Paint industry: Brands rule the roost

Hyderabad: With over 65 per cent of the paint industry market captured by about six to seven top companies including Asian Paints, Kansai Nerolac, Berger Paints it is the brand that rules the roost here. The unorganised sector controls around 35% of the paint market, with the organised sector accounting for the balance. In the unorganised segment, there are about 2,000 units having small and medium sized paint manufacturing plants. But hardly any of these units have pan India network. They only cater to demand by the lower class of the soceity where pric factor plays important role. Moreover, the wide variety of colour shades offered by the industry giants cannot be compared with the unorganised sector. Now, different hues and shades that are advertised with catchy lines like 'merawala blue' are being made to the customers at the dealer itself. The company provides a paint mixing unit to the dealer and offers wide choice of shades, which can be made then and there by mixing different colours in the machine. Once the shade is purchased it is not taken back. The tailor made colours are made after checking online the percentage of three primary colours to be mixed in the machine. Giving a wide variety of shades to the customers and making them then and there, and huge advertising bills have cutting edge over the small and unorganised sector. The demand for