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Indian Paint Industry: Colourful Times

Paint industry is going through a colourful & happy time with demand rising sharply. Growth in housing, automobiles and construction are all driving the rise in current consumption.

The paints industry can be classified into two segments — industrial and decorative. While decorative paints cater to the housing sector, industrial paints cater to automobile original equipment manufacturers (OEMs), industries and railways.

Paint demand can also be categorised into new or refinish/refurbishment demand. Fresh demand depends on the construction, housing and auto sectors, while refinish/refurbishment demand is directly related to the disposable incomes and higher aspirations of consumers i.e. both the ability as well as the willingness to spend.

A boom in the Indian housing sector, increasing urbanisation, easy availability of housing loans and a shift from semi-permanent to permanent housing structures have been driving growth in the decorative paints segment, which accounts for nearly 65-70% of the Indian paint industry. There is seasonality involved in the demand for decorative paints. Consumption peaks around festive time.

Globally, the industrial paints segment accounts for a major share, indicating that this segment offers many opportunities for paint manufacturers. With a recovery in realty, production volumes in the sector have substantially recovered since June 2009. Production of paints grew by a robust 25.2% during April-February 2009-10 compared to a 40 basis points drop in production in the corresponding year-ago period.

Production of Paints & Varnishes
  Feb ’09 Feb ’10 Apr-Feb ’08-09 Apr-Feb ’09-10
In Tonnes

63,526

86,200

753,289

943,324

YoY % growth

-4.7

35.7

-0.4

25.2

Source:CSO

With production of passenger cars expected to grow by 15.3% in 2010-11, demand for automotive paints will continue to remain healthy as sales are expected to grow in double-digits. And with realty majors launching new projects, construction activity is expected to gain momentum and generate demand for decorative paints. Rise in demand is expected to be supported by higher supply as the industry is expected to commission additional capacity in 2010-11.

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Categories: Paints
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