
the figures in the paintings.
The history of Indian Paint Industry is as old as the history of the
Indian people. The earliest examples of Indian painting are cave paintings
going back to 10,000 B.C. The tradition of painting in Indian subcontinent
grew and developed over time, resulting in a fully developed and finest
style, incorporating the culture and faith of the region and religion. Indian
paints always embrace rich color and clear symbolism, using specific
iconography to make religious figures clearly recognizable
INDIAN PAINT INDUSTRY
Size of the IndustryToday India has more than 20,000 outlets in operation,
probably the highest for any country.
Geographical
distribution
Mumbai, Ahmedabad, Coimbatore, New Delhi, Surat,
Chennai, Delhi, Jaipur, Bangalore, Kolkata, Karur,
Tirupur, Ludhiana, Bhilwara, Erode, Jodhpur, Rajkot,
Noida, Panipat, Amritsar, Vadodara, Kanpur, Madurai,
Gurgaon, Hyderabad, Navi Mumbai, Tirupur ,Thane,
Shanghai, Pune, Karachi, Faridabad, Indore, Ghaziabad,
Varanasi, Faisalabad, Cochin - Alappuzha.
Output per annum
The high volumes of low cost distempers sold in India,
which amounts to approximately 200,000 tonnes per
annum at an average cost of Rs35 per kg ($0.88) at the
present rate.
Market
capitalization
The market for paints in India is expected to grow at 1.5
times to 2 times GDP growth rate in the next five years
Business Pl
13
Business Plans and Organizational Strategy
History of Indian Paint has fascinated culture throughout the years. Color
has been the major attraction for more than 20,000 years. Two
anthropologists conducted a worldwide study of color naming in 1960's.
Many languages only contained two color they are the white (light) and
black (dark).Today after all the research and finding we have numerous
combination colors of : black, white, red, orange, yellow, green, blue,
purple, pink, grey and brown. Paint is generally made up of a pigment.
Paint Companies in India bring to you a wide range of paints,
varnishes, pigments and coatings for the perfect finishes for the home
interior and exteriors décor and beautification. The paint industry in India
has flourished into a full-fledged manufacturing and sale market catering
to the international standards being demanded for the painting jobs.
While choosing paint for your home or office, check if the paint is:
Stain Resistant, Grease and Dirt Resistant, Scrub Resistant, Heat
Resistant and Water-Resistant
The earliest paint factory in India dates back to 1902, when
Shalimar Paints, Colour & Varnish Company, A Pinchin Johnson unit, was
established at Calcutta. Growing industrialization, expansion of the
railways and introduction of electric power a couple of years earlier had
all kept business confidence soaring high. However, this did not provide a
ready and expanding market for the nascent paint industry then. Imports
from Britain continued to swarm the market and raw materials were not
easy to come by. The industry still consisting of one lone unit went
through a rather prolonged period of infancy, till the World War II brought
Business Pl
14
Business Plans and Organizational Strategy
in dramatic opportunities. With the stoppage of imports owing to war
conditions, the domestic market at last became almost the exclusive
reserve of the domestic industry. European manufacturers, hitherto
exporting to India, readily saw the advantages of setting up
manufacturing facilities here.
The period between the wars thus saw the greatest ever influx of
foreign paint companies into India- Goodlass Wall (1918), Elphant Oil
Mills (1917) in Bombay, and British Paints, Jenson & Nicholson and
Macfarlances in Calcutta. Macfarlanes was brought over by the Poddars
and became a completely Indian company, while the other three:
Shalimar Paints (Pinchin Johnson), British Paints and Jenson Nicholson
continued as British operated units.
While talking about the post independent development of the Paint
industry in India, mention must be made of Asian Paints, a completely
Indian unit which started on a very small scale, grew so big and so
beyond recognition over the years that it is today not only the largest
unit in India but way ahead of the second largest, Kansai (Goodlass)
Nerolac Paints Ltd., formerly a unit of Goodlass Wall (UK).
Besides Asian Paints, numerous factories, wholly Indian in
ownership and with rare exceptions in technology as well were set up in
Calcutta, Kanpur and Bombay. The British units, though a few in number,
were technically strong and financially sound and, with the active
support and patronage of the Government, controlled a vastly higher
share of the market. The post independence period witnessed a steady
Business Pl
15
Business Plans and Organizational Strategy
growth in the paint industry. From a mere Rs.200 million turnover in
1950, the paint industry crossed the Rs.14000 million marks in 1990-91.
But even in this period, paints were considered a luxury item. Only
people with high incomes were expected to decorate their houses with
the use of paints. Paints, as a protective element, were totally unheard
of. The industrial segment, which was traditionally a low user of paints,
vis-à-vis its counterparts in the decorative segment, too contributed to
this notion. In line with this misconceived notion, the government
drastically increased duties on paints in the early nineties with an aim to
bolster exchequer revenues. The result was obvious. This inevitably
brought about a downturn in the fortunes of the industry. The products,
which are highly price elastic, saw a negative growth rate of 20 % in
1991-92. The next year was also not good, registering a growth of only
2%, bringing it back to the 1990-91 level, thus corroborating the fact that
the industry needed lower excise levels to grow.
The industrial slowdown during that period also did not help
matters. In line with the liberalized policies and the realization that paints
are not necessarily a luxury item, duties were progressively reduced from
1993-94.
This squared growth as most companies passed on duty reductions.
Further, the entry of world majors in the automobile and white goods
market in India since 1993 helped the market to expand. Demand for
auto paints shot up suddenly. Form a modest 8% growth rate in 1993-94,
paint demand touched 12% in 1995-96.
Rapid industrialization and improvements in the infrastructure such as
transport, energy and communication during the last decade gave a
further fillip to the growth of the paint industry. Aided by Government’s
Business Pl
16
Business Plans and Organizational Strategy
liberal policy of technology import, the automotive and consumer durable
segments expanded phenomenally, with a flurry of foreign collaboration.
Increased demand for decorative, protective and functional coatings was
a natural fall out, which brought, in its stride, a host of indigenous
developments as well as the injection of new technology.
Types of Paints in India
Paint has been used by mankind since its origin. The evidence can be
found in the cave paintings. The Chinese are considered to be the
pioneers of manufacturing paints thousands of years ago. In modern
times paint is made artificially and is used in many different ways. There
are three basic things required to make paint. You need a ·
Pigment to get the exact color you want·
Binder to hold the paint together ·
Thinner so that it can be applied easily.
