Paints & Varnishes

 

Overview

The Indian paints and varnishes industry is divided in to two segments – Decorative and Industrial. Although it is distributed in a 70:30 ratio domestically, globally these are shared equally.

With a CAGR of about 12-13%, this industry is propelled by the demand in housing and construction, automobile industry and various other commercial and non-commercial decorative art pieces.  Today, consumers in India have a rising affinity towards using high quality and pleasant looking paints and varnishes which is gladly met by suppliers. With the rapid urbanization taking place in India and an increasing share of infrastructure, real estate and automobiles sector,the industry would see an expansion in its size thus resulting into a rise in demand for paints and varnishes.

 

Industry Structure :-

 

 

Buy Industry Analysis

 
Domestic & Global Outlook

With a INR 1,08,697 crores market capitalisation of the industry, the major participants in the domestic market are Asian Paints, Berger Paints, Kansai Nerolac and Akzo Nobel with a domineering Asian Paints holding over 50% of the market share. Berger Paints International is a subsidiary of Asian Paints.

The global forecast for this industry is 4.7% p.a. in the upcoming years based on its average annual growth rate of 4.2% p.a. from 2007 to 2013 which is lower than the rate at which this industry has grown in domestic markets. This industry has a massive domestic consumption and huge exports to United States, UK and China with little competition from foreign participants. Indian Paints and Varnishes have grown at a higher rate than the national GDP unaffected by the recent sluggish growth in real estate in a few parts of India. The cost of Titanium dioxide, a key raw material in paints has risen in domestic markets and thus, participants have to resort to imports from China, to suffice their requirement in their produce.  In February 2015, Asian Paints acquired a 51% controlling stake in Kadisco Paint and Adhesive in Ethiopia.  Asian Paints has numerous foreign subsidiaries which take up manufacturing as well as retail in their respective countries. But the ratio of domestic consumption to exports is heavily biased to the former. The per capita consumption of paints and varnishes will definitely rise in the near future and the market can grow at 1.5 -2 times the GDP growth rate.

 

Future Potential

With a growing affinity towards highly decorative and good quality paints and varnishes in the housing sector and a rapid increase in the demand of automobiles in India, paints and varnishes would see a green future. The chemical and dyes industry has seen a sharp rise whose end products are paints and varnishes too. The Indian Government has paved the way for 100% FDI in the chemicals sector which means that India can see a potential rise in competition from foreign players but as of now, there is an adequate demand of Indian produced paints and varnishes in major foreign markets. India should tighten their grip over these through their subsidiaries or direct exports and tap the growing demand within India. Since availability of raw materials is a major hindrance to cost sheets of domestic companies, the focus should be on utilizing resources judiciously to produce raw materials, especially Titanium dioxide since it is 30% of the total cost of product. The recent drop in crude oil prices was good news to the paints and varnish industry as it is second most important raw material to paints.

Despite the sluggish real estate market in the country, a positive forecast for the economy due to the new government and its reforms, the paints and varnishing industry will have a stable to increasing growth due to the expected expansion of the economy as well as an inclination of the corporate, government as well as the housing sector towards top quality infrastructure. 

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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