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This document provides an overview of the paint industry in India. It discusses that while the global paint market is 20 times larger than India's, India's paint market is growing 3 times faster at 15% annually. The top 5 players in the organized Indian paint sector control 61% of the market. Asian Paints leads in sales volume and profits. Decorative paints account for 73% of demand in India, compared to 50% globally. The paper concludes that the Indian paint market is both highly competitive and offers opportunities for further growth.
IJSR
- 1. 222 IJSR - INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCH Volume : 5 | Issue : 9 | September 2016 • ISSN No 2277 - 8179 | IF : 3.508 | IC Value : 69.48 Original Research Paper Management Dr Ajai Kumar Jain Senior Assistant Professor, Institute Of Management Studies, DAVV, Indore Vishal Sharma Research Scholar, Institute Of Management Studies, DAVV, Indore A Study of Paint Industry With Special Reference to India-2016 ABSTRACT Indian paint industry is as old as Ancient Indian culture but modern synthetic paints were introduced in the country by Goodlass Nerolac Paints in 1920. This research paper aims to study current scenario of Indian paint industry. Though the size of global paint market (Size-$132 billion) is 20 times bigger than Indian market ($ 6.77 billion) the growth of Indian paint market (15%) is three times faster than global market (5%). There are five major players in organized Indian paint market with 61% market share. The Asian Paints Ltd. leads the organized sector in sales volume and profits. The unorganized players constitute about 35% share of the total Indian paints market. This is a secondary data based descriptive study that shall be done to analyze the cur- rent scenario of the Indian paint industry. Lot of study material is available on paints industry here and there but there is no research paper available on the title. The paper concludes that Indian paint market is not only among the most competitive markets in the world but is also one among the most opportunistic paint markets in the world for national and international players. The recommendation includes the regulation of environment damage caused by the paint industry by law or regulatory agencies mandatory. INTRODUCTION A substance used for protecting or decorating a surface, es- pecially a mixture consisting of a solid pigment suspended in a liquid, then when applied to a surface dries to form a hard Coating (freedictionary.com). Across the world total paint sales in terms of value is around $ 132 billion and in terms of volume is 43.8 million tons in 2014 (world paint coating market report, 2015). The high demand of paint products is because of high global building construction spending particularly in North America, Europe japan (world paint coating market report, 2015). Indian paint industry estimated to be more than $6.77 billion (40,600 Cr) and has been growing at a rate of 15% for the last few years. Out of total market 65% been catered by organized players and remaining 35% by unorganized players in terms of value. The organized players mainly predominant in distemper primer category (Shastra, 2011). The paints sector is raw material intensive, with over 300 raw materi- als (50% petro-based derivatives) involved in the manu- facturing process. Since most of the raw materials are pe- troleum based, the industry benefits from softening crude prices (Paint sector analysis report, Nov 17, 2014). Paint in- dustry has 2 segments-First is decorative segment – Major segments in decorative include exterior wall paints, interior wall paints, wood finishes and enamel and ancillary prod- ucts such as primers, putties etc. Decorative paints account for over 73% of the overall paint market in India. Demand for decorative paints arises from household painting, archi- tectural and other display purposes. Second one in indus- trial segment- Three main segments of the industrial sector include automotive coatings, powder coatings and protec- tive coatings. User industries for industrial paints include automobiles engineering and consumer durables. In India decorative segment account for 73% of total paint demand and 23% account for industrial demand. In International market ratio is 50:50. Majorly unorganized players caters to rural