There are different types of paints available today. Till the 19th
century the word paint was used to describe oil-bound types only. The
paints bound with glue were called distemper. For farmhouses and
cottages an alternative was found and was called lime wash or color
wash.
Different things need different paints. The interior of the house is
painted by different type of paint than the exterior of the house.
Automobiles use different type of paint. The industrial paint is different
than marine paint. Now colors are made by using different ingredients for
specific surFor example enamel paint, when dries it becomes especially
Business Pl
17
Business Plans and Organizational Strategy
hard and usually has glossy finish. The term enamel paint today means
hard surfaced paint and usually it is used in reference to paint floor
coatings of a gloss finish or spray paints. It can be used for concrete,
stairs, porches and patios. Fast dry enamel is ideal for refrigerators,
counters and other industrial finishes. High-temp enamel may be used
for engines, brakes and exhaust. Enamel is also used on wood to make it
water resistant.
The types of paints available in the market and their utility are:
Acoustic Paint: It is specially designed for acoustic tiles
Alkyd Resin Paint: Best suitable for trim, doors, faux finishes and other
maximized use areas.
Dripless Paint: This paint is thicker and is most suitable for application
on ceilings Latex Paint: The applicability of this paint is easier than
most other and it dries much quickly. It is also easier to be washed.
One-Coat Paint: It is the more expensive version of the latex and alkyd
paints and is mostly chosen for surfaces that require flawlessness in
color.
Primers: This paint is the initiation for all interior paint works.
Rubber-Base Paint: This is best for concrete and bricks.
Textured Paint: If need is to cover any flawed surface in your house get
this paint. It works well on ceilings
New Trends in Decorative Painting
Besides these home decorating and improvement paints and office paint
you can also get industrial paints, aircraft paint, airplane paint, aviation
paint and many other paint products with the paint shops in India. The
paint companies in India house a wide range of paint products that cater
to all your needs. A whole spectrum of colors with your own textured
Business Pl
18
Business Plans and Organizational Strategy
options and application patterns are available with the paint companies.
Each company has its own specialized product and some also offer home
paint services. The cost of a painting job may vary with the paint chosen
- acrylic, emulsion, primer etc., the paint tools being used and the
painting company hired.
World Wide Painting Concept is changed to Decorative Concept and the
Products for Decorative Painting are developed.
Growth of the Industry
There is a phenomenal growth on the housing sector front with rapid
urbanization and availability of easy to secure housing loans which have
become the prime drivers of growth in the decorative paint segment,
which comprises 70% of the $2 billion Indian Paint industry. An average
increase of growth of about 10% in the automobile sector contributes to
50% of the revenues in the industrial paints segment. Paints can be
classified as Decorative Paints & Industrial Paints.
Decorative Paints are usually meant for the housing sector. Distemper is
mostly affordable by all and used in the suburban and rural markets.
Interestingly, 20% of all decorative paints in India are distempers. Indian
Paint products are highly in demand in countries of United States, China,
Business Pl
19
Business Plans and Organizational Strategy
India, United Kingdom, Australia, Pakistan, Hong Kong, Canada, etc
forming the turning points in the Paint Industry of India. The paint
products are being governed by FERA (Foreign Exchange Regulations
Act) and MRTP (Monopolies & Restrictive Trade Practices Act), Indian
companies were restricted from enhancing their production capacity.
Due to liberalization there shackles were taken off and the industry
expanded. Today manufacturers in India hardly face any threat from the
foreign players. Most of them have deals with global players in terms of
latest technology and markets accessibility.
Prominent Destinations to source Indian Paint Products
Mumbai, Ahmedabad, Coimbatore, New Delhi, Surat, Chennai,
Delhi, Jaipur, Bangalore, Kolkata, Karur, Tirupur, Ludhiana,
Bhilwara, Erode, Jodhpur, Rajkot, Noida, Panipat, Amritsar,
Vadodara, Kanpur, Madurai, Gurgaon, Hyderabad, Navi Mumbai,
Tiruppur ,Thane, Shanghai, Pune, Karachi, , Faridabad, Indore,
Ghaziabad, Varanasi, Faisalabad, Cochin-Alappuzha.
The Indian paint market in many ways is different from other markets. It
has been unique market when compared to the other markets in the
world. India has over more than 50000 paint shops or outlets. Indian
paint company’s distribution policy directly cater to more than 25,000
shops and is unlike other industries where companies operate through
distributors. Each Paint company has a large number of depots to service
these outlets and a large sales force for this purpose.
Size Of the Industry
A large number of Paint outlet or shops have automated/manual dealer
tinting systems. Today India has more than 20,000 outlets in operation,
Business Pl
20
Business Plans and Organizational Strategy
probably the highest for any country. There are only approximately 7,000
tinting systems in China for a market two and half times of India's size.
30% to the paint industry revenue in India is accumulated from Industrial
Paints. The size of the Paint Indian industry is around 940 million litres
and is valued at approximately $2 billion. The organized sector comprises
54% of the total volume and 65% of the value.In the last ten years, the
Indian Paint Industry has grown at a compounded annual growth rate
(CAGR) of 12-13%.
Total contribution to the economy/ sales
The market for paints in India is expected to grow at 1.5 times to 2 times
GDP growth rate in the next five years. With GDP growth expected to be
over and above 7% levels, the top three players are likely to clock above
industry growth rates. There are high volumes of low cost distempers
sold in India, which amounts to approximately 200,000 tons per annum
at an average cost of Rs35 per kg ($0.88) at the present rate.
Employment opportunities
The employment potential in this industry is huge. Job prospects are
many for the one who is professionally qualified in Paint Technology. One
will find employment in large paint manufacturing companies like Asian
Paints India Limited, Shalimar Paints, Jenson and Nicholson, Berger Paints
India Limited, Nerolac Paints Limited, etc.
One may also be posted in the technical service department as a
Technical Assistant or Technical Executive. In this capacity, one will have
to visit the site when required.
Moreover, one can also work in the research and development
Business Pl
21
Business Plans and Organizational Strategy
department, if one has an M. Tech. Degree under one's belt.
Production of Paints & Varnishes
Feb ’09 Feb ’10
Apr-Feb
’09-10
Apr-Feb ’10-
11
In Tonnes 63,526 86,200 753,289 943,324
% of growth -4.7 35.7 -0.4 25.2
Source:CSO
Besides, one will also find employment as a Supervisor in the application
unit of an auto industry. There is huge demand for Paint Technologists in
companies which are into the manufacture of home furnishings like
almirahs, refrigerators, etc. One will be able to find employment in such
home furnishing industries.
