The Indian Paint Association (IPA) was founded by amalgamating the Indian Paint Manufacturers Association and the

Paint Federation, on 1st July, 1960. It is a national body which represents both the Organized Sector and the Small Scale Sector in the paint industry and is a voluntary non-political and non-profit organization which promotes the interests of the paint industry and the society. In its formative years the IPA devoted considerable time and effort to examine the problems of fiscal issues, DGS & D and so on, so asto redress the difficulties arising out of Government's regulatory and control measures. The first important assignment undertaken by the IPA was to organize an All India Conference of Paint Manufacturers to discuss the various problems that arose. With this, the IPA took upon itself the onus of steering the course of the paint industry. With the new perspective of a liberalized economy, the IPA is now changing its focus to a more promotive role from the erstwhile protective role.

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
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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. 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 OEMs. 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 peaking during the festive seasons in the months of September to November, whereas the demand is low in the monsoons. The top 5 companies make up more than 80% sales of the organized market. The market share of the organized sector is continuously improving as consumer preference is shifting towards better products offered by the leading brands. Established Foreign companies have entered the Indian

market by acquiring existing Indian companies. Kansai Paints, Japan entered the Indian Market by acquiring Nerolac, Akzo Nobel, the worlds largest Paint company, entered the Indian market by acquiring ICI Paints (now Akzo Nobel India.)

Asian Paints is the market leader in the Indian Paint Industry and gets the major portion of its revenue from the Decorative segment. Over the years, it has outperformed its peers in every aspect by wide margins. This is mainly due to its strong moat (competitive advantage) which lies in its strong Brand Equity and an extensive Distribution Network. The companys Net sales, Net Profit and Book Value have grown with a 5 year CAGR of 22%, 27% and 28% respectively. Also the companys debt is very low and its ROIC has been 40% on an average over the last six years. Kansai Nerolac holds the second position in the Indian Paint market, and is the market leader in the Industrial Paint Segment, owing to its leadership position in the Automobile Paint segment. It is the subsidiary of Kansai Paints Ltd., the leading Japanese paint company. Berger paints has the third position and derives its major revenue from the Decorative segment. Akzo Nobel (former ICI Paints) is the subsidiary of the worlds largest Paint Company and is at the fourth position. Shalimar Paints is at the fifth position.

1. Increasing level of income and education The increasing proportion of young population along with increasing disposable incomes is leading to a change in consumer habits. The Indian economy is shifting from a savings economy to a spending economy. With more income at their disposal, people are now ready to pay for better products and paint is no exception. Educated consumers are more brand conscious and seek value in what they consume. Thus, paint companies offering value-added features like non-toxicity, weather protection, texture, eco-friendly production, etc. will attract more demand. These value-added products enable the manufacturers to earn a better premium as compared to the regular paints, thus offering higher margins. 2. Increasing Urbanization: Urbanization is leading to a shift from temporary houses to permanent houses. Urban houses are well-designed in its interior as well as exterior aspect. This calls for more houses being painted using medium and premium paints. For urban houses, interior design is becoming a fashion statement and a lot of paint is used to decorate the interiors. This will lead to an increase in the per capita consumption of paint which will increase the overall demand of paint. Urbanization also brings more nuclear families. More nuclear families mean more number of houses even for the existing population thus further driving the demand. 3. Increasing share of organized sector: Decrease in taxes on key raw materials will improve the position of the organized players. The Organized sector is expanding its distribution network and adopting the installation of tinting machines at retail outlets. These tinting machines offer a wide variety of colour shade options to choose from. The unorganized players are not in a position to offer such facility as it is comparatively capital intensive. Shift in use, from distemper segment towards premier segment is also shifting market share from the unorganized sector to the organized sector.

