Exploring The Paint Industry
Indian paint industry has evolved since its inception in 1920 from merely decorative paints market depending mainly on festivals to a more diversified market. The estimate size of Indian paints market is about US2.5$ billion contributed by organized and unorganized segments in the ratio of 65:35. This gap has been steadily decreasing providing level playing field to both by steady and steeped reduction in excise duties over the last few years from 40% to 14% as organized sector is subjected to excise duty.
India has one of the lowest per capita paint consumption at 1kg/annum as against 15-25kg/annum of a few of the developed countries, while for the few countries like US, Japan etc per capita consumption is more than 25 kg/annum. Low per capita consumption with rural penetration of only 10% has prompted many domestic and global manufacturers to step up their production capacity to tap this latent potential.
The Indian paint industry is segmented into decorative and industrial market. Decorative market catering to housing sector has been valued at US 1.7 billion and Industrial market catering to automobile OEM, industries and railways has been valued at US$0.8 billion. With current demand of 6,50,000 tonnes the per capita consumption of India is amongst lowest in the world.
Owing to boom in housing sector, increasing urbanization, easy availability of loans and shift from kuccha or semi permanent to permanent housing structure the demand for decorative paints segment is increasing which constitute 70% of Indian paint industry. However, due to rapid industrialization, increase in manufacturing over the past few years the ratio of industrial to decorative paints is expected to be 50:50 in line with the global trends.
The global players like Akzo Nobel, Sherwin Welliams, Nippon and Jotun have set up their shops in India. They are unlikely to affect the domestic players as it would require some time to match the scale, reach the brand equity, distribution network, and brand loyalty that is currently being enjoyed by the existing players. However, serious efforts are being made by them to capture market share through organic growth, Sherwins William has acquired domestic decorative paints company, Netco Paints, while Akzo Nobel has taken over ICI paints. Thus over the long-term the intense competition well take a toll on operating margins of the players thus shifting the focus from price increase to cost optimization.(责任编辑：BUG)