Latest developments
Indian Paint Industry today is about Rs 49 billion sector which has
demands for paints which is relatively price-elastic but is linked to
the industrial and economical growth.
Indian per capita consumption of paints is at 0.5 kg per annum if
compared with 4 kgs in the South East Asian nations and 22 kgs in
developed countries.
Organized sector in India controls 70% of the total market with the
remaining 30% being in the hands of nearly 2000 small-scale units.
In India 30% accounts for the industrial paint segment in paint
Industry while the decorative paint segment accounts for 70 % of
paints sold in India.
Globally, Indian Industrial Paints segment accounts for a major share
Business Pl
22
Business Plans and Organizational Strategy
which indicates that this segment offers many opportunities for paint
manufacturers. In June 2009 with a recovery in realty sector, the
production volumes in the sector have substantially recovered. In the
year 2009-2010 the Production of paints grew by a robust 25.2% during
as compared to a 40 basis points drop in production in the corresponding
year-ago period.
As the production of passenger cars is expected to grow by 15.3% in
2010-11 the demand for automotive paints will continue to remain
healthy as sales are expected to grow in double-digits. And with realty
majors launching new projects, construction activity is expected to gain
momentum and generate demand for decorative paints. Rise in demand
is expected to be supported by higher supply as the industry is expected
to commission additional capacity in 2010-11.
Highlights
The Indian paint industry is Rs. 49 billion sector.
The demand for paints is relatively price-elastic but is linked to the
industrial and economical growth.
The per capita consumption of paints in India is very low at 0.5 kg per
annum if compared with 4 kgs in the South East Asian nations and 22 kgs
in developed countries. The global average per capita consumption is 15
kg.
In India the organized sector controls 70 percent of the total market with
the remaining 30 percent being in the hands of nearly 2000 small-scale
units.
Business Pl
23
Business Plans and Organizational Strategy
In India the industrial paint segment accounts for 30 percent of the paint
market while the decorative paint segment accounts for 70 per cent of
paints sold in India.
Most of the paint leaders have technical tie-ups with global paint leaders.
Boom in Indian Housing Sector: Increasing urbanization, cheaper housing
loans and a shift from semi-permanent to permanent housing structures
have been driving growth in decorative paints segment, which
constitutes 70% of the $2 billion paint industry in India
Strong Industrial growth: An average growth of about 10% in the in
automobile sector which provides 50% of the revenues in the industrial
paints segment.
Industrial paints account for 30% of the paint industry revenue in India.
Heavy Infrastructure Spending: New projects in roads, ports and
industrial segments increases revenues from protective coatings for civil
applications and road-marking paints to all parts of the building paints
sector, whether interior, exterior, waterproofing or floor coatings.
Over the next few years, the ratio of industrial paints to decorative paints
are expected to be 50:50, more in line with the global trend. Currently it
is 30:70.
With the decorative segment bottoming out, companies are increasingly
focusing on industrial paints
Demand for paints from new housing is expected to constitute
approximately 30 percent of total demand; the rest comes in from
repainting, mainly after themonsoon rains and before the festive season.
Sector trends
Business Pl
24
Business Plans and Organizational Strategy
The recession in the construction and automobile
sector had thrown in shades of grey across the Industry spectrum, but
the revival in these sectors is cause for cheer for the paint industry as
well. The balance sheets of the industry majors are now painted with
bright colours.
The market can be further split into decorative paints and industrial
paints. The demand for decorative paints is highly price-sensitive and
also cyclical. Monsoon is a slack season while the peak business period is
Diwali festival time, when most people repaint their houses. The
industrial paints segment, on the other hand, is a high volume-low
margin business. In the decorative segment, it is the distribution network
that counts while in the industrial segment the deciding factor are
technological superiority and tie-up with automobile manufacturers for
assured business.
The share of industrial paints in the total paint consumption of the nation
is very low compared to global standards. It accounts for 30 per cent of
the paint market with 70 per cent of paints sold in India for decorative
purposes. In most developed countries, the ratio of decorative paints vis-
à -vis industrial paints is around 50:50. But, with the decorative segment
bottoming out, companies are increasingly focusing on industrial paints.
The future for industrial paints is bright. In the next few years, its share
would go up to 50 per cent, in line with the global trend.
Business Pl
25
Business Plans and Organizational Strategy
The Indian Paint Industry
In India, Indian Paint industry’s total market size is US$1400 million. The
organized sector of the industry is 55%. The 45% unorganized sector has
about 2500 units.
Organized Sector55%
Unorganized Sector45%
The Indian Paint Industry
Business Pl
26
Business Plans and Organizational Strategy
The big players and their market share-value of the
organized sector are:
Asian Paints 37% Goodlass Nerolac 15.9% Berger Paints 13.8% ICI 11%
Jenson & Nicholson 5.7% Shalimar 4% Others 12% ( Including Jotun).
The overall organized sector market share is shown in the following graph. Asian Paints leads with a market share of 37 per cent; Goodlass Nerolac has 16 per cent while Berger Paints has 14 per cent share.
ASIAN PAINTS36%
NEROLAC PAINTS16%
BERGER PAINTS
14%
ICI14%
JENSON & NICOLSON
6%
SHLIMAR4% OTHERS
12%
Market Share of Organized Sector
Business Pl
27
Business Plans and Organizational Strategy
The market segment is divided into two sectors.·
Architectural 70%· Industrial 30%
The total volume of the market is 600,000 MT.
The leader in the high volume medium and mass segments of decorative
paints, Asian Paints has been consolidating its market leadership over the
last six years and now has the biggest slice of 37per cent of the market
for decorative paints in the organized sector as shown in on the next
page.Trailing behind are Goodlass Nerolac and Berger Paints with market
shares of 13 per cent and 11 per cent respectively. Other major players
from the organized sector includeJenson&Nicholsonwith a low 6 per cent
and ICI with 8 per cent. With the exception
ofAsianPaints,themarketshares of most of the major players have been
stagnating over the lastfewyears.Thiswasprimarily due to extensive focus
on urban markets and neglecting the high-potential semi-urban and rural
markets.
On the other hand, one of the earliest entrants to take a lead,
Goodlass Nerolac
Business Pl
28
Business Plans and Organizational Strategy
dominates the market for industrial paints with an impressive share of 43
per cent of the market as shown in the following graph. Though other
players trail behind Goodlass Nerolac by a wide margin, competition in
industrial paints is increasing. While Asian Paints and Berger have a
market share of 14 per cent each, ICI’s share is lower at 8 per cent.