market. As per code laid down by the Bureau of Indian Standards (BIS), which specifies that lead content should be 1,000 ppm. In the US, lead had been termed the number one environmental threat to the health of children. But it was a non-issue for the industry in India. So, gov- ernment has to step in and set regulations and then ensure that these can be enforced (Narain, Sep 08, 2009). LITERATURE REVIEW The history of Indian Paint Industry is as old as the his- tory 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 de- veloped 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 Mirror July, 2015). Cave paintings representations traces have been found at Bhim- betka; close to the Bhopal area in approximately thousand caves. The date set for these caves dates back to the Paleo- lithic period (7000 BC). In that remote time the inhabitants of this area were still forming the bases of the civilization and however already pictorial realization are done on the walls of these dark caves used also as protection from the weather and animals (Paint in ancient India, Oct-5, 2013). World’s top ten paint brands in 2015 COMPANY NAME A N N U A L TURNOVER($ billion) AKZONOBEL (N.L.) 16.516 PPG Industries (U.S.) 15.33 SHERWIN-WILLIAMS (U.S.) 11.43 RPM Inc. (U.S.) 4.595 VALSPAR (U.S.) BASF (D.E.) 4.428 Axalta (U.S.) 4.252 DIAMOND Paint (U.S.) 3.473 BASF (D.E.) 3.214 SACAL (U.K.) 3.064 NIPPON Paint (J.P.) 2.937 (SOURCE: WPCIA January 5, 2016 Washington) The top five paint manufacturing firms in India are- 1. ASIAN PAINTS - First in the list is Asian Paints, Asian Paints was started in 1942 and has over 60 years of in- dustry experience. It is India’s largest paint company with widest range of wall and wood paints. 2. BERGER PAINTS LTD - Second in the list is Berger Paints India Limited, Berger Paints is UK based company which started its India operations in 1923. They are India’s second larg- est paint company based out of Kolkata. 3. KANSAI NE- ROLAC PAINTS LTD -Third in the list is Kansai Nerolac KEYWORDS : Paint industry
- 2. IJSR - INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCH 223 Volume : 5 | Issue : 9 | September 2016 • ISSN No 2277 - 8179 | IF : 3.508 | IC Value : 69.48 Original Research Paper Paints Ltd. Nerolac is leading Paint Company of India. They are 100% subsidiary of Kansai Paint, Japan. Head- quartered in Mumbai. They are leaders in Industrial Paints. 4. AKZONOBEL INDIA LTD - Akzonobel India ltd is an India based arm of Netherland Company. Company has started its Indian operations way back in 1932. 5. SHALI- MAR PAINTS - Expertise of more than 100 years, Shalimar Paints are among most trusted paint brands of India. RESEARCH METHODOLOGY This is secondary data based descriptive study that shall be done to study the current scenario of the Indian paint in- dustry. The sources of the data would be the related books, internet and financial reports of various companies. Tables and charts are based on the interpretation taken from the secondary data collection will be drawn with the help of MS office and analysis will be done by simple analytical and statistical tools. Rationale- Past literature has focused over statistical rep- resentation of paint industry in world market, Asia Pacific market and Indian market separately but no work has been done for comparative study of paint industry in all three market. Research objective-To study the current scenario of Indian paint industry. Limitation- It is secondary based study and inherent limi- tations of secondary data based study is there. OBSERVATIONS AND INTERPRETATIONS SECTORWISE DISTRIBUTION OF GLOBAL CON- SUMPTION OF PAINT PRODUCTS Table 1.0-Showing Sector wise distribution of paint products consumption in world constructed by author. Sector Building Indus- try Trans- porta- tion Pack- age Other Total sales volume (million tons) 21.69 12.58 4.8 2 2.31 43.38 Percentage share 50% 29% 11% 5% 5% 100% (SOURCE: WPCIA, JAN-2015) .OBSERVATION - This table shows that paints are con- sumed in 5 major sectors. The building sector is largest with 50% consumption followed by Industrial paints (29%), transportation (11%). The paints products used for pack- aging and other purposes are just very small segments-5% each. INTERPRETATION-Three major contributors to paints in- dustry are building, industrial and transportation sectors with 90% share of total consumption. Rest 