Indian Paint Investment Oppoertunities

Investment Opportunities in the Indian Paint Industry

January 2008

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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...