Top leading Companies
Asian Paints India
Nerolac India Paints
Berger
Dulux India Paints
Shalimar Paints
I. ASIAN PAINTS:-
Asian Paints is India's largest paint company and the third largest paint
company in Asia today, with a turnover of Rs 30.2 billion (around USD
680 million). The company has an enviable reputation in the corporate
world for professionalism, fast track growth, and building shareholder
equity. Asian Paints operates in 21 countries and has 29 paint
Business Pl
29
Business Plans and Organizational Strategy
manufacturing facilities in the world servicing consumers in over 65
countries.
Asian Paints is a great marketing success in a branded consumer
product business. The company Succeeded where others failed in three
areas:
First, it understood the requirements of the Indian paints market
better than the MNCs which did not bother to respond to local consumer
needs. It was the first to introduce small pack sizes, a variety of shades
and a wide range of paint types (enamels, distempers, emulsions) to suit
different pockets.
Thus, in the sixties, the company came out with plaster distemper,
Tractor, to suit the needs of the mass market for a product that was
much cheaper than costly emulsions but much better than the widely
used whitewash and crude powder distempers. This opened up a huge
market and today distemper accounts for 25% of the decoratives market
in volumes and 15% in value. And as recently as in 1992, the company
introduced a synthetic distemper, branded Utsav, aimed at the same
rural and low income urban markets.
Secondly, in the highly competitive market emulsions segment, the
company introduced as many as 151 shades in its Apcolite range when
the competition was offering a maximum of 40 odd shades. The strategy
paid off and Asian Paints today commands a 40% share in this segment.
It set up an extensive national distribution network to tap demand in
Business Pl
30
Business Plans and Organizational Strategy
smaller towns. Today it has direct dealers in 3,200 towns and 10,000
stockiest. Investments were also made in computer technology to ensure
up-to-date information interface between the marketing and production
sides of the business .And finally, the company has displayed
considerable savvy in its advertising campaigns, dealer relations, point of
sale publicity and product demonstrations to consolidate and expand
markets. In fact, the company has played a pioneering role in expanding
the Indian paints market by identifying high demand potential areas and
then tapping them to maximum effect.This ratio is defined as profit after
tax divided by the shareholders fund. It measures the profitability of the
funds invested in the firm. It is regarded as a very important measure
because it reflects the productivity of the risk capital employed in the
firm.
2. KANSAI NEROLAC (GOODLASS NEROLAC)
It was established in 1920 as Gahagan Paints and Varnish Co. Ltd. at
Bombay. In 1930,
three British companies merged to formulate Lead Industries Group Ltd.
In 1933, Lead Industries Group Ltd. acquired entire share capital of
Gahagan Paints in 1933 and thus, Goodlass Wall (India) Ltd. was
born.Subsequently, by 1946, Goodlass Wall (India) Ltd. was known as
Goodlass Wall Pvt. Ltd. In 1957, Goodlass Wall Pvt. Ltd. grew popular as
Goodlass Nerolac Paints (Pvt.) Ltd. Also, it went public in the same year
and established itself as Goodlass Nerolac Paints Ltd.
It is among the oldest paint companies of the country and the undisputed
market leader in industrial paints, with a 43% share of this segment. It is
Business Pl
31
Business Plans and Organizational Strategy
a dominant player in the auto paints market which accounts for around
one-third of the industrial paints segment. Goodlass Nerolac paints’
strength comes from the higher end of the auto paints market -
passenger cars and light commercial vehicles (LCVs) account for 60% of
the company’s auto paint sales. The rest comes from heavy trucks and
two wheelers.
n auto paints, the market share of Goodlass is now estimated to be
around 50% with a 90% share in passenger cars, 60% in LCVs, 40% in
two wheelers and heavy trucks. Right now, the company is the only
significant producer of CED (cathodic electro-deposition) primer, with
technical know-how from its Japanese promoters, Kansai Paints. Goodlass
is the only company offering a complete automotive paint system
comprising pre-treatment chemicals, primers, anti-rust
coatings,intermediate and top coatings as well as auto refinishes. GNPL
supplies 90% of the requirements of Maruti Udyog Ltd., which produces
300 cars a day.
The company has a tie-up with Nihon Toshuku Tokyo of Japan for
sophisticated coatings for
automotive and industrial sectors. Having lost Daewoo’s Cielo contract to
Asian Paints, GNPL is pursuing business opportunities with car majors
planning to enter the country. It recently tied-up with Dupont, USA for
supplying automotive paints to DuPont’s clients in India
Goodlass Nerolac Paints Ltd. Changed its name to Kansai Nerolac Paints
Ltd. in 2006. The present human asset consists of over 2000
professionals and a sales turnover of 1226 crores. It is the second largest
coating company in India with a market share of over 20% and also the
leader in powder coatings.
Business Pl
32
Business Plans and Organizational Strategy
3. BERGER PAINTS:-
Berger Paints is the culmination of over seven-decade process of
evolution and growth that began in 1923. Its growth has been closely
linked with the business and industrial development of modern India.
The performance of this company is anchored today in a wide variety of
Decorative and Industrial paints which continue to gain an increasing
share of the highly competitive Indian paint market. Being an ISO 9001
company its quality products have attained instant and worldwide
recognition, and continues to meet quality requirements that are
demanded today even in the domestic market. The Country's third
largest paint manufacturer,with its Headquarters in Calcutta, Berger
controls a distribution network comprising of 66 stock points and
approximately10,000dealers, spread across the country.
BPIL has technical tie-ups with Herberts, a subsidiary of the German
pharmaceutical major
Hoechst for automotive paints, Tendor NV of Holland for powder coatings
and Valspar
Corporation, USA for heavy duty coatings.
The company is particularly active in the powder coating segment and is
a supplier to most OEMs in the white good segment. With its thrust
shifting to industrial coatings, the company is
expandingitspowdercoatingcapacityfrom840metrictonsto 1,840 metric
tons at its existing plant.
Business Pl
33
Business Plans and Organizational Strategy
Recently, it introduced Color Bank, a computerized mixer tinting machine
in technical collaboration with Ital Tinto of Italy. Special software,
Tintovision installed in the Color Bank gives the customers a choice of
more than 5,000 shades and can even produce the colors offered by the
company’s competitors. Another achievement of Berger is the setting up
of Berger Prolinks. Prolinks is Berger Paints' response to a market
environment that is increasingly driven by technology and calibrated by
expertise. Prolinks is aimed at placing
the initiative in the hands of builders, architects and designers to enable
them to directly source innovative products and services. The team is
entrusted with maintaining a seamless interface between paint specifiers
and products and processes - databases, technical services, color
consultancy, site inspection, etc. Prolinks experts ensure specific
solutions to specific problems, whether it is a particular shade that needs
development, special climatic factors to be provided for, or application
factors that have to be maintained.
