Paints and Coatings Industry in India

09 Mar 2018

The growth story of India remains incomplete without a mention of the paints industry. The market size of the Paints industry in India is INR 170 billion in value. The industry is largely fragmented and has significantly grown over the years. The per capita consumption of paints in the country stood at 3.34 kg per annum as compared to that of China which is at 1.6 kgs and 22 kgs in developed economies. India has a small share in the world paints market which is limited to 0.6% only. This shows that there is a huge opportunity for the industry to grow in the coming period. The unorganized sector controls about 35% of the paint market and the organized sector accounts for the balance 65%. There are about 2000 units in the unorganized segment which constitute small and medium sized manufacturing plants. Major players in the industry include Asian Paints with a 30% market share, Nerolac with 20% share, Berger Paints with 19% share and ICI with a 12% market share.

The demand for paints in the country can be divided between two broad categories which include decorative and industrial. The decorative segment includes exterior wall paints, wood finishes and enamel, interior wall paints and ancillary products. This demand accounts for 75% of the total market in the country and Asian Paints leads the industry. It includes demand that arises from household painting, architectural and other display purposes. This segment also has a higher margin as compared to the industrial segment. Further, the Industrial demand includes automotive coatings, protective coatings and powder coatings. The market leader in the segment is Nerolac and the demand for the products is much more technology intensive than the decorative segment.

There are more than 300 raw materials that form a part of the paints industry. Majority materials are petroleum based which is one reason why the industry benefits from the reduction in crude prices. Over the years, the unorganized sector has lost significant market share to the organized sector. Due to the fragmentation of the industry, the supply ex ceeds the demand in both the segments. Raw materials constitute 56% of the total expenditure in paint companies. One of the major raw materials is titanium dioxide and any price fluctuations in the cost have a huge impact on the cost of production. Other important raw material is crude oil derivative which is directly impacted by the change in crude oil prices across the globe.

The demand for decorative paints depends on the housing sector while the demand for industrial paints depends on user industries in the country. The decorative paint market is expected to witness CAGR of 12.7 per cent and the industrial market is expected to witness the same at 9.5 percent. There was a high growth in the demand of exterior and interior emulsions in the decorative paints segment and a demand of powder coatings and auto refinish in the industrial paints segment.

The industry is expected to grow at a rate of 7.5% and the boost in consumer spending will result in a higher demand for paints. The decorative segment is expected to witness huge growth in the coming years. An increase in investment in infrastructure can lead to a rise in the demand of industrial paints as well.
Paints and coatings play a crucial role in the automobile industry. They are used to provide protection and impart decorative texture to the automobile. Available in liquid, solid or aerosol, it is applied using products like brushes and sprays. In case of liquid, brushes, sprayers and rollers are used while in case of aerosol, only spray can be used.

Paints and coatings in the solid form are applied to the automobile which is then exposed to high temperature which melts the powder and causes it to adhere to the surface. The coatings segment and automotive refinish paints are estimated to grow at a CAGR of 14.47 percent. The products find wide application in automotive, aerospace, defence, construction, oil and gas, refinery, petrochemical, marine and industrial coatings industry. Several factors have contributed to the rapid growth of the Indian paint industry; this includes the adoption of latest technologies as well as innovative products launch. Additionally, given the rapid urbanization, development of infrastructure and increasing disposable income, it is anticipated that the market will grow higher by 2019-20.
There is huge potential for innovative technology in the industry. The companies are looking for better technology in order to produce ecofriendly paints and coatings with natural raw materials or biodegradable materials. The latest technology will have better opportunities for the market in the future.
The performance of the sector depends on the production process and the raw materials. With the advancement of digital technology, it has become possible to customize the production process in order to meet International standards.


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