PAINT INDUSTRY

PRESENTED BY-DIBYARUP GHOSH

JAYA SAXENAJAMCY JOSE

IMTISOLA MONGROJEET RAJ SINHA

Size of the Industry Today India has more than 20,000 outlets in operation, probably the highest for any country.

Geographical distribution

Mumbai, Ahmedabad, Coimbatore, New Delhi, Surat, Chennai, Delhi, Jaipur, Bangalore, Kolkata, Karur, Tirupur, Ludhiana, Bhilwara, Erode, Jodhpur, Rajkot, Noida, Panipat, Amritsar, Vadodara, Kanpur, Madurai, etc.

Output per annum

The high volumes of low cost distempers sold in India, which amounts to approximately 200,000 tonnes per annum at an average cost of Rs35 per kg ($0.88) at the present rate.

Market capitalization The market for paints in India is expected to grow at 1.5 times to 2 times GDP growth rate in the next five years

OVERVIEW OF INDIAN PAINT INDUSTRY 

GENESIS OF PAINT INDUSTRY

First paint Industry Shalimar Paints, Colour & Varnish Company.

The paints were generally imported from the Britain Due the 2nd world war many companies entered in India like

Goodlass Wall(1918), Elephant Oil Mills (1917) Asian Paints & Kansai Nerolac came into picture after the post

independence. Paints were considered as a luxury item Low used in Industrial segments There was a negative growth in industry and price was elastic. Introduction of liberalization policy

TOP LEADING COMPANIES

Asian Paints India Nerolac India Paints Berger Dulux India Paints Shalimar Paints

HOW INDUSTRY WORKS

NATURE OF INDUSTRY

Indian Paint industry, estimated to be a Rs. 40,600 Cr. industry, growing at a rate of above 15% for the past few years.

FACTORS RESPONSIBLE FOR GROWTH Increasing level of income and education Increasing Urbanization Increasing share of organized sector Development of the Realty, Automobile and Infrastructure

sector Increasing Penetration in the Rural Markets

PESTAL ANALYSIS

POLITICAL FACTORS India, the largest democracy in the world The government is federal republic Export oriented Economy

ECONOMIC FACTORS Market based economy India is the third largest in term of purchasing

power Inflation rate is 6.62 as on January 2013 Introduction of FDI in few sectors

SOCIAL FACTORS India is the second largest populated

economy in the world Import of raw material

TECHNOLOGICAL FACTORS

Emerging of IT sector Modernization of paint like (waterproof paints,

Teflon coating, creating colours shops etc.) Lead free paints

ENVIRONMENTAL FACTORS Impact of volatile organic compounds (VOCs) Lead free paints Season and climate changes

LEGAL FACTORS Pollution Control Law Consumer Law Health and Safety Law Environmental Law

DOMESTIC MARKETDECORATIVE 70% INDUSTRIAL 30%. GLOBALLY MARKET DECORATIVE 50% INDUSTRIAL 50%.

Indian Paint Industry

Decorative Paints(7O%)

Premium Range (High end Acrylic Emulsions)

Metros &

Large Cites

Medium Range

(Enamel Paints

Small Cities

Distemper Range( Low end Paints)

Sub - urban&

Rural Areas

Industrial Paints(30%)

Automobile Sector (about 2/3rd share)

Consumer Durables Marines

Paints Other OEM's

PORTER’S 5 FORCES ANALYSIS BARGAINING POWER OF BUYERS

Household users - The contractors : Higher bargaining power & more price

sensitive The end customer : Number of options are available

Decisions are made based many factors

Industrial users -. A low margin high revenue business The buyers knowledgeable Price comparison is done effectively by the consumers

BARGAINING POWER OF SUPPLIERS Raw material intensive industry More than 300 products required to manufacture of the

final products

COMPETITIVE RIVALRY

About 80% of the organized market is catered by the top four players of the industry.

The current market growth rate provide ample room for all the players of the industry to flourish.

Competition may increase as the market gets saturated.

AVAILABILITY OF SUBSTITUTES

• Lime wash is conventionally used substitute for paints.• In decorative paints segments an alternative option is wallpapers.

THREAT OF NEW ENTRANTS

• The paint industry in India is dominated by few players making difficult for anyone new entering the industry

• Establish foreign players may pose a threat by virtue of the knowledge and expertise

ASIAN PAINTS INDUSTRIAL ANALYSIS

Founder of Asian Paints

• Champaklal H. Choksey• Chimanlal N. Choksi • Suryakant C. Dani • Arvind R. Vakil

PRODUCT PORTFOLIO

Ancillaries Decorative paints

Industrial Paints

Automobile

CURRENT ISSUES

Market leader at present. Overall condition of the company is quite stable. Requires a lot of raw materials for its production , European crisis resulting the prices of the raw materials have

increased considerably.

Solution: Company can try to utilize the domestically available materials to cut down on the extra manufacturing cost.

SITUATION AUDIT India's largest paint company and Asia's third largest paint company Operates in 17 countries and has 24 paint manufacturing facilities in

the world servicing consumers in over 65 countries. Operates around the world through its subsidiaries Apco Coatings,

SCIB Paints.

COMPETITIVE ANALYSIS

RATIO ANALYSISCOMPANY ASIAN PAINTS BERGER

PAINTS Particulars

FY 2014 FY 2014

Operating Profit Ratio 15.71 11.15

Net Profit Ratio 9.93 6.44

Current ratio 1.18 0.97

Quick ratio 0.64 0.93

Debt equity ratio 0.01 0.27

Gross Profit ratio 15.02 9.78

RATIO INTERPRETATION

Asian paints is having higher operating profit than Berger because of higher GP.

Higher current ratio of Asian Paints indicates that co. is holding good amount of current assets than Berger.

Asian paints is having less quick ratio means holding of less liquidity assets which may results in delay of paying its short term obligation.

Debt equity ratio indicates that the financial leverage is not being properly used. Therefore the co. is not having high financial risk.

Asian paints is having greater capacity to stand in worse economic condition than Berger paints because of higher net profit.

A higher gross profit indicates that Asian paints having efficient production and purchase management .

CONCLUSION

Indian Paint Industry is one of the fastest growing sector in India. The market for paints in India is expected to grow at 1.5 times to 2 times

GDP growth rate in the next five years The employment potential in this industry is huge. Asian Paints, India’s largest paint company and Asia’s third largest paint

company, with a turnover of Rs 96.32 billion. Have an enviable reputation in the corporate world for professionalism,

fast track growth, and building shareholder equity.