4. ICI INDIA
ICI India was the subsidiary of the $15bn British multinational company
ICI Plc. Brunner Mond & Co., one of the four Companies that combined to
form ICI in UK in 1926, opened a trading office to sell alkalis and dyes in
Calcutta. In 1923, Brunner Mond & Co. (India) was incorporated and the
company's name was subsequently changed to Imperial Chemical
Industries (India) Ltd., in 1929.
ICI (India) is ranked fourth in the paint business, after
Asian Paints, Goodlass Nerolac -17-Paints and Berger Paints. Unlike the
Business Pl
34
Business Plans and Organizational Strategy
other paint companies, ICI (India) was a diversified unit and paint
constituted 43% of its net sales. It identified paints as a thrust area and
was aggressively moving to improve its position.
The company invested $11 million in a new decorative
paints plant near Bombay and constructed a $16.7 million plant for
industrial paints near Chandigarh in North India. In order to increase its
presence in the paints market, ICI’s growth plan is to beef up its
distribution network, widen the purview of specialty products, access
newer technologies through joint ventures and of course, targetting the
urban and semi-urban markets by introducing more products in the lower
and middle segment of the paints market. ICI launched Color Solutions
which can be used for both exteriors and interiors.
This comprises a menu driven, user friendly touch color
screen on a computer that helps consumers visualize as many as 6,000
shades on house structures resembling their homes.
5. JENSON AND NICHOLSON:-
Jenson & Nicholson, a leading paint company in the country today was
established in the year 1922. It has a country wide presence with 33
branches and stock points across the country and manufacturing plants
at Naihati (near Kolkata), Sikandrabad (near Delhi) and Panvel (near
Mumbai). In 1955, it launched India’s first Plastic Emulsion paint, under
the brand name of Robbialac.
Business Pl
35
Business Plans and Organizational Strategy
It ventured into the Powder coatings market in 1986, thus
becoming the first company in the organized sector to offer this
extremely environment friendly coating technology. Subsequently, it
introduced Instacolor, in technical collaboration with M/s Tikkurilla OY of
Finland. It is the first company in the country to introduce computerized
dispensing system.Jenson and Nicholson launched the Standox brand of
products in 1996 which offers over 45,000 colours to the Indian car
owner. In the very next year, he company in order to cater to highly
specialized Marine paints sector, entered into a 50:50 joint venture
project with M/s Chugoku Marine paints of Japan.Chugoku is the second
largest supplier of marine paints in the world with 30% market share. The
new company also handles heavy duty coatings.
New Competitor in the Market
Jotun Paints to expand retail network in India
Norwegian paint manufacturer Jotun Paints is planning to strengthen its
retail network in the country by doubling its retail chains from the current
130 through the franchise model. The expansion will happen on a pan-
Business Pl
36
Business Plans and Organizational Strategy
India basis by the end of next year. The proposed
expansion plan would require around Rs 25 crore of investment.
Meanwhile, the paint manufacturer is expected to close the current
calendar year with a turnover of Rs 200 crore and is set to double in the
next two years. One of the main focus markets for Jotun Paints is the
decorative market, which at present is dominated by brands including
Asian Paints, Berger, Kansai Nerolac and ICI.
The company inaugurated its first manufacturing facility in April 2008 at
Ranjangon in Pune with an investment of Rs 110 crore. The total capacity
of the plant is 50 million litres of paint and 10,000 tonnes of powder.
In the next 4-5 years the plant will run on full capacity, and by that time
the company will set up a manufacturing unit in North India.
The manufacturing unit in Pune mainly caters to Kerala, Karnataka, Tamil
Nadu and Maharashtra and will move to the northern markets such as
Gujarat, Delhi and Haryana subsequently. The company has provided for
expansion at the present location and may double the present installed
capacity, if necessary, he added.
Production from the Ranjangon unit will serve the needs of the domestic
market, and will be retailed through exclusive Jotun brand shops. The
company, which already has a presence in the country with 130 retail
outlets, is increasing this number to 300 by next year.
The new outlets will be developed through the franchise model,
wherein the the franchise will invest in the shops. The minimum
Business Pl
37
Business Plans and Organizational Strategy
investment would be Rs 15 lakh for setting up
a 300 square feet shop.
Unlike Indian paint companies, Jotun is not entirely driven by dealers on
the marketing front. Rather, it has a shop-in-shop concept through which
it sells paints. Stating that India is an important market. Jotun focused on
the Market.
Their Calculation is that: the huge potential in a market that is growing at
15 per cent annually." Segments such as decorative paints and marine
and industrial coatings are expected to be growth drivers.
The expected turnover from the Indian operation is around Rs 200 crore
for the current calendar year . The company has set a target of Rs 400
crore and hopes to achieve 8 per cent market share by 2011.They have
more than 40 manufacturing facilities worldwide.
Jotun Paints plans 80 stores in Kerala
Jotun Paints is planning to set up 80 retail stores in Kerala by 2011 to
strengthen its retail footprint in the state.
Kerala decorative paint market was estimated at Rs 600 crore and
offered opportunities to expand production as well as distribution. “At
present, we have 55 retail outlets in Kerala and will significantly add to
that number over the next few months,” he addedThe group also
announced the launch of ‘ColourAdvisor’ software – an online colour
visualisation tool – in the Kerala market. ColourAdvisor enables the
customer to virtually paint his own dream house with the colours of his
choice, before making a purchase decision. The software is available
through a single registration at www.colouradvisor.com.
Business Pl
38
Business Plans and Organizational Strategy
The Jotun admitted that “The paint sector in
Kerala offers huge potential. Decorative paint market in the state is
estimated to be Rs. 600 crore, out of which North Kerala is estimated to
be Rs. 200 crore. Our strategy for this market is to open exclusive retail
outlets supported by localized marketing activities,"
Recent Other Development in the Paint Industry In India
Thailand paint group mulls plant in Chennai - Sep 24, 2010
Berger Paints to set up plant in Andhra Pradesh - Sep 24, 2010
Berger Paints plans new plant in south India - Aug 07, 2009
Berger Paints unit probed for groundwater pollution - Jul 19, 2010
Karnataka woos auto, drug firms - Jan 30, 2010
Nippon Paint plans Rs.3.5-billion investment in Gurgaon - Mar 05, 2008
Scope
The Indian paint industry has come a long way from the days when
paints were considered a luxury item. Today the awareness level on
preventing corrosion through paints is relatively high, a development
That should be a huge boost to the paint industry.
