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Chapter 1

Industry Profile

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Introduction:-

The Indian Paint Industry is today worth over INR 62,000 crores (USD 8 billion), and is
the fastest-growing major paint economy the world over, with a consistent double-digit growth
over the last 2 decades. It has over 3,000 paint manufacturers, with nearly all global majors
present in the country. It has a near-75% share of architectural paints and a 25% share of
industrial paints, with an equitable fast-paced growth across all segments, from Architectural to
Powder, from Automotive to Coil, from High-Performance to General Industrial, from Refinish
to Wood, and from Packaging to Plastic

Share of Paint

25%

Architectural Paints
Industrial Paints

75%

Besides the core Paint/Coatings segment, Paint India also represents the interests of the Printing
Inks, Construction Chemicals and Adhesives-Sealants segments from a sourcing and
manufacturing viewpoint, since the raw materials, production equipment and supply channels
have a significant overlap, and none of these segments have dedicated world-class events for
themselves. Similarly, large and important industry segments like Pigments, Resins, Plastic

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Master batches and Composites also find valuable sourcing avenues at the show, extending the
benefits and customer engagement on offer

Two type of paint:-

 Architectural Paint Industry:-

Major segments in architectural include exterior wall paints, interior wall paints, wood
finishes and enamel and ancillary products such as primers, putties etc. Architectural paints
account for over 75% of the overall paint market in India. Berger Paints is the market leader in
this segment. Demand for architectural paints arises from household painting, architectural and
other display purposes. Demand in the festive season (September-December) is significant, as
compared to other periods. This segment is price sensitive and is a higher margin business as
compared to industrial segment.

 Industrial Paint Industry:-

Three main segments of the industrial sector include automotive coatings, powder
coatings and protective coatings. Kansai Nerolac is the market leader in this segment. User
industries for industrial paints include automobiles engineering and consumer durables. The
industrial paints segment is far more technology intensive than the decorative segment. The
paints sector is raw material intensive, with over 300 raw materials (50% petro-based
derivatives) involved in the manufacturing process. Since most of the raw materials are
petroleum based, the industry benefits from softening crude prices.

Key Points

 Supply

Supply exceeds demand in both the decorative as well as the industrial paints segments.
Industry is fragmented.

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 Demand

Demand for decorative paints depends on the housing sector and good monsoons.
Industrial paint demand is linked to user industries like auto, engineering and consumer durables.

 Barriers to entry

Brand, distribution network, working capital efficiency and technology play a crucial
role.

 Bargaining power of suppliers

Price increase constrained with the presence of the unorganised sector for the decorative
segment. Sophisticated buyers of industrial paints also limit the bargaining power of suppliers. It
is therefore that margins are better in the decorative segment.

 Bargaining power of customers

High due to availability of wide choice.

 Competition

In both categories, companies in the organised sector focus on brand building. Higher
pricing through product differentiation is also followed as a competitive strategy.

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Industry:-

The Big Four of the paints industry Asian Paints, Berger Paints, Kansai Nerolac and Akzo
Nobel India. Account for more than 65% of the overall paints and coating market and 75% of the
decorative paints market. The industrial segment is more fragmented, with these four companies
accounting for 51% of the overall market.

Asian Paints:-

India’s largest paint & coating producer, Asian Paints has announced in last week of
November to invest USD 128 million (INR 9.60 billion) to expand the installed capacity at its
facility situated at Ankleshwar in the state of Gujarat.

The proposed expansion will increase the installed capacity of paint from 130,000 KL to
250,000 KL and resins and emulsions from 32,000 MT to 85,000 MT. The expansion will be
carried out on the existing land owned by the company and will be completed in the next two to
three years.

Berger Paints:-

India’s second largest paint company in terms of market share Berger Paints is setting up
its biggest-ever greenfield venture at Sandila Industrial Estate, near Luknow in the state of Uttar
Pradesh with an investment of USD 93 million (INR 7 billion), which would be operational
during the first quarter of 2022.

Berger paints has recently expanded its installed capacity at Jejuri plant at Pune in the state
of Maharashtra. Earlier, the company had an installed capacity of 9,000 tons per month of paints
and 6,000 tons per month of resins. Post capacity expansion, the company has added 39,600 tons
per annum of paints and 27,000 tons per annum of resins with an investment of USD 26 million
(INR 2 billion).