10% consump- tion is by packaging and other sectors. SALE OF PAINTS ACROSS WORLD IN TERMS OF VOLUME VALUE REGION WISE Table 2.0-Showing region wise distribution of paint prod- ucts sale in world constructed by author. REGION Asian Pacific Eu- rope North Amer- ica Latin Amer- ica Oth- ers Total SALES OUTPUT (TONS) 20.38 10.41 7.8 2.6 2.16 43.38 million Scale (%) 47% 24% 18% 6% 5% 100% OUTPUT VALUE (U.S $) 52.8 40.92 26.4 7.92 3.96 132 bil- lion Scale (%) 40% 31% 20% 6% 3% 100% (SOURCE: WPCIA, JAN-2015) OBSERVATION- Asia Pacific region in 2014 was the most rapidly growing emerging market in the world. Above table shows that Asia pacific region’s share to sales out- put is 20.38 million tones followed by Europe sales out- put share 10.41 million tons followed by North America share7.8 million tons and Latin America share 2.6 million tons. In terms of value Asia pacific region’s share is $52.8 billion followed by Europe share is $40.92 billion and then followed by North America at $26.4 billion Latin America at $7.92 billion. INTERPRETATION-Asian pacific region’s share to total paint industry across world is 47% in terms of sales output and 40% in terms of sales value. Europe’s share is 24% in terms of sales output and 31% in terms of sales value. Latin America share is 18% in terms of sales output and 20% in terms of sales value. So we can conclude that Asian pacific region is biggest contributor to world paint industry. COUNTRY WISE BREAKUP OF SALES VOLUME IN ASIA PACIFIC REGION. Table 3.0-Showing Volume sales of paints in Asia pacific region constructed by author. COUNTRY CHI- NA JA- PAN IN- DIA SOUTH KOREA AUS- TRAL- IA OTH- ERS TO- TAL sales output (billion) 30.62 4.75 4.22 3.16 2.11 7.92 52.8 billion scale % 58% 9% 8% 6% 4% 15% 100% (SOURCE: Asia Pacific report, Aug-15) OBSERVATION-In above table in Asia- Pacific region, sales of China is the largest, accounted for $30.62 billion of the Asia-Pacific Paint market, Japan accounted for $4.75 bil- lion, India accounted for $4.22 billion, South Kores account- ed to $3.16 billion and Australia accounted to $2.11billion. INTERPRETATION-In Asia pacific region China is biggest and very high potential market which contributes 58% to- tal sale of paints in Asian Pacific region , followed by Ja- pan contributing to 9% and then India contributing at 8%. If we put altogether china, India and japan than 75% paints consumption and sales in Asian pacific region comes from 3 countries only. PAINTS INDUSTRY IN REAL ESTATE SECTOR IN IN- DIA In real estate sector three major industries has been at- tached with it i.e. Cement, Steel Iron and Paints. Table 4.0-Industry wise sales in terms of volume related to real estate constructed by author INDUSTRY Size of market(2014-2015)Million tons CEMENT 280 STEEL IRON 90.5 PAINT 2..25 (SOURCE: ibef, Aug-2015) OBSERVATION-The 3 major component in real estate business are – cement, steel Iron and Paints. The above
- 3. 224 IJSR - INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCH Volume : 5 | Issue : 9 | September 2016 • ISSN No 2277 - 8179 | IF : 3.508 | IC Value : 69.48 Original Research Paper table shows that Cement is largest consuming material fol- lowed by steel Iron and Paints. INTERTRETATION-The paint is consumed 100 times lesser to cement and 40 times lesser to steel Iron as per weight measurement. 5. PAINT INDUSTRY SEGMENTATION IN INDIA Table 5.0-Value sale of paints as per segment in India constructed by author INDUS- TRY SEGMENT SALES(CR)(2014- 2015) PERCENT- AGE PAINT DECORATIVE 29638 77 INDUSTRIAL 10962 23 TOTAL 40600 100 (SOURCE: Indian Mirror, July- 15) OBSERVATION-Paint industry has two segment – Deco- rative Industrial segment. Total paint industry size is 40,600 Cr - Decorative segment is 29638 Cr and Industrial segment is 10962 Cr. INTERPRETATION-Paint consumption in India mostly in Decorative segment as compare to Industrial segment. Al- most 73% sales comes from decorative segment and 27% sales comes from Industrial segment 6. MAJOR PLAYERS OF PAINTS INDUSTRY IN INDIA Table 6.0-Top 5 Paint companies in India in terms of net sales net profit constructed by author. COM- PANY BUSINESS MODEL NET SALES in Cr for FY 2015 Percent- age Con- tribution to Paint market NET PROFIT in Cr for FY-2015 Asian Paints Decorative, Industrial au- tomotive paints. 