THE INDIAN PAINT INDUSTRY
The paint industry of India is 100 years old. Its beginning can be traced to the setting upof a factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II, theindustry consisted of just a few foreign companies, and some small, indigenousproducers. The war led to a temporary stoppage of imports leading to many more localentrepreneurs setting up manufacturing facilities. Nevertheless, foreign companiescontinued to dominate the industry. Even now, they remain active contestants, thoughtheir foreign shareholdings stand reduced, with two of them having become totallyIndian. Currently, the industry has a sales turnover of about Rs.3, 600 crore. In terms of volume, it corresponds to 5 lakh tonnes. The industry is composed of two sectors, theorganised and the unroganised. The organised sector controls 70 per cent of the totalmarket. The remaining 30 per cent is in the hands of the unorganised sector, consistingof 2000 odd small-scale units. The industry is not capital intensive. It is however workingcapital intensive. The demand for paints is fairly price-elastic and is linked to economicand industrial growth. Demand is somewhat seasonal in nature-low during monsoonmonths, high during festival seasons.
THE MAIN SEGMENTS
The industry comprises two main segments decorative/architectural and industrialpaints. The decorative/architectural paint segment accounts for 70 per cent of the totalpaint market while the industrial paint segment accounts for the remaining 30 per cent.The industry is, however, expected to undergo a structural shift towards industrial paintsin the next few years, when its share is expected to go up to 50 per cent in line with theglobal trend. Industrial paints thus holds greater growth potential in the coming years.Actually, with the decorative segment gradually bottoming out, companies are alreadyincreasing their focus on industrial paints. Industrial paints are technology intensive. Theindustrial paints segment can be further classified into automotive paints, marine,powder coatings, high performance coatings, and others. Original equipmentmanufacturers (OEM) of products such as automobiles, furniture and white goods suchas refrigerators are prime consumers of industrial paint. The automobile industryaccounts for 50 per cent of the industrial paint market. A good part of the demand isfrom shipping and heavy industry. Navy being the largest customer in shipping.
THE MAIN PLAYERS
Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar are the leading companies in the organised sector. The top six manufacturers accountfor about 80 per cent of the market in the organised sector in value terms. AP is theindustry leader, with an overall market share of 33 per cent in the organised sector.Threat of global competition is minimal in the industry. AP dominates the decorativesegment, with a 38 per cent market share. Goodlass, a Tata company, is number twowith a 14 per cent market share. Berger and ICI have 9 per cent and 8 per cent shares,respectively, in this segment followed by Shalimar, with 6 per cent.Goodlass dominates the industrial paints segment, with 41 per cent market share. AP isa poor second here, with a 15 per cent market share. Berger, ICI, and Shalimar are theother substantive players in the sector, with 10 per cent, 9 per cent and 8 per centshares, respectively. The dominance of Goodlass in industrial papints is largely the resultof its technical associated with the Japanese paint major, Kansai Paints, which has a29.5 per cent equity stake in the company. Goodlass has a lion’s share of 70 per cent inthe OEM passenger car segment, 40 per cent share of two-wheeler OEM market and 20