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Category: Business and Industry
Date Submitted: 10/14/2010 02:03 PM
Investment Opportunities in the Indian Paint Industry
January 2008
420 Lexington Avenue . Suite 300 . New York, NY 10170 . 212-297-6107 . www.virtusglobal.com
Market Snapshot
Market Growth of about $200 - $400 million per year over next 5 years Per capita consumption of paint in India is 800-900 grams compared to 15-25 kg in the developed countries Growth rate in the Organized sector expected to be 15 – 17% per annum Unprecedented boom in Housing sector to fill demand for over 30 million new homes.
Unorganized Sector
$2 billion Indian Paint Industry
$0.6 billion 30%
$1.2 billion 70% Organized Sector
INDIAN PAINT MARKET ANALYSIS
*Source: HDFC Securities Analyst Report
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New Opportunities for Foreign Paint Companies
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, or Own up to 51% of local joint ventures
INDIAN PAINT MARKET ANALYSIS
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Market Potential
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...