Indian Paint Industry
The Indian Paint industry, estimated to be a Rs.28,000 Cr.(FY13) industry, has been growing at a rate of above 15% CAGR for the past few years. Though for the industry FY13 has been a challenging year as a whole due to subdued demand across key sectors and rising inflation, but the industry is expected to grow by at 12-13% annually over the next five years from Rs 280 bn in FY13 to around Rs 500 bn by FY18.
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 can be classified in two main segments, which are as follows: * Decorative segment * Caters to the housing sector * Industrial segment: consists of * Powder coatings * Floor coatings * Other protective coatings to cater to the * Automobile * Marine * Other industries.
In the Indian 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.
Source: http://www.ipaindia.org/
Industry Dynamics:
Industry dynamics is basically driven by three factors, which are: * Major Inputs: the major inputs for the cement industry includes the following * Raw Material: 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. * Supplier Firms: These are the small to big firms, which basically provides the value added raw material to the OEMs of the paint industry * OEMs: The OEMs in the paint industry are mainly responsible for the production of the final product. As stated earlier, the paint industry in India is driven by organised sector (65%), OEMs are mainly responsible for the capital expenditure, the selling and administrative cost and the research and development of new products. Also the OEMs are responsible for the vendor development and the supplier force creation. The OEMs are the final product producers. * The 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. The end user is basically divided in two parts, which are * Households: which use the decorative paints * Industries: Which use the different coatings
Source: http://www.ipaindia.org/
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[ 1 ]. http://www.equitymaster.com/research-it/sector-info/paint/Paints-Sector-Analysis-Report.asp
[ 2 ]. Various Industry reports 