DECORATIVE FINISH PAINTS - A NEW LOOK AROUND
DECORATIVE/ARCHITECTURE FINISH PAINTS:
This market can be further segmented on the basis of the following:
• Customer’s type : institutional/retail or domestic use.
• Product Features/Categories: Distempers, enamels, emulsion.
• Price: Premium, medium, economy.
The Indian market is dominated by decorative segment, which comprises of almost 70% of consumption as compared to developed countries where the industrial segment is more dominant.
The ratio in India is also more likely to shift towards industrial segments, especially with growth in the auto and white goods industry.
The unorganized sector has historically been dominant by high excise structure. Over the last five years the excise rates have come down drastically from 40% to 18% resulting in erosion of unorganized sector’s share.
The paint industry is charatererised by low fixed asset intensity (as essentially it is a mixing process) but high working capital intensity (as the number of shades is large and there is seasonal demand). The investments are in brand building and distribution infrastructure.
New trends are emerging in technology and marketing. Introduction of tinting machine at the dealer/retailer level will bring down working capital cost. Also new technology is being used to increase the utility and lifespan of paints. Indian industry will have to keep pace with global technological changes to maintain their competitiveness. Already a few alliances have entered and the number is likely to increase in future.
Asian paint is a market leader with 41% market share followed by Goodlass nerolac and ICI respectively. However, APL is primarily present in decorative segment. It has entered into joint venture with PPG of US to cater to fast growing industrial segment.
The outlook for the industry is positive especially given the good prospect for automotive and white goods Industry. Moreover, housing is expected to grow rapidly on the back of rising incomes and government incentives.
The supply situation remains a cause for concern and will keep prices under check. The key to success will be innovative marketing. Thus, we prefer Asian paints within the sector, which has proven track record in innovation and is indomitable in the decorative segments.
DECORATIVE/ARCHITECTURE FINISH PAINTS:
This market can be further segmented on the basis of the following:
• Customer’s type : institutional/retail or domestic use.
• Product Features/Categories: Distempers, enamels, emulsion.
• Price: Premium, medium, economy.
The Indian market is dominated by decorative segment, which comprises of almost 70% of consumption as compared to developed countries where the industrial segment is more dominant.
The ratio in India is also more likely to shift towards industrial segments, especially with growth in the auto and white goods industry.
The unorganized sector has historically been dominant by high excise structure. Over the last five years the excise rates have come down drastically from 40% to 18% resulting in erosion of unorganized sector’s share.
The paint industry is charatererised by low fixed asset intensity (as essentially it is a mixing process) but high working capital intensity (as the number of shades is large and there is seasonal demand). The investments are in brand building and distribution infrastructure.
New trends are emerging in technology and marketing. Introduction of tinting machine at the dealer/retailer level will bring down working capital cost. Also new technology is being used to increase the utility and lifespan of paints. Indian industry will have to keep pace with global technological changes to maintain their competitiveness. Already a few alliances have entered and the number is likely to increase in future.
Asian paint is a market leader with 41% market share followed by Goodlass nerolac and ICI respectively. However, APL is primarily present in decorative segment. It has entered into joint venture with PPG of US to cater to fast growing industrial segment.
The outlook for the industry is positive especially given the good prospect for automotive and white goods Industry. Moreover, housing is expected to grow rapidly on the back of rising incomes and government incentives.
The supply situation remains a cause for concern and will keep prices under check. The key to success will be innovative marketing. Thus, we prefer Asian paints within the sector, which has proven track record in innovation and is indomitable in the decorative segments.