Paint industry

Paint Industry Analysis

1. Saurav Kumar paint Industry Analysis

2. CONTENTS 1. INTRODUCTION 2. GLOBAL SCENARIO FOR PAINT INDUSTRY 3. INDIAN SCENARIO 4. MICHEAL PORTER FIVE FORCES MODEL 5. HERFINDAHL INDEX 6. PERFORMANCE ANALYSIS 7. FUTURE OUTLOOK

3. INTRODUCTION The Paint Industry is divided into two major segments: Decorative Paint- Industrial Paint- The Paint industry impacts on Indian economy Paint market to grow 20% annually in next two years Source : Assocham Current market size of Paint industry is 40,600 crore in 2014 which is expected to grow at a CAGR of 20% and expected to reach Upto 62,000 Crore by 2016 Source ipaindia.org

4. GLOBAL SCENARIO OF PAINT INDUSTRY One of the key factors of the paint market growth is the rapid development of the global construction industry. The paint and coatings industry largely depends on the purpose of the market, such as the need to meet the key industrial sectors are construction, steel, marine, automotive and wooden furniture . The global paint consumption, total sales of $ 120 billion, an output of 39.82 million tons shows there is rise in consumption of paint in 2012 which is grown at 5.43% in 2013 and 2014. The Asia-Pacific region is still the world's largest paint consumption ranked first in a yield of 42% in 2012. Asia, China accounted for more than half of consumption, and the slowdown in the rapid expansion of the past.  Wold Paint and Coating Industry Association

5. World's TOP TEN PAINT COMPANIES Sr No Company Country Website Revenue 1 AKZONOBEL Netherland www.akzonobel.com $ 18.29 billion 2 PPG Industries United States www.ppg.com $ 14.83 billion 3 SHERWIN-WILLIAMS United States www.sherwin-williams.com $ 7.94 billion 4 DUPONT United States www.dupont.com $ 5.35 billion 5 BASF Germany www.basf.com $ 4.99 billion 6 RPM Inc United States www.rpminc.com $ 4.08 billion 7 DIAMOND Paints United States www.diamondpaints.us $ $ 3.73 billion 8 VALSPAR United States www.valspar.com $ 3.57 billion 9 SACAL United Kingdom www.sacalpaint.com $ 3.35 billion 10 NIPPON Paint Japan www.nipponpaint.com $ 2.98 billion Source : World Paint and Coating Industry Association

6. GLOBAL SCENARIO OF PAINT (PRODUCTION) AND (REVENUE) Source : World Paint and Coating Industry Association

7. INDIAN SCENARIO Source- Assocham The current market size of Indian Paint Industry is 40,600 Crore which is expected to grow Upto 62,000 crore by 2016 2. Asian paints dominates the Indian Paint industry followed by Berger Paints and Nerolac. 3. The paints sector is raw material intensive, with over 300 raw materials (50% petro-based derivatives) involved in the manufacturing process. Since most of the raw materials are petroleum based, the industry benefits from softening crude prices. 4. The major drivers of Paint industry are rapid urbanization, GDP, IIP, progress in real-estate.

8. Top paint companies by Market Share Companies Price Sales Mcap Net Profit Sales % M Cap % Net Profit % Asian Paints 632 10,925.22 60,583.07 1,165.77 50% 67% 69% Berger Paints 399 3,384.82 13,836.18 233.72 15% 15% 14% Kansai Nerolac 1,889.00 3,334.69 10,179.28 204.67 15% 11% 12% Akzo Nobel 1,271.00 2,417.90 5,932.12 99.8 11% 7% 6% Shalimar Paints 147 520.77 278.85 -8.55 2% 0% -1% Asian PPG Indus. 382.33 32.95 2% 0% 2% Jotun India 304.54 -41.02 1% 0% -2% NCL Alltek & Sec 142.18 8.12 1% 0% 0% Grand Polycoats 81.86 4.34 0% 0% 0% Cipy Poly Uretha 78.96 5.66 0% 0% 0% Source Capitaline.com