4. Development of the Realty, Automobile and Infrastructure sector: The growth of the paint industry is largely dependent on the development of the realty and housing sector, as decorative segment generates about 70% of the total paint demand from this sector. The Automobile segment generates more than two-third of the demand for Industrial paints, and hence is the growth driver for Industrial Paints. The Infrastructure segment creates direct demand for paints as well as creates indirect demand through supporting the growth of the realty, automobile, FMCG and other industries where paint is used. The growth potential in the above 3 sectors is immense, the paint industry being dependent on these 3 sectors is expected to grow along with them. 5. Availability of financing options: Easier housing finance and auto finance is expected to favour more people to buy houses and travel in personal vehicles. This will drive the growth of housing and automobile sector, of which the Paint industry will get its share. 6. Increasing Penetration in the Rural Markets: Paint usage in rural areas is generally in the distemper segment, hence dominated by the unorganized players. Demand in rural areas is dependent on agriculture, which is dependent on the monsoons. With the development of irrigation facility, the dependence of agricultural output on monsoons will be on a decreasing trend. Also, with the modernization of agriculture and accompanying development of rural India, consumer preferences are expected to improve. Paint companies are expanding their distribution network in rural parts of India, which is a relatively untapped market for the organized players. These factors supported by the increasing penetration of the paint companies will help drive the demand for paints. Cost of raw materials: The Cost of Raw materials is an important factor as the industry is raw material intensive. Fluctuation in the prices of Titanium dioxide and Petroleum directly affect the production cost. This is more of a concern for the Industrial segment as compared to the Decorative Segment, as it is comparatively easier to pass on the costs in case of decorative paints. Also, a large portion of raw materials are imported, leaving the cost factor vulnerable to exchange rate fluctuation. MNCs entering the Indian Paint Market: The entry of Established foreign players in the Indian market may increase the competition among the players of the industry. This may lead to price competition which may impact the profit margin of the companies. As a result, the increase in volume growth may not equally reflect in the profit growth for the companies. The Indian paint Industry has a wide potential for growth which is demonstrated by the fact that the per capita consumption of paint in India is merely around 1 kg as compared to about 20 kg in the developed countries or a global average of about 15 kg. So, the absolute consumption of paint in India is definitely expected to rise. The market share of the organized sector is on an increasing trend. Also, the contribution of industrial segment will increase with the continuing economic development of the country. With India moving towards becoming a developed economy, the decorative to industrial paint ratio of 70:50 is expected to move towards the global average of 50:50. Thus the Indian paint industry is in its growth phase and is expected to grow at a rate faster than that of GDP. The future prospects of the industry are strong.

Looking at the above points, we can say that the long term future prospects of the Indian Paint Industry appear to be Green (Very Good.) Companies which have high revenues, efficient operations and distribution network, comfortable debt levels and robust capacity expansion plans will be best suited to capitalize on the growth prospects. It is very important that while investing in a company, an investor selects an industry, where the long-term future prospects are bright. We have seen that in the long run the Indian Paint industry is expected to have good growth. Also, it is equally important that the company has an excellent financial track record (i.e. Green 10 Year X-Ray) and its long-term future prospects are Green (Very Good). *The 10 YEAR X-RAY facilitates analysis of the financial performance of the company considering the five most important parameters. A 10 Year period will normally encompass an entire business cycle. Analysing the performance over this time frame is essential to understand how a company has fared during the good as well as bad times. The five most important parameters that one needs to look at are Net Sales Growth Rate, EPS Growth Rate, Book Value per Share (BVPS) Growth Rate, Return on Invested Capital (ROIC) and Debt to Net Profit Ratio. Given below is the MoneyWorks4me assessment for a few Paint companies: The table above gives you a list of the top 5 companies from the Paint Industry. Due to the very nature of the paint industry, it is best advised to invest in companies which have created a strong brand equity for themselves and have a strong competitive advantage. While such companies usually trade at a premium and are rarely cheap, you should look to invest in them when they are available at a good discount. To find out the right price to invest in these companies, become a member of MoneyWorks4me.com.

INDIAN PAINT INDUSTRY

Size of the Industry Today India has more than 20,000 outlets in operation, probably the highest for any country. Mumbai, Ahmedabad, Coimbatore, New Delhi, Surat, Chennai, Delhi, Jaipur, Bangalore, Kolkata, Karur, Tirupur, Ludhiana, Bhilwara, Erode, Jodhpur, Rajkot, Noida, Panipat, Amritsar, Vadodara, Kanpur, Madurai, Gurgaon, Hyderabad, Navi Mumbai, Tirupur ,Thane, Shanghai, Pune, Karachi, Faridabad, Indore, Ghaziabad, Varanasi, Faisalabad, Alappuzha.

