Overview of Paint Industry
* 3. 1. OVERVIEW OF THE PAINTS INDUSTRY • The Indian paints industry is currently placed at Rs. 85.0 billion and has been showing consistent double-digit growth from 1991. The organized sector consists of 65-70% whereas the unorganized sector still controls a large portion of 30-35%. • The growth of the domestic paint industry is attributed to the boom in the housing sector and the strong growth in the automobile sector. The automobile sector has done well over past 10-years with an average growth of 7-8%. The auto sector is likely to grow at 8-10% due to healthy growth in 2- wheeler and car segments. However, the volume growth in the paint industry may not be in line with the auto sector growth, as the quantity of paint per vehicle is declining over a period, due to continuous innovations. • Around 70% of the domestic paint industry revenues come from the decorative segment, whereas the industrial segment constitutes around 30%. In FY05, the manufacturing sector has shown good activity with new projects in roads, ports and industrial segments. • The Indian paint industry has a huge potential, as the per capita consumption of paint in India is 800-900 grams compared to 15-25 kg in the developed countries. The domestic paint industry is poised for good growth in the coming years. • The Indian paint industry is governed by 4 major players and is largely dependent on the crude oil prices as most of the raw materials are derived from crude oil. The prices of derivatives of crude oil rose more than crude oil due to the lag effect. Despite the sharp rise in the crude oil prices in FY05, the industry has reported good growth. • The Indian paint industry has grown at CAGR of 10% or 1.5-2.0x GDP growth. With the expected 7-8% GDP growth in FY06, the industry is likely to grow at 10.5-12.0%. • The decorative segment is likely to do better than the industrial segment. The decorative segment is likely to grow at 12% whereas the industrial segment is expected to grow by 8