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Kansai Nerolac:-

Kansai Nerolac is the largest industrial paint and third largest decorative paint company in
India. While strengthening its position in these traditional markets, it continues to venture into
new customer need areas, such as wood coating, adhesives, construction chemicals in decorative
and floor coatings, transportation coatings, coil coatings, rebar coatings and super durable
powders in the industrial coatings segment. These ventures have helped it expand its product
portfolio and offerings.

During the financial year 2020-21, the company increased its installed capacity by 5.5%,
taking it to 547 million liters per annum from the existing 518 million liters per annum. Kansai
Nerolac will be setting up another production plant at Visakhapatnam in the state of Andhra
Pradesh. Currently, the company operates a total of six production plants, all of which are
strategically located near key original equipment manufacturers (OEMs), thus giving it a strong
competitive edge.

Industry Growth:-

Established in 1923, it is one of the oldest paint companies in India. In its century-old
existence, it has grown to become the second-largest paint manufacturer in India. The company
offers its customers paints for decorative and industrial use, waterproofing solutions, and express
painting services

Over the last few decades, the company has judiciously built a strong distribution network.
It has a network of over 50,000 dealers and retailers, making its product available to its large
customer base in India and other countries. Its focus on improving product portfolio through
innovation has led to technological tie-ups with companies such as DuPont and Nippon Bee
Chemicals.

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Top 3 Growth Paint Industry In India:-

1 Asian Paints:-

. From humble beginnings in a small garage in the year 1942, Asian Paints became the
largest paint company in 1967, and has maintained its leadership position for the last 55 years.
Asian Paints is one of the finest paint companies in India. It manufactures various products,
including varnishes, enamels, lacquers, surfacing preparation, organic composite solvents, and
thinners. It serves customers in more than 60 countries across the globe. In the last five years, the
company's revenue and profit have grown at a compound annual growth rate (CAGR) of 12%
and 8.3%, respectively. The growth was primarily led by volume growth across product
categories and segments

The company is known for its supply chain strategy. It removed all channel partners and
reached out to paint dealers and mom-and-pop stores directly to sell its products. Today the
company has more than 145,000 touchpoints in India and over 70,000 dealers selling its products
in India. An extended market reach could be why Asian Paints has close to 50% market share in
the organized market.

The company has always focused on innovation. In financial year 2022, it launched 29 new
products and has 17 new patents on its name. After establishing itself in the paint industry, Asian
Paints has also successfully ventured into the home décor and interior design business. Going
forward, a strong festive and wedding season demand and easing inflation will drive its revenue

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and profit growth. Here's another mind-boggling stat on why Asian Paints is considered one of
India's best franchises.

The company has earned an ROE (Return on Equity) of at least 20% in each of the last 10
years. This makes it one of the only 100 companies in a universe of close to 4,000 to have
achieved this feat. Think of 20% ROE as a fixed deposit that consistently pays an interest of 20%
or higher, year after year.

2 Indigo Paints:-

Established in 2000, it is one of India's fastest-growing paint companies. Despite being a

late entrant into the sector, the company is the fifth largest player in the decorative paint
segment.It has four manufacturing facilities in India with a total installed capacity of 110,000
kilo-litres of liquid paints and 138,000 metric tons of power paints and putties.

The company manufactures a wide range of products, including emulsions, enamels, wood
coatings, primers, distempers, cement paints, and putties.It focuses on innovation and product
development. Indigo Paints was the first to launch metallic paint for walls and floor paint that
can withstand vehicular traffic. In the last two years, it has launched six new products.

The company's zeal to deliver new and innovative products has driven its growth over the
years. Indigo Paints' revenue has grown at a CAGR of 17.4%, primarily led by high realizations.
While its net profit has grown at a whopping 100.4% (CAGR) during the same time.

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The company is building a robust and responsive supply chain to strengthen its market
presence. Currently, it has a network of over 15,000 dealers across tier 3 and tier 4 cities. It is
now focussing on tier 1 and tier 2 cities to increase its reach by expanding its dealer network.
Indigo Paints invested aggressively in building its brand. It has catchy advertisements featuring
its mascot 'Zebro', a colourful zebra, to market its differentiated paint solutions. Going forward,
Indigo Paints expansion into tier 1 and 2 cities and stabilising raw material prices will drive its
revenue and margin growth.

