Porter’s Five Force Analysis

1. Threat of New Entrants- Medium

Paint market in India is dominated by few players, making it difficult for anyone newly entering the industry
to compete. Working capital needed is high-causes difficulty to local players & big firms enjoy economies of
scale. Big players have high brand image & quality products & good promotional activities to attract
customers.

2. Bargaining Power of Suppliers- Medium

The Indian Paint industry is raw material intensive industry with more than 300 products going into the
manufacturing of the final products. The raw material can be divided into different categories like pigments,
additives, solvents, binders etc. Titanium Dioxide is one of the key pigment used in the production of paint
and is facing a global supply shortage. Thus supplier of this material has good bargaining power.

3. Bargaining power of buyers- Medium

Households and Industrial Users are the main customers of this industry. For housing requirements, the
buyers are building contractors who buy in bulk and end people who paint their house. Customers are more
price sensitive because for them number of options are available and decisions are made based on quality,
price and differentiating factors like weather protection, environment friendly paints. Industrial segment is
low margin high revenue business and buyers of these segments are knowledgeable about their needs.
Therefore, price comparison is done effectively by the customers. However, the leading Industrial paint
suppliers have their expertise in their favour, which limits the bargaining power of buyers.

4. Threat of Substitutes- Low

The availability of substitute is very minimal. In the rural areas lime wash is conventionally used substitute
for paints. One alternative option for decorative walls available today is Wallpaper. Buyer propensity to
substitute is low. Relative price performance of Decorative walls is also high.

5. Intensity of Rivalry- Low to Medium

About 80% of organized market is created to by the major players of Indian Paint Industry. But the current
market growth rate can provide ample room of opportunity for all the players of the industry to flourish.
However, competition will keep on increasing as market will get saturated, but this will take some time to
happen, till then one can keep satisfy customer need with good margin. Also, presence of unorganized
sector can cause competition.