Indian Paint Industry

Market Analysis


Shalimar Paints
1st paint company in India
Aviation coatings, marine
paints, painting thermal
power plants

Asian Paints
Largest paint company in
India
More than 50% market
share in decorative paint
segment
Operations in 19 countries
with 26 facilities providing
service to 65 countries

Berger Paints
2nd largest paint
company in India
according to market cap
Acquired Jenson &
Nicholson and entered in
Nepal. also, Acquired
Sherwin Williams India
Trying to increase
presence in South and
western market
Focus on expanding
dealer base, sales of
Akzo Nobel
premium
products
Dutch multinational with
around 11% market
share and 6 plants in
India
Decorative paints and
coatings, chemicals
Currently placing
foundation in India
through distribution
network, different
product portfolio
Augmented reality app

-Anuradha Kuckia
-Prachi Kore

From Garage to the

World

Founded in 1942, Bombay

No. 1 Paint company in India
49 years of market leadership in India
Over $ 2 Billion revenue
JV with PPG industries

Market Analysis
4th largest in the Asia,
14th largest in
the World
3 times the nearest
competitor in India
Market leader in
decorative paints
Operations in 19
countries
26 Paint manufacturing
plants worldwide

Business Portfolio

Industrial
International operations
Home improvement

Decoratives

Products
Wood
Waterproofing
finishes
solutions
Metal
Painting tools
finishes
and
Adhesiv
implements
es
Vertical integration: Phthalic Anhydride
and Pentaerythritol

Interior
walls
Exterior
walls
Nilaya

Innovative Market
place strategies

Providing the
paint and the
painters
Small packs
Textured paints
Color visualizer
Color Next

Supply Chain - India

350 Raw
material
suppliers

18
Processin
g centres

6 Regional
distributio
n centres,
72 depots

2
Chemical
plants

140
Packing
material
vendors

Supply Chain
Raw materials
60 percent of its value chain
Titanium Dioxide (TiO2) 30% of total cost - mostly
imported
Crude oil derivates 30 to 40%
Alkyd resin Piyanshu Resins, Hyderabad
20 lt tins Baba containers
Printed tins Asian Metal Containers
Pigments Sudarshan Chemicals

Demand forecasting

Hockey stick variation

Annual upsurge in demand during festival seasons
in various parts of India

Outsourced to JDA - supply chain company

Explosion of Business and Data

20,0
00
1,20
0
35,0
00
3,00
0
100

Invoices each day

Sales
representatives in
India
Dealers in India
SKUs
Company
Warehouses

Agile
decisi
on
makin
g

Real time
analytics

The SAP Experience

SAP
HANA:
CRM

90%
83%
25%
10,000
20-30%

SAP IQ:
Analytics

SAP
Business
Warehous
e

Improvement in data extraction

Reduction in data footprint from 180 GB to
30 GB
Decrease in training demand on IT staff
Dealers receive functionally scalable
inventory support
Call centre productivity increase

Inventory Management
Automated Storage and
Retrieval System

Traditional
Approach

Ground storage
approach
Pallets on the
floor, 2 level
racks
Manual pick and
put away
High area and
manpower
requirements

Storage racks 12
levels high
Optimized truck
planning schedule
Reduced inventory
targets by 12-18%
Depots increased to
110
Reduced factory level
losses

Inventory Management

Discount for perfection in payments: 3.5%

Cash discount for all outright cash purchases: 5%
Savings in Inventory Carrying Cost = Promotion budge

Energy Management
16-18% of the total overhead cost
Incinerator flue gas waste heat
recovery
Caustic barrel heating by steam
Screw pumps in place of Diaphragm
Pumps

Competitive
advantage
Color world dealer
Tinting system costing Rs. 2.5 3 Lakhs
More than 1000 shades from basic 10
shades
More than 2600 CWD
70% of decorative paints sales in India
Lesser inventories

Journey Ahead

Fulfilling all placed orders from

dealers within 4 hours
Extending network to up to 50,000
direct retailers
Adding 6 Lakh kl per annum to
existing capacity of 10 Lakh kl
Obtained 110 acres from
Government in Sep, 2015