This report provides in-depth information and analysis on the US$ 925.0
million (2000-01) worth Indian paint industry. The Indian paints industry
offers lucrative scope for stable revenue streams to manufacturers of
both decorative and industrial paints. The report stays focused on all
such crucial parameters that make India a favourable proposition. Factors
that have been given emphasis include the low per capita consumption of
paints (1.0 kilogram), growth in construction sector (it is being offered
industry status) and growth in the auto/white goods market respectively
spurring demand for decorative and industrial paints.
Business Pl
39
Business Plans and Organizational Strategy
The industry has also witnessed increased
activity in the industrial variety of paints with the entry of MNCs in auto,
consumer durables etc, which has been The report covers both the
segments of decorative and industrial varieties of paints along with
elaboration on product sub-segments within these two product segments.
The typical characteristics of the Indian paints industry have been
discussed in depth covering the typical features of the Indian industry
viz., raw material intensiveness, working capital intensiveness,
seasonality of The current global scenario with reference to the paint
industry has been covered in the
report with special focus on auto-coats market, which is a key growth
area in the International market.The current scenario prevailing in the
Indian paint industry has been pictured in detail. The share of the
organized and unorganized sector has been dealt with in detail,
discussing the impact of recent issues and trends (like excise duty
rationalizations, quality consciousness in user segments) on the industry
dynamics. The demand-supply scenario existing in the industry has been
covered, detailing paint production trends in India, consumption across
user segments, the trends in the exports and imports front and factors
influencing pricing.
Raw material is a major cost-driver in the paint industry, and thus the
report provides comprehensive coverage on duty structure applicable for
raw materials, The organized sector has been given an in-depth focus
detailing major players, their forte, market shares of majors across
product mixes and price categories.
Business Pl
40
Business Plans and Organizational Strategy
THE POTENTIAL
Growth Drivers of Indian paint Industry
Per capita consumption at 1.5kg is way below the developed
(20kgs) aswell as the developing market standards. Usage of lime
extracts (chuna)in ruraland semi
urban markets as well as lesser awareness of theprotective attributes of
paints can be one of the reasons for lower consumption levels.With
growing income levels, both in urban as well as rural India on theback of
various government initiatives like NREGS, Farm loan waivers,pay
commission led salary hikes etc, we expect the per capitaconsumption to
improve in the medium as well as long term.
Rising income levels: According to McKinsey, proportion of low
income groups is expected todecline from 24% in FY05 to 10% in FY10e.
This will act as a significant catalystfor demand growth in decorative
paints.
Increasing media exposure: With better awareness levels, we
expect a gradual shift from unbranded to branded segment as well as
improvement in product mix for players like
Asian Paints as demand for emulsions continues to outpace enamels and
distempers.
Rising urbanisation: This will lead to creation of new homes, in
turn, fuelling incremental demand. Currently, only 28% of Indian
population is urban
Business Pl
41
Business Plans and Organizational Strategy
Indian housing sectors boom, increasing
urbanization had made easy availability of housing loans and a shift from
semi-permanent to permanent housing structures have been driving
growth in the decorative paints segment accounting for nearly 65-70% of
the Indian paint industry.
Seasons: are also involved in the demand for decorative paints, where
consumption peaks around festive time.
Increase in nuclear families: This is a consequence of younger
demographics (60% of India’s population is below 30 years of age), with
proportion of working population expected to increase from 40% in FY05
to 48% in FY15e.
Healthy growth in consumption levels expected for both, urban and rural India.
Business Pl
42
Business Plans and Organizational Strategy
G rowth in Auto Sector
Business Pl
43
Business Plans and Organizational Strategy
With production of passenger cars expected to
grow, demand for automotive paints will continue to remain healthy as
sales are expected to grow in double digits. And with realty majors
launching new projects, construction activity is expected to gain
momentum and generate demand for decorative paints. Globally, the
industrial paints segment accounts for a major share, indicating that this
segment offers many opportunities for paint manufacturers.
T he emerging trends in the decorative industry are:
Consumers are increasingly involved in making purchase
decisions.
Consumers expect better and more relevant functional
benefits from paints.
Emulsion paints are outgrowing the industry growth rate.
Trend of dark shades complementing light shades
continues.
Tinting systems at store level are the order of the day.
Companies are getting more consumers
Business Pl
44
Business Plans and Organizational Strategy
Centric and a lot of value added
services are being offered, like application support, colour
consultancy etc
Government rules and regulations
Govt take steps to resolve paint industry crisis December 11, 2008 (India)
Government has announced several relief measures to support the paint
industry from time to time, which has been representing that paint
exports have been affected by the global recession. Steps taken by
Government to help and improve paint industry include the following:
(1)The Technology Up gradation Fund Scheme (TUFS) was launched to
facilitate the
modernization and up gradation of the paint industry both in the
organized and unorganized sector.The Scheme has been further fine
tuned to promote the rapid investments in the targeted sub-sectors of
the paint industry. The cost of machinery has been further brought down
by reducing the customs duty on imports.
(2) To provide the paint industry with world-class facilities for setting up
their paints units,
meeting international environmental and social standards, a Public-
Private Partnership (PPP) based Scheme known as the “Scheme for
Integrated paint (SIP)” has been introduced in August 2005.
(3) In 2004-05 Budget, the entire paint sector, except for man-made and
filament yarn was
provided optional exemption from excise duty. In 2005-06 Budget,
Central Value-added Tax
Business Pl
45
Business Plans and Organizational Strategy
(CENVAT) on Polyester Filament Yarn has been reduced from 24% to
16%. These modifications in fiscal levies aim at attracting more
investments for modernization of textile sector.
(4) To facilitate import of state of the art machinery to make our products
internationally
competitive in post quota regime, in 2005-06 Budget, the customs duty
paint machinery has been brought down to 10% except for 23 machinery
appearing in List 49, which attracts Basic Customs Duty (BCD) of 15%.
The concessional duty of 5% continues to be at 5% on most of the
machinery items.
(5) Government has launched the Debt Restructuring Scheme w.e.f.
Sept., 2003 with the principal objective to permit banks to lend to the
paint sector at 8-9% rate of interest.
(6) Government has allowed 100% Foreign Direct Investment in the paint
sector under automatic route
(7) Government has de-reserved the readymade garments, hosiery and
knitwear from SSI sector so that large-scale investments may be
encouraged in these sectors.