9. Top ten paint company by sales Companies Sales Asian Paints 10,925.22 Berger Paints 3,384.82 Kansai Nerolac 3,334.69 Akzo Nobel 2,417.90 Shalimar Paints 520.77 Asian PPG Indus. 382.33 Jotun India 304.54 NCL Alltek & Sec 142.18 Grand Polycoats 81.86 Cipy Poly Uretha 78.96

10. Total Paint companies in india Companies Asian Paints Ind Saurashtra Paint American Paints Keytuo Chemicals Asian Paints Rajit Paints GNP (Madras) Macfarlane & Co Maha Classic Pai Berger Paints Jenson & Nich. Beepee Coatings Addisons Paints Mahalaxmi Paints Kansai Nerolac Nitco Paints Sarika Paints Nilchem Infrastr Mahavir Paints Akzo Nobel PSL Corrosion Hardcast.& Waud Pelican Paints Sil Business Shalimar Paints DIC Coatings Killick Nixon Abhi Technocoat Asian PPG Indus. Deve Paints Special Paints Ashirwad Innovat Jotun India Berger Auto Ravi Paints & Ch Decorative Paint NCL Alltek & Sec Mysore Paints Skylon Engineers Esdee Paints Ltd Grand Polycoats Coimb. Cots Multilac Surface Garnish Paints P Cipy Poly Uretha Fillon Technolog Incon Protective Hello Paints Pvt Source: Capitaline.com

11. Porter’s Five forces model Major Points Supply Supply exceeds demand in both the decorative as well as the industrial paints segments. Industry is fragmented. Demand Demand for decorative paints depends on the housing sector and good monsoons. Industrial paint demand is linked to user industries like auto, engineering and consumer durables. Barriers to entry Brand, distribution network, working capital efficiency and technology play a crucial role. Bargaining power of suppliers Price increase constrained with the presence of the unorganised sector for the decorative segment. Sophisticated buyers of industrial paints also limit the bargaining power of suppliers. It is therefore that margins are better in the decorative segment. Bargaining power of customers High due to availability of wide choice. Competition In both categories, companies in the organised sector focus on brand building. Higher pricing through product differentiation is also followed as a competitive strategy.

12. 'HERFINDAHL-HIRSCHMAN INDEX - HHI ' Herfindahl-Hirschman Index is a measure of the size of firms in relation to the industry and an indicator of amount of competition among them. A HHI index below 0.01 (or 100) indicates a highly competitive index. A HHI index below 0.15 (or 1,500) indicates an un concentrated index. A HHI index between 0.15 to 0.25 (or 1,500 to 2,500) indicates moderate concentration. A HHI index above 0.25 (above 2,500) indicates high concentration

13. HERFINDAHL INDEX PAINT COMPANIES Companies Sales Market Share HHI Asian Paints 10,925.22 0.50642 0.25647 Berger Paints 3,384.82 0.15690 0.02462 Kansai Nerolac 3,334.69 0.15458 0.02389 Akzo Nobel 2,417.90 0.11208 0.01256 Shalimar Paints 520.77 0.02414 0.00058 Asian PPG Indus. 382.33 0.01772 0.00031 Jotun India 304.54 0.01412 0.00020 NCL Alltek & Sec 142.18 0.00659 0.00004 Grand Polycoats 81.86 0.00379 0.00001 Cipy Poly Uretha 78.96 0.00366 0.00001 21,573.27 0.318705 Source=Capitaline.com

14. PAINT INDUSTRY PROFITABILITY ANALYSIS Companies Net Profit Profit Margin Asian Paints 1,165.77 68% Berger Paints 233.72 14% Kansai Nerolac 204.67 12% Akzo Nobel 99.8 6% Shalimar Paints -8.55 -1% Asian PPG Indus. 32.95 2% Jotun India -41.02 -2% NCL Alltek & Sec 8.12 0% Grand Polycoats 4.34 0% Cipy Poly Uretha 5.66 0% 1,705.46

15. Companies Export Asian Paints 45.99 Berger Paints 3.23 Kansai Nerolac 11.05 Akzo Nobel 2.01 Shalimar Paints 1.23 Paint industry export

16. The major drivers of paint industry are cost of raw material, IIP data, GDP Disposable income of people urbanization and standard of living. Asian paints is market leader and expected to come with more innovations and share price growth. Paint industry has a very positive outlook in the coming years. FUTURE OUTLOOK