Major Players in Indian Paint Industry

The paint industry of India is 100 years old. Its beginning can be traced to the setting up of a factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II, the industry consisted of just a few foreign companies, and some small, indigenous producers. The war led to a temporary stoppage of imports leading to many local entrepreneurs setting up manufacturing facilities. Nevertheless, foreign companies continued to dominate the industry. Even now, they remain contestants, though their foreign shareholdings stand reduced, with two of them having become totally Indian.

Currently, the industry has a sales turnover of about Rs. 3,600 crore. In terms of volume, it corresponds to 5 lakh tons. The industry is composed of two sectors, the organized and the unorganized. The organized sector controls 70% of the total market. The remaining 30% is in the hands of the unorganized sector, consisting of 2000 odd small-scale units.

The industry is not capital intensive. It is however working capital intensive. The demand for paints is fairly price-elastic and is linked to economic and industrial growth. Demand is somewhat seasonal in nature — low during monsoon months, high during festival seasons.

The main Segments: The industry has two main segments – application-wise -decorative/architectural paints and industrial paints. The decorative / architectural paint segment accounts for 70% of the total paint market while the industrial paint segment accounts for the remaining 30%. The industry is, however, expected to undergo a structural shift towards industrial paints in the next few years, when its share is expected to go up to 50% in line with the global trend. Industrial paints thus hold greater growth potential in the coming years. Actually, with the decorative segment gradually bottoming out, companies are already increasing their focus on industrial paints. Industrial paints are technology intensive.

The industrial paints segment can be further classified into automotive paints, marine, powder coatings, high performance coating, and others. Original equipment manufacturers (OEM) of products such as automobiles, furniture and white goods such as refrigerators are prime consumers of industrial paint. The automobile industry accounts for 50% of the industrial paint market. A good part of the demand is from is from shipping and heavy industry, Navy being the largest customer in shipping.

The main players: Asian Paints (AP), Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar are the leading companies in the organized sector. The top six manufacturers account for about 80% of the market in the organized in value terms. AP is the industry leader, with an overall market share of 33% in the organized sector. Threat of global competition is minimal in the industry.

AP dominates the decorative segment, with a 38% market share. Goodlass, a Tata company, is number two with a 14% market share. Berger and ICI have 9% and 8% shares, respectively, in this segment followed by Shalimar, with 6%.

Goodlass dominates the industrial paints segment, with 41% market share. AP is a poor second here, with a 15% market share. Berger, ICI, and Shalimar are the other substantive players in the sector, with 10%, 9% and 8% shares respectively.

The dominance of Goodlass in industrial paints is largely the result of its technical association with the Japanese paint major, Kansai Paints, which has a 29.5% equity stake in the company. Goodlass has a lion’s share of 70% in the OEM passenger car segment, 40% share of two-wheeler OEM market and 20% of commercial vehicle OEM market. Goodlass also holds 20% of the white-goods segment.