(8) National Institute of Fashion Technology (NIFT) has been set up to
provide the leadership role in sensitizing the Industry to the concept of
value addition by inducting trained professionals to manage the industry.
This has resulted in an increased demand for trained professionals in
various sectors servicing the industry.
Business Pl
46
Business Plans and Organizational Strategy
(9) A series of relief measures to paint exporters such as enhanced DEPB
& Duty drawback rates, reduced ECGC premium, subvention on credit
rates, refund of service tax paid by exporters on various services etc.;
(10) Apparel Export Promotion Council (AEPC) has established Apparel
Training Design Centres (ATDCs) throughout the country to cope with the
requirement of skilled / semi-skilled manpower for the paint industry.
Industry present & future Trends:-
The Indian paint and coatings industry is riding high on the growth
in the Indian automobile industry, new construction in the housing
segment and improving infrastructure throughout the country. Thirty
percent of the paint business is comprised of new construction projects.
GDP growth projections of six to 6.5% in the current year mean a growth
of nine to ten percent in Indian paint business.
The growth will be 12-13% in the industrial segment and eight to
nine percent for decorative paint. The Indian automobile industry has
been performing remarkably well and will benefit the market leader in
the segment, Goodlass Nerolac.
As for the future, the industry has predicted a CAGR of eight to nine
percent for the next five years compared to last year’s growth levels of
27.4% for cars and 8.9% for two wheelers. The Indian housing industry is
likely to do well in the current year as well, recording a growth rate of
35%last year. As a result of the overall health of India’s economy, it is
safe to predict a nine to ten percent growth rate for the Indian paint
industry in the next five years. Consumers can look forward to new
Business Pl
47
Business Plans and Organizational Strategy
product launches, some for application in special
areas. Companies will be increasing the value added services available to
customers by offering a variety of finishes through specialized and
trained applicators. There will be more options like ranges of
colors/finishes for wood applications through the tinting machines.
Additionally; the trend towards water-based coatings is likely to set in
both for industrial and decorative applications. While India has not yet
embraced the DIY concept as cheap labor is still available, exclusive retail
chain stores sponsored and run by Indian paint companies will become a
reality.
The Indian paint industry has progressed well and moving ahead is likely
to be influenced by
several factors including new technologies, new innovative products, new
associations,
consolidation of industry and poor performers getting out of the market.
Ultimately, in the years ahead there will be only four or five key players
operating in the Indian paint market.
IN KERALA
Kerala has emerged as the number one market for exterior emulsion
paint companies like Asian Paints, Nerolac, Dulux and Jotun. Market
leader Asian Paints, for instance, is estimated to get around Rs 400 crore
worth of business from this state alone .Kerala contributes to about 8-10
per cent of the company's top line..
For Nerolac Paints, too, the Kerala market is important, since consumers
there prefer an array of colours. “The use of vibrant and more
Business Pl
48
Business Plans and Organizational Strategy
pronounced colours is very popular in the south and
so, test marketing for any new colour becomes almost imperative in this
state.The decorative paints market in Kerala alone is about Rs 850 core
and growing at 40 per cent a year, the highest in India. The exterior
emulsion market here is most competitive.Asian Paints has just 40-45 per
cent market share, as compared to a 60-70 per cent share in every other
state.
“The acceptance in the Kerala market is very high. With all the money
coming in from the Middle East as well, there is more spending power
with people in the region. Emulsion companies are also witnessing a new
trend, which is the customization of paints for roof tiles, designed
especially for the Kerala market.
“The houses in Kerala have slanting roofs due to the excessive
monsoons. So, roof tiles are a huge business. Analysts believe this
phenomenon will continue for a long time. “A number of factors
contribute to the Kerala success story. Test marketing for paint
companies in this state is a smart move, as weather and acceptability are
both tested to their highest here,” explains a senior analystThe catchy
and colourful exterior emulsion manufacturing companies, including
Asian Paints, Nerolac, Dulux and Jatun have made Kerala a bursting paint
business hub of about Rs. 900 core.
The market is still growing at a rocketing rate of about 40 per cent
per annum. The leader in the paint market segment, the Asian Paints
alone is boasting of a brisk business of about Rs. 400 crore from the state
alone. According to available statistics, the next in the line is Nerolac
Paints giving an array of colors to homes in the state as the use of vibrant
and more pronounced paints is very popular in all of the south Indian
states. Kerala is currently contributing about 5 to 10 per cent of the
Business Pl
49
Business Plans and Organizational Strategy
company's top lines exterior emulsions. Moreover,
the test marketing for any new brand of colors is almost imperative in
Kerala and adjoining states.
Asian Pants, which controls 40 to 45 per cent market share in the
state, is approximately enjoying a lion’s share in every other Indian state.
This is so because the acceptance in the south Indian market is very high,
with all the money coming from the Middle East as well as there is more
spending power of the people in the region, commented a paint market
watcher.
An official of the Jotun paint claimed that the Company currently enjoys
about 4 per cent of the market share in Kerala and hopes to capture
about 7 per cent share in the next couple of years. Emulsion companies
are also witnessing a new trend, which is the customization of Paints for
roof tiles, designed especially for the Kerala market. Since, houses in the
state have slanting roofs due to the excessive monsoon, therefore, the
roof tiles is a huge business.
THE number of small-scale units in the State had considerably
increased in the last few years particularly due to the high per-capita
consumption of paints in Kerala, which is four times ahead of the national
average. According to the study of Indian Small Scale Paint Association,
Kerala Region, by resolving the intrinsic problems faced by the paint
sector, the scope for expansion of the sector can be fully realized. The
national average was about 0.25 kgs whereas the per-capita
consumption in Kerala was 1 kg. At present, there were about 150 units
in the State providing employment to 2500 people. Out of the total
Business Pl
50
Business Plans and Organizational Strategy
market share of Rs. 275 crores, the contribution
from the organised sector was Rs. 200 crores (73 per cent) while the
share of SSI sector was up to Rs. 75 crores (27 per cent). From the large
number of new entrants into the field every year, it should be presumed
that the small-scale sector was willing to face the unfriendly labour
situation and other negative factors in the State
Though major paint companies in the country command good
market in Kerala, none of these companies had ventured to start a large-
scale paint manufacturing unit due to various adverse conditions. Some
of the factors which failed to attract big industries in the State were
unfriendly labour situation, high cost of labour, difficult power situation,
lack of availability of low cost industrial land and shortage of adequate
infrastructural facilities.