Geographical distribution

The high volumes of low cost distempers sold in India, which amounts to approximately 200,000 Output per annum tonnes per annum at an average cost of Rs35 per kg ($0.88) at the present rate. Market capitalization The market for paints in India is expected to grow at 1.5 times to 2 times GDP growth rate in the next five years

History The history of Indian Paint Industry is as old as the history 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 developed 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.

History of Indian Paint has fascinated culture throughout the years. Color has been the major attraction for more than 20,000 years. Two anthropologists conducted a worldwide study of color naming in 1960's. Many languages only contained two color they are the white (light) and black (dark).Today after all the research and finding we have numerous combination colors of : black, white, red, orange, yellow, green, blue, purple, pink, grey and brown. Paint is generally made up of a pigment. The types of paints available in the market and their utility are:

Acoustic Paint: specially designed for acoustic tiles Alkyd Resin Paint: good trim, doors, faux finishes and other maximized use areas Drip less Paint: This paint is thicker and is most suitable for application on ceilings Latex Paint: good for applicability and it dries much quickly & easier to wash. One-Coat Paint: It is the more expensive version of the latex and alkyd paints and is mostly chosen for surfaces that require flawlessness in color.

Primers: paint used in the initiation for all interior paint works. Rubber-Base Paint: This is best for concrete and bricks.

Textured Paint: If need is to cover any flawed surface in your house get this paint. It works well on ceilings.

Brief Introduction
There is a phenomenal growth on the housing sector front with rapid urbanization and availability of easy to secure housing loans which have become the prime drivers of growth in the decorative paint segment, which comprises 70% of the $2 billion Indian Paint industry. An average increase of growth of about 10% in the automobile sector contributes to 50% of the revenues in the industrial paints segment. Paints can be classified as Decorative Paints & Industrial Paints. Decorative Paints are usually meant for the housing sector. Distemper is mostly affordable by all and used in the suburban and rural markets. Interestingly, 20% of all decorative paints in India are distempers. Indian Paint products are highly in demand in countries of United States, China, India, United Kingdom, Australia, Pakistan, Hong Kong, Canada, etc forming the turning points in the Paint Industry of India. The paint products are being governed by FERA (Foreign Exchange Regulations Act) and MRTP (Monopolies & Restrictive Trade Practices Act), Indian companies were restricted from enhancing their production capacity. Due to liberalization there shackles were taken off and the industry expanded. Today manufacturers in India hardly face any threat from the foreign players. Most of them have deals with global players in terms of latest technology and markets accessibility.

Prominent Destinations to source Indian Paint Products

Mumbai, Ahmedabad, Coimbatore, New Delhi, Surat, Chennai, Delhi, Jaipur, Bangalore, Kolkata, Karur, Tirupur, Ludhiana, Bhilwara, Erode, Jodhpur, Rajkot, Noida, Panipat, Amritsar, Vadodara, Kanpur, Madurai, Gurgaon, Hyderabad, Navi Mumbai, Tiruppur ,Thane, Shanghai, Pune, Karachi, , Faridabad, Indore, Ghaziabad, Varanasi, Faisalabad, Alappuzha.

The Indian paint market in many ways is different from other markets. It has been unique market when compared to the other markets in the world. India has over more than 50000 paint shops or outlets. Indian paint company's distribution policy directly cater to more than 25,000 shops and is unlike other industries where companies operate through distributors. Each Paint company has a large number of depots to service these outlets and a large sales force for this purpose.

Size Of the Industry

A large number of Paint outlet or shops have automated/manual dealer tinting systems. Today India has more than 20,000 outlets in operation, probably the highest for any country. There are only approximately 7,000 tinting systems in China for a market two and half times of India's size. 30% to the paint industry revenue in India is accumulated from Industrial Paints. The size of the Paint Indian industry is around 940 million litres and is valued at approximately $2 billion. The organized sector comprises 54% of the total volume and 65% of the value.In the last ten years, the Indian Paint Industry has grown at a compounded annual growth rate (CAGR) of 12-13%.