Timeline
1920
1968

Company was incorporated

Converted into a public limited company

It entered into technical collaboration agreement with Kansai

Paint Co. Ltd., Japan for import of know-how for the manufacture
1985 of certain ingredient.
The Company entered into technical assistance agreements with
Kansai Paint Co. Ltd., Japan and with Nihon Tokushu Toryo Co.
1987 Ltd.
The Company entered into a technical assistance agreement
with E.I. du Pont de Nemours and Co. Inc. U.S.A. for the
1996 manufacture of sophisticated coatings
Kansai Paint Co. Ltd., Japan, acquired the Tataa stake in the
2000 company

Company has changed its name from Goodlass

2007 Nerolac Paints Ltd. to Kansai Nerolac Paints Ltd.
2015

Announcement of 2 new factories

USP for Kansai Nerolac

Strong base in Industrial paints market
Around 45% market share
Parent company which supports by
providing latest technology and equipment
Early movers advantage in case of
automotive paints
Brand name and parent companys
relations with automakers
High investment to match international
standards
Over 2000 SKUs

How to make paint

Supply Chain
6
warehous
es

94 Depots

Nerolac
Impression
style Zones45

8 sales
Divisions

14000
Dealers

Franchise
stores Nearly 600

Exclusive
stores

Supply Chain
Currently, they have 6 plants
and are investing to set up 2
more plants in Gujarat and
Punjab.
Last year sold Chennai plant
and earned nearly 500 crores
from the transaction
All plants are located in such
a way that they can provide
paints in JIT
There all imports come to
Mumbai port (JNPT)

Planning
For industrial consumers
planning is carried out as
per Make to Order
Automotive players want
JIT
Decorative paints follow
forecasted demand
Adopted Nerolac portal to
facilitate supply chain
visibility

Demand Forecasting
Qualitativ
e
Expert
Opinions
Market
Research
Eg. Soldier
paint

Quantitati
ve
Trend
Analysis

Eg. People
moving to
water based
paints

Seasonal

Based on
festivals, high
demand from
September to
march

Nonseasonal but
repetitive

Painting cycle
from 7-8 years
to around 4-5
years

Sourcing
Around 40% raw materials
consumed are imported
Raw materials constitute
35% of imports

Countries from where it

imports:
Taiwan
Japan(7% of raw materials)
China
Vietnam
U.S.
Germany

Shift from solvent or oil

paint based paints to water
based paints for both
decorative and industrial
market (65% to 55%)
To reduce imports of
technology, a global R&D
centre at Navi Mumbai is
planned

Sourcing
Import of car painting technology and equipment
Godrej racking system
Technology collaborators
E.I. Dupont De Nemours & Co.Inc,U.S.A;
Kansai Paint Co. Ltd., Japan;
Oshima Kogyo Co. Ltd. Japan
Dupont Performance Coatings GmbH & Co.KG ;
Germany
ED primers
Ameron, USA
Major suppliers
Kansai
Du-pont

ERP
In 2000, SAP was implemented in the organization
SAP R/3 solution, SAP supply chain, dealer and
vendor portals
Use of SAP in financial planning as well
Cost reduction was its aim for implementing SAP
SAP HANA
Real time analysis & warehousing applications
Good at both analysis and transactional workloads
Improved speed due to in-memory processing

kansai-nerolac-paints-ctv.mp4

Warehousing
Bar coding is done at all warehouses
Jainpur warehouse is automated
Bawal and Lote warehouse handled by SAP 9
Revenue per depot around 40 Cr. And revenue per
factory is around 700 Cr.
Transportation is done by 3rd party contractors

Quality Control: Paint

Finished paint is inspected for density, dispersion,
viscosity and fitness of grind
Color:
How well it matches with standard color
Fading due to light
Paints hiding power 0.98 being high quality
Gloss
Adhesiveness: Crosshatch test
Rate settling : 6 months good
Weathering
Fire Resistance

Sustainability initiatives
Certified by agencies such as BVQI and Intertek, ISO
14000, ISO 9000 2000, OHSAS 18000
Pioneer of Zero VOC, low VOC, low odour range of
decorative paints in decorative paint segment
Zero liquid discharge facilities at all major plants to
reuse and recycle treated water
Renewable energy initiatives
Implemented static electricity interlock (Pokayoke) at
solvent and resin filling stations to eliminate major fire
hazards
Frequent KYT (Kiken Yochi Training) exercise on shop
floor
Learning activities for painters