3 Berger Paints:-

Berger Paints also holds a dominant position in the automotive coating segment. It is a major
supplier to Hero Motors, Eicher, Tata Motors, and Mahindra and Mahindra, etc. In the last five
years, the revenue has grown at a CAGR of 11.6% driven by volumes. Its net profit also grew at
a CAGR of 12.6% during the same period.

Currently, Berger Paints has a market share of 18% in the Indian paints market. It is
planning to increase this through capacity expansion. The company is setting up a greenfield
plant in Uttar Pradesh and West Bengal to increase its capacity by 33%. It is also expanding its
capacity in some of its existing plants.

The company is also focussing on the luxury product segment and aims to become one of
the top players in the industry. It has launched several products in line with its goal, which
helped the company expand its margins. Going forward, capacity addition will drive its revenue
and profit growth.

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Performance And Other Statistical Data:-

From the times when paint products were being developed to meet the new performance
requirements, high performance additives have played an important role with their own
attributes. Modern paint technology is heavily dependent on high performance additives due to
their ability to meet the wide spectrum of paint performance requirements of current times. The
global paints market is worth $ 121 billion (2012); with total production being 38 million metric
tonnes (MT). Globally, by volume, the split is approximately 50% architectural paints and the
remaining 50% performance coatings. The APAC region contributes 44% paints and coatings
market. India constitutes 15% and China 57% by volume of APAC market. In the APAC, water
based (architectural paints) constitutes 65% by volume. The Indian paint industry is worth $ 5.6
billion with the volume of 2.28 million MT per annum.

The Indian decorative paints segment constitutes 72% by volume and 67% by value.
Whereas the Indian water based (latex/architectural paints) constitute 6065% by volume of the
decorative paints. The per capita consumption of paint in India is 2.40 kg. The highest per capita
consumption is 4 kg in Kerala and is largely dominated by latex based architectural paints and
coatings. The growth rate of the Indian paint industry is 1.5 to 2 times the GDP. There are over
1500 architectural paint producers in India. The organised sector, led by Asian Paints,
AkzoNobel, Berger Paints and Kansai Nerolac Paints, contributes 62% market share of
architectural paints.

Rising demand for novelty:-

As the paint and coatings industry continues to fall under pressure by environmental
regulations, manufacturers of coatings and paints are endlessly reformulating their products. As a
result, demand for novel additives continues to increase. The rapid economic growth in most of
the emerging countries in the recent years resulted in rampant architectural construction and
industrial activity, which created significant demand for paints and additives. This in turn,
heavily increased the demand for paint additives. The Asia Pacific region is expected to account
for more than 40% of the global demand for paint additives in 2016. Already growing faster than
the major developed countries (though currently slowed down a bit) China has emerged as the

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second largest market (after the US) in the global paint additives market. India is also emerging
as a strong market.

Indian market dynamics:-

During last 5-7 years, it has been observed that high quality exterior paint segment has
conceptually grown with very high growth rate of 25% compared to 10-12% of other paints and
coatings. In addition, the premium paints and novel finishes segments have also grown at a faster
rate 15 -20%. And, this evolution has forced the use of high performance additives.

Industry Profile:-

Industry Name Berger Paint India Limited

Type Public Ltd
Industry Paint Industry
Founded 17th December 1923
Headquarter Kolkata, West Bengal, India
Key People Abhijit Roy (M.D)
Profit Rs.177 crore (US $ 32.21 Million)
Employee 2300 Employee
Website Berger.com

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Top 10 Rank in Cosmpetitor:-

No Company Name Company Logo

1 Asian Paints Ltd

Berger Paints India

2
Ltd

Kansai Nerolac Paints

3
Ltd

Akzo Nobel India Ltd

4
Dulux Paints

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5 Indigo Paints Ltd

Nippon Paint India Pvt

6
Ltd

7 Shalimar Paints Ltd

8 Sirca Paints Ltd

9 Sheenlac Paints Ltd

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Snowcem Paints Pvt

10
Ltd