Indian Paint Industry

INDIAN PAINT INDUSTRY:-

The Indian Paint industry, estimated to be a Rs.21,000 Cr. industry, has been growing at a rate of above 15% for the past few years. The organized players of the industry cater to about 65% of the overall demand, whereas the unorganized players take care of the remaining 35%, in value terms. The unorganised players mainly dominate the distemper segment.

The industry consists of two segments, namely

* Decorative segment – caters to the housing sector and

* Industrial segment - consists of powder coatings, floor coatings and other protective coatings catering to the automobile, marine and other industries.

In the domestic market, Decorative segment accounts for 70% of the total demand for paints whereas the industrial segment accounts for the remaining 30%. Globally, the demand for paints is almost equally distributed, where both the segments account for close to 50% of demand.

So, how does the industry work? Here is the analysis….

The working of the Paint industry has been explained pictorially below:

Raw Materials: On an average, raw materials constitute ~56% of the total expenditure in paint companies. Titanium dioxide is one of the major raw materials and price fluctuations in its cost have direct and substantial impact on the cost of production. Crude oil derivatives are the other major raw materials and have similar impact. Apart from these a large number of other raw materials are used for adding/giving specific properties to the wide product range offered by the industry.

End-User: The decorative paints segment products find use in households and construction whereas the industrial segment products find use in automotive industry, consumer durables industry and other OEM’s.

What does the Past Say?

Growth of the paint industry has been consistent with the growth of Indian GDP.  Paint industry has been growing at a rate of 1.5 to 2 times of Indian GDP growth. The Decorative segment shows a seasonal trend with sales...