References
https://www.zauba.com/import-nerolac-hs-code.html
http://
www.infodriveindia.com/companies/goodlass-nerolac-paints-ltd-14
3093.aspx
members.tripod.com/~Umesh_R/paintsprojects/goodlassnerolac
http://
ficci.in/spdocument/20172/KnowledgePaperSpecialtyChemicals.pdf
https://www.equitymaster.com/outsideview/detail.asp?date=07/02/
2013&story=4&title=Kansai-Nerolac-Robust-long-term-innings-Luke-Verghese
http://
reports.dionglobal.in/BPWealthAdmin/Admin/reports/RR2103201313
.pdf
https://www.equitymaster.com/outsideview/detail.asp?date=07/02/
2013&story=4&title=Kansai-Nerolac-Robust-long-term-innings-Luke-Verghese
https://www.karvyonline.com/viewdocument.aspx?DocumentID=11
205
http://
www.slideshare.net/homeworkping4/152039949-benkibimmvva

Berger Paints

Timeline
1760

Lewis Berger started manufacturing 'Prussian blue'in England

company started in 1923 as Hadfield's (India) Limited which was a small

colonial venture producing ready-mixed stiff paints, varnishes and
1923 distempers setup on 2 acres of land
British Paints (Holdings) Limited, an international consortium of paint
manufacturing companies bought over company and the name changed to
1947 British Paints (India) Ltd

1965

Share capital of parent company was acquired by Celanese Corporation,

USA.Controlling interest of British Paints (India) Ltd was acquired by
CELEURO NV, Holland, its subsidiary

1969

The Celanese Corporation sold its Indian interests to Berger, Jenson &
Nicholson, U.K

1976

The foreign holding in the company was diluted to below 40% by sale of a
portion of the shares to the UB Group

The British Paints (India) Limited, changed its name to Berger Paints
1983 India Limited.
UB Group's stake in the company bought over by the Delhi based
Dhingra brothers, Mr. K.S.Dhingra & Mr. G.S.Dhingra and their
1991 associates of the UK Paints Group

 Technology Collaborations:
(1) DuPont Performance Coatings in the area of automotive
coatings
(2) Nippon Paint Co Ltd for new generation of automotive
coatings
(3) Orica Australia Pty. Ltd. in the area of protective
coatings
(4) TIGERWERK Lack-u.Farbenfabrik GmbH & Co. KG, Austria
for specialized powder coatings
(5) Nippon Bee Chemical Co. Ltd for coating on plastic auto
parts and mobile phones
(6) Teodur of Holland
(7) Herberts Germany- automotive coating

Import of raw material includes only 33% of total

requirement

Factory/Pla
nt
10

Sales
Depot 110

Dealers
25000+

Plant locations
Uttar Pradesh (2) , West Bengal,
Pondicherry, Goa, Delhi, Tamil Nadu, J
& K, Andhra Pradesh, Maharashtra,
Assam (Yr 2017)
Factory Video:
https://

 To ensure customer satisfaction, fast

transportation from depots to
dealers
From Factory to depots public
transport is used like trucks on
rental basis or railways

USP
Lone supplier of nuclear power plants with its
protective coatings
Currently, 7 warehouses which it wants to increase to
13
Either industrial paint or decorative paint plants Eg in
Kolkata region decorative paint plant

ERP System

Late adoption of IT system

Lost sales
In 2007, they started using Oracles ERP packages
Oracle Apps modules like Advanced Supply Chain
Planning, Trade Management, Process Manufacturing,
Procurement, Financials, Order Management, Logistics
and Human Resources Management.
MCC has intricate knowledge of industry process.
Secondary Material Despatch tracking system
Oracle Bolt provides Depot indenting and production
indenting
Country Specific localizations.

References
http://www.cxotoday.com/story/berger
-paints-opts-for-oracle-apps/
mccit.co.in/oracle-erp.html

Future Growth Potential

Shift from solvent based to water based paints in
decorative segment
Key growth drivers:
Low per capita consumption
Growth in automotive industry
Rapid growth in residential and commercial real
estate with regulation permitting 100% FDI flow
Untapped rural market:
Growing middle class with increasing disposable
incomes and nuclear families

Prospects

Current market size of paint

industry: Rs.350 Billion
Expected: 12% growth in business
volume
10-12% rise in sales in FY 16
Fiscal incentives by government to
housing sector
Increased demand for powder and
high performance coatings