14182.8 ($236.4) 34.93% 1327.4 ($22.12) Berger Paints Decorative Industrial paints, 4214.7 ($70.2) 10.31% 264.7 ($4.4) Kansai Nerolac Decorative, Industrial au- tomotive paints. 3532.4 ($58.8) 8.70% 271.7 ($4.5) Akzo Nobel Decorative, Industrial, auto- motive paints Powder coatings. 2469.6 ($41.1) 6.08% 186.3 ($3.1) Shali- mar Paints Decorative Industrial paints. 484.6 ($8.0) 1.19% -105.4 (-$1.7) (SOURCE: Balance sheet of different companies of 2014- 2015) OBSERVATION-Top 5 companies share is 61% to total sales of the Paint industry in India. Below is the sales and net profit data of top 5 paint companies in India as per there balance sheet. Asian Paints Ltd is biggest paint com- pany in India have sales value of 14182.8 Cr, followed by Berger paints 4214.7 Cr, followed by Kansai Nerolac paints 3532.4 Cr and Akzonobel paints 2469.6 Cr. As per percent- age share Asian Paints Ltd share almost 35% to Indian paint market, followed by Berger Paints at 11%, followed by Kansai Nerolac Paints at 8.7% and Akzonobel India ltd at 6%. INTERPRATION- Asian paints is biggest paint compa- ny in India having 35% market share followed by Berger paints having 11% market share, followed by Kansai Nerol- ac paints having market share of 8%. In terms of profit also Asian paint profit is 1327 Cr is highest among all the play- ers followed Kansai Nerolac paints at 271.7 Cr and Berger Paints at 264.7 Cr. CONCLUSION As seen not only demand for paint has been increasing in India but across the world it has been increasing. Various major players new entrants are focusing in India market as it has been third fastest growing market in Asia Pacific region. India has good opportunity to cover the gap with Japan in terms of sales in Asia pacific region. Indian com- panies has to face stiff competition from MNC and they have to be on toes so that they will not lose foot in India market. Companies has to focus on rural market a lot to gain benefits as unorganized players are leaders there. Mar- ket players has to shift from oil based paint products to water based product and major players has been focusing on water based paint product( 80% of their total output ). The major factors for such a dramatic growth are (i) Indian economy is emerging economy.(ii) The Indian population is a stable population and is second largest in the world.(iii) Favorable Government policies to boost the Real Estate sec- tor. So Indian market has got huge potential to grow and paint companies has to design strategies to capture market share. RECOMMENDATIONS As paint industry and Indian economy is growing at con- sistent pace, so lots of major players around the world has been attracting to Indian market. Indian Paint Company will going to face strong competition from them and they have to be well prepared to fight with new players. They have to focus on unorganized market (rural market), which is accounting 35% of total paint market. Regulation of in- dustry to reduce environmental pollution is mandatory and impending. REFERENCES 1. Asia Pacific Report (Aug 17, 2015), http://www.coatingsworld.com/is- sues/2015-08-01/view_features/asia-pacific-report/ 2. Asian paint balance sheet, 2014-2015, https://www.asianpaints.com/pdfs/ company-info/investors/financial_results/AR%202014-15.pdf 3. Berger paints balance sheet, 2014-2015, https://www.bergerpaints.com/ investors/annual-reports.html 4. ibef (Aug, 2015), http://www.ibef.org/industry/cement-india.aspx 5. Indian Mirror (July, 2015), http://www.indianmirror.com/indian-indus- tries/2015/paint-2015.html 6. Kansai Nerolac Paint balance sheet, 2014-2015, https://www.nerolac.com/ financial/financial-results 7. Paint in ancient India (Oct 5, 2013), http://arthistorysummerize.info/ paint-ancient-india/ 8. Paint sector analysis report (Nov 17, 2014),https://www.equitymaster. com/research-it/sector-info/paint/Paints-Sector-Analysis-Report.asp 9. http://thefreedictionary.com. 10. http://www.madehow.com/Volume-1/Paint.html. 11. Shalimar paints balance sheet, 2014-2015,http://www.shalimarpaints.com/ investor-relations.php 12. Stock Shastra (2011), http://stockshastra.moneyworks4me.com/paints- indian-paint-industry-analysis-and-research-report-2011 13. Sunita Narain (Sep 08, 2009), http://southasia.oneworld.net. 14. world paint coating market research (2015), http://www.reportlinker. com 15. WPCIA Washington (Jan 5, 2016), http://wpcia.org/news/World’s%20 Top%20ten%20Paints%20Companies%202015%20Annual%20Report.html.