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Paints

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Contents
 Market Characteristics
 History of the Indian Paints Industry
 Industry Overview and Outlook
 Trends in the Industry
 Porters Five Forces Analysis
 The Business Process
 Consumer Purchase Behavior
 Player Profiles
 Brands

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Market Characteristics
 Decorative paints
• Caters to the housing sector
• Premium paints (acrylic emulsions) used mostly
in the metros.
• Medium range (enamels) popular in cities and
smaller towns.
• Economy paints (distempers ) demanded in the
suburban and rural markets
• Distribution network is the key
 Industrial paints
• Include powder coatings, high performance
coating, automotive and marine paints
• Two-thirds of the industrial paints produced in the
country are automotive paints
• Technological superiority and tie-up with
automobile manufacturers

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Indian Paints Industry: A Brief History
 1902 – Shalimar Paints, Calcutta
 1920-45: Asian Paints, Nerolac started operations
 1965-91: Paints looked upon as luxury item
 1983: Demand for automotive paints picked up with
entry of Maruti
 1991: Reduction in excise duty and many controls on
the industry removed.
 After 1991: Steady growth, slow disappearance of
unorganized sector units and industry fragments.

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Industry Overview
 Four main players
• Asian Paints- 42%
• Goodlass Nerolac-20%
• ICI Paints- 14%
• Berger Paints- 15%
 Asian Paints dominates decorative segment
 Goodlass Nerolac dominates industrial segment

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Industry Characteristics
 Demand for paints linked to the industrial and
economical growth
 Decorative paints market naturally price-elastic
 Industry majors maintain a vast dealership network
 High inventory levels

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Key Success Factors
 Costs and price drivers – raw materials
 Working capital management
 Heavy seasonality of demand
 Brand building
 Stocking and distribution
 Access to latest technologies

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Trends in the Industry
 Reduction in excise duties and taxes – larger scale
plants
 Customer power !
 Proliferation of industrial use
 Super premium decorative segment – better margins
 Niche marketing strategies
 India – an exporter
 Industry expected to further consolidate

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More Trends…
 Increased emphasis on attractive packaging, more
sturdy packaging, lighter SKUs, etc.
 From tin cans to plastic tubs
 Asian Paints introducing “sub-stockists”
 Focus on rural markets
 Computerization and ERP
 Less seasonality

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Market Practices
 Discounting is the norm
 Dealers operate with the company on credit – 2 to 6%
 Stock sometimes “undervalued” to “save” taxes and excise
 Bulk purchasers and “key accounts” are given additional
discounts
 Distinct Segmentation in the Market
• Super economy segment – cement based - <Rs 100 per litre
• Economy segment - oil based – Rs 100/- per litre
• Medium segment – Rs 200 per litre
• Premium segment- Rs 300 per litre
• Super premium segment – Rs 1200 for a four litre pack

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Industry Prospects
 Market slated to grow from 9000 crores to 18000
crores in the next five years !
 Per capita consumption of paint is India is around 800
gram, compared to 15-25 kgs in most developed
countries.
 Organized sector will grow 16 to 20% per annum
 30 million new homes, millions of cars and vehicles,
Infrastructure projects all will fuel huge demand !

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International Players in India
 International retailers had until January 2006 been
able to operate in India only through franchise
arrangements with local partners
 The Indian Government passed a regulation in
January 2006 allowing entry of foreign single retail
brands without the need for franchise arrangement
 Starting February 2006, foreign single retail brands
are allowed to:
• open their own stores in India;
• own upto 51% of local joint ventures

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Porter’s Five Forces Analysis
Buyers power: High
Supplier’s power: High
Threat of entry
Low
Threat of substitutes
Low
Thus, overall the
industry is profitable
Industrial rivalry :
High

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Business Process
 Factory - nimbleness in the supply chain, efficiency and speed of
the production very important , since inventory turnover periods
are significantly high.
 Depots - normally owned by company, strict quality control
essential to prevent loss of inventory due to product
deterioration leading to them not meeting the product
specifications.
 Dealers
• Dedicated dealers
- Terms of trade more favourable
- Higher margins , exclusivity of distribution , greater variety of product
lines stocked , technical support in terms of MIS
• Independent dealers
- Form a large part of the distribution process in paints industry
 Customer
Factory
Depot
Dealer
Customer

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 Factors affecting purchase are price, finish, durability,
range of colours/ shades
 Maximum demand from the household sector who uses
paint as a decorative medium
 Purchase decision influencer-regarding the above
parameters - the dealer or the painter- whose view is
given major importance
Consumer Behaviour –
Decorative Paint