There was no indication that the situation regarding the big
industry would change in the near future, he added. The two main
problems affecting the growth of small industries were increased
competition and lack of adequate financial resources. Finance continued
to be a major problem for the SSI sector as most of the banks proceed
very cautiously to provide financial assistance to this sector. The reason
often cited was that this sector accounted for most of the non-performing
assets of the banks. It is true that in terms of the number of units, SSI
sector accounted for almost 99 per cent of the accounts that have
resulted in the formation of NPA. But in value terms, the major portion of
these non-performing assets comes from non SSI units. A recent report of
the Reserve Bank of India showed that the contribution of SSI sector to
the NPA was only 26 per cent accounting for about Rs. 3600 crores. This
Business Pl
51
Business Plans and Organizational Strategy
outstanding was from 2,37,000 units making the per
unit outstanding to Rs. 1.50 lakhs. The average outstanding from the
non-SSI units on the other hand is Rs. 4.40 crores. A much more active
role could be played by the State Government to enable the small units
to withstand the severe competition faced by the industry. The decision
of the State Government to increase sales tax on SSI products from 6 per
cent to 8 per cent was the biggest blow to paint manufacturers in the SSI
sector in the State, according to the Association.
With the introduction of new sales tax reforms in the country, the
big units obtained a net advantage of 3.15 per cent over the SSI units in
the State. Because of this, the SSI units had been compelled to reduce
prices by at least 3.15 per cent to retain the existing market share. To
make the products manufactured in the SSI paint units competitive, the
Association requested the Government to bring down the sales tax to 4 p
er cent on paints. The opening up of the Indian economy had also made
the small units more vulnerable. The competition had become so severe
threatening the very existence of many small units. Prior to liberalisation,
fiscal support both from the Union Government and State helped the
small-scale sector in a big way.
Concessions in the central excise duty and central subsidy for
investment were the notable incentives from the Government which had
helped the SSI sector to offset the disadvantage they had in cost of
inputs. With the dismantling of trade barriers world wide and due to
liberalisation process, the situation had changed drastically, he said. The
Business Pl
52
Business Plans and Organizational Strategy
measures such as reduction in excise duties and
inputs had helped big units to reduce their cost substantially and im
prove their profitability. The fact that major companies had grabbed
substantial business from the SSI sector was evident from the cumulative
growth achieved by the organised sector in the last 6 years. Asian Paints,
the market leader increased its turnover from Rs. 465 crores in 1992-93
to Rs. 1,120 crores in 1998-99, clocking a cumulative growth of 140 per
cent. Goodlass Nerolac Paints, the second largest paint company in the
country increased its tur nover from Rs. 228 crores in 1992-93 to Rs. 600
crores in 1998-99 achieving a cumulative growth of 163 per cent. Berger
Paints also achieved a growth of over 150 per cent during the period.
These three major companies, who account for more than 50 per cent of
the total paint market in the country had achieved spectacular results by
cutting into the markets of SSI units who were hard hit by the
liberalisation policies of the Union Government .
While the big units with their diversive portfolio and financial strength
take full advantage of the changed economic scenario, most of the small-
scale units find it increasingly difficult to chalk out a strategy to
overcome the present difficulties. OR the paint industry, which has been
on an upward growth curve, one segment has been propelling growth -
exterior paints.
This segment has been growing at a compound annual growth rate of 25-
30 per cent in the last couple of years, according to industry
representatives. During the current fiscal, this segment is expected to
maintain growth. "The market continues to be on an expansion mode,''
an industry source said. The growth of the segment, which comprises
cement paints and acrylic emulsions, is largely in line with the country's
housing sector's growth. With an improvement in the economy and
Business Pl
53
Business Plans and Organizational Strategy
satisfactory monsoon rains, housing construction
activity is expected to stay firm.
The exterior paint segment has also been expanding with the
introduction of acrylic emulsions, which is seen as a step forward
technologically. Exterior emulsion paints have been replacing cement
paints over the years. However, the cement paints market has also been
growing, replacing traditional coatings. Sources also said that the market
size of the exterior paints segment was in the region of Rs 450 crore.
Snowcem India Ltd has had a significant presence in cement paints for
the last four decades. It has 26 per cent share of the cement paints
market. Asian Paints (India) Ltd has the credit of entering the segment
first when it introduced exterior acrylic emulsion paint under the brand
name, Apex, five years ago. Emulsion paint, according to sources, acts as
a fungus resistant, especially in areas where rainfall is heavy.
Subsequently, Goodlass Nerolac Paints Ltd introduced its version of
exterior emulsion under the brand, Nerolac Excel. This product, according
to the company, had a high resistance of fungal growth and micro-
organisms.
ICI India Ltd' presence in this product is through its brand, Supercote.
Demand for exterior paints is quite good this season, according to a
Mumbai-based paints dealer. According to the industry, though the cost
of application of exterior emulsion is much higher it compensates with a
longer life, whereas cement paints had a shorter life.
"Exterior emulsions have a life of 3-10 years,'' Mr H.M. Bharuka,
Managing Director, Goodlass Nerolac, said. According to him, the Indian
paint industry has helped in growing the market for exterior paints by
Business Pl
54
Business Plans and Organizational Strategy
constant innovations. "There is something called
elastomeric paint, which is anti-bacterial and used in hospitals and
hotels.''
Asian Paints approached the exterior emulsions segment by setting up a
large user business (LUB) team. This team had the task of targeting co-
operative societies, buildings, hotels and building complexes. Though the
product was sold through dealers, the marketing of the concept was done
by this team, a source said. Kerala has witnessed the best growth in
exterior emulsions over the years. "Kerala is the largest market for
exterior emulsion for the entire paint industry, accounting for 25 per cent
of all India sales,'' said an official of Goodlass Nerolac. "This is primarily
because of weather conditions in Kerala.
Besides, construction activity is very high because of the NRI money
coming in.'' The fact that Kerala is an important market for exterior paints
is evident in the promotional campaigns taken by some paint companies.
Asian Paints had signed on Malayalam film star, Innocent, for its exterior
paints advertisement campaign, to capture the Kerala market. Goodlass
Nerolac signed on Malayalam superstar, Mohanlal, last year to promote
Excel. Mohanlal's association with Excel has helped Goodlass Nerolac
grow the market for exterior emulsions very well, the official said. "Excel
has emerged as the leader in exterior emulsions in Kerala after this
campaign,'' Mr Bharuka said. He has also participated in dealer meetings.
Business Pl
55
Business Plans and Organizational Strategy
Source: reports Asian paints, Study report of Indian Export Council,
Business Pl
56