Total contribution to the economy/ sales

The market for paints in India is expected to grow at 1.5 times to 2 times GDP growth rate in the next five years. With GDP growth expected to be over and above 7% levels, the top three players are likely to clock above industry growth rates. There are high volumes of low cost distempers sold in India, which amounts to approximately 200,000 tons per annum at an average cost of Rs35 per kg ($0.88) at the present rate.

Top leading Companies

Asian Paints India Nerolac India Paints Berger Dulux India Paints Shalimar Paints

Employment opportunities
The employment potential in this industry is huge. Job prospects are many for the one who is professionally qualified in Paint Technology. One will find employment in large paint manufacturing companies like Asian Paints India Limited, Shalimar Paints, Jenson and Nicholson, Berger Paints India Limited, Nerolac Paints Limited, etc.

One may also be posted in the technical service department as a Technical Assistant or Technical Executive. In this capacity, one will have to visit the site when required. Moreover, one can also work in the research and development department, if one has an M. Tech. Degree under one's belt. Besides, one will also find employment as a Supervisor in the application unit of an auto industry. There is huge demand for Paint Technologists in companies which are into the manufacture of home furnishings like almirahs, refrigerators, etc. One will be able to find employment in such home furnishing industries.

Latest developments

Indian Paint Industry today is about Rs 49 billion sector which has demands for paints which is relatively price-elastic but is linked to the industrial and economical growth. Indian per capita consumption of paints is at 0.5 kg per annum if compared with 4 kgs in the South East Asian nations and 22 kgs in developed countries. Organized sector in India controls 70% of the total market with the remaining 30% being in the hands of nearly 2000 small-scale units. In India 30% accounts for the industrial paint segment in paint Industry while the decorative paint segment accounts for 70 % of paints sold in India.

Indian housing sectors boom, increasing urbanization had made easy availability of housing loans and a shift from semipermanent to permanent housing structures have been driving growth in the decorative paints segment accounting for nearly 65-70% of the Indian paint industry. Seasons are also involved in the demand for decorative paints, where consumption peaks around festive time.

Production of Paints & Varnishes AprAprFeb Feb Feb Feb 09 10 09-10 10-11 In Tonnes 63,526 86,200 753,289 943,324 YoY % growth -4.7 Source:CSO

35.7

-0.4

25.2

Globally, Indian Industrial Paints segment accounts for a major share which indicates that this segment offers many opportunities for paint manufacturers. In June 2009 with a recovery in realty sector, the production volumes in the sector have substantially recovered. In the year 2009-2010 the Production of paints grew by a robust 25.2% during as compared to a 40 basis points drop in production in the corresponding year-ago period.

As the production of passenger cars is expected to grow by 15.3% in 2010-11 the demand for automotive paints will continue to remain healthy as sales are expected to grow in double-digits. And with realty majors launching new projects, construction activity is expected to gain momentum and generate demand for decorative paints. Rise in demand is expected to be supported by higher supply as the industry is expected to commission additional capacity in 2010-11. 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 unorganized players mainly dominate the distemper segment. The industry consists of two segments, namely . Decorative segment - which 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

Development of the Indian Paint Industry

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Abstract

IN a recent article entitled Some Lines of Development of the Indian Paint Industry (Current Science, November 1935), N. Srinivasan deals with the possibilities of developing the paint and certain allied industries in India. There is, of course, already quite a considerable paint-manufacturing industry in India, partly Indian owned and partly in the hands of branch English firms, but it is contended that insufficient use is made of the raw materials available in India, notably barytes (in Madras and Alwar), lead and zinc ore (in Burma), titaniferous ore (in Travancore) and earth colours. The appeal continues for manufacture in India of the whole range of chemical pigments the artificial oxides of iron, lead chromes, Prussian blues, Brunswick greens, ultramarine and organic lake colours. In due course, some of these operations may be carried out economically and profitably in India, but it should be pointed out that it is a far cry from a barytes mine to a successful lithopone plant; and to suggest, speaking of manufacturing titanium pigment, that only enterprise is needed for starting a large modern plant with careful scientific control and intelligent commercial direction indicates failure to appreciate the extent and manner in which this class of manufacturing operation is tied in with, and can only be considered as a part of, the heavy chemical industry