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 The major factors affecting purchase decision:
• Brand, price, quality, durability, timely supply, credit and
discount terms, logistics service, relationship with supplier
 Access to technological parameters assist paint
companies to customize their products as per needs of
specific industrial sectors
Consumer Behaviour –
Industrial Paints

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The organized sector
 Asian Paints
 Goodlass Nerolac
 ICI Paints
 J&N
 Shalimar Paints
Players in the Industry

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Asian Paints
 US $ 680 million Asian Paints Group has a presence in
23 countries
 Ranks among the top 10 decorative coatings companies
in the world
 Subsidiaries - Berger International Ltd., Apco
Coatings, SCIB Paints and Taubmans
 Market leader in the decorative segment

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Asian Paints
 Asian Paints CSF – Supply Chain
 Market driven strategy
 Colour World – Paint retailing of the future
 ColourNEXT 2006 , Kids World
 Royale Play – readymade special effects
 Bye Bye Gattu

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Asian Paints
Promotional campaigns
 Point of sales activities and dealer incentives
 Shift from individual branding to umbrella branding –
building the Asian Paints brand
 Messages of durability, excellent finish, wide range
of colour availability – shade combinations

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Asian Paints
Asian PaintsAsian Paints
ApexApex
Asian PaintsAsian Paints
Ace ExteriorAce Exterior
Asian PaintsAsian Paints
Premium GlossPremium Gloss
Asian PaintsAsian Paints
Apcolite PremiumApcolite Premium
Asian PaintsAsian Paints
Premium EmulsionPremium Emulsion

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Asian Paints
TouchwoodTouchwood
Utsav AcrylicUtsav Acrylic
DistemperDistemper
Tractor AcrylicTractor Acrylic
DistemperDistemper
Tractor EmulsionTractor Emulsion

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ICI Paints
 Multi-divisional company dealing in rubber
chemicals, paints, polycarbonate, others
 Revenues in 2004 - $157.51 million (paints business)
 Mainly auto refinishes and decorative paints
 Present in all categories
 Brands - Dulux, Duco, and 2K
 Only Indian decorative paint manufacturer producing
paints that are totally free from toxic metals

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ICI Paints
Promotional campaigns/positioning
Premium brands advertised through television
 Dulux Interior - Washability, durability, fungal
resistant, smoothness and exclusiveness
 Weathershield (exterior wall finish) – Prevents
exterior walls from cracking and eroding due to high
rutile content

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ICI Paints
Dulux VelvetDulux Velvet
TouchTouch
Dulux SupremeDulux Supreme
3-in-13-in-1
Dulux AcrylicDulux Acrylic
EmulsionEmulsion
MaxtiliteMaxtilite
DistemperDistemper
Dulux SatinDulux Satin
FinishFinish
Dulux SuperglossDulux Supergloss
5-in-15-in-1
Dulux GlossDulux Gloss

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ICI Paints
DuluxDulux
WeathershieldWeathershield
MaxMax
SupercoteSupercote
ExteriorExterior
Acrylic PrimerAcrylic Primer
MaxtiliteMaxtilite
DistemperDistemper
DuluxDulux
TileshieldTileshield

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Goodlass Nerolac
 Goodlass Nerolac is the second largest paint company
 Gross group turnover of approximately Rs 1200
crores
 Undisputed leader in industrial segment with a
market share of 45% in industrial paints

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Goodlass Nerolac
 Five strategically located manufacturing units and a
strong dealer network of over 11,500 dealers across
the country
 As opposed to the Asian Paints strategy of hitting the
entire gamut of paint segments, GNPL - mainly
concentrated on industrial paints segment, which is
technology driven

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Goodlass Nerolac
 Industrial
• Automotive coatings
• General industrial coatings
• High performance coatings - DIMETCOTE
• Powder coating
Company Product Category
Kansai Paint Co., Japan ED Primers, Automotive & Industrial
Coatings
Nihon Parkerizing, Japan Pre-Treatment Chemicals
Oshima Kogyo, Japan Heat Resisting paints
Ameron, USA High Performance Coatings

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Goodlass Nerolac
 Decorative paints
• "Nerocem" which is cement paint
• "Suraksha" the value pack
• "Nerotex" which is a texturized paint
• "Excel" the premium exterior paint
• “Impressions” the premium interior paint
• “Wonderwood” can be used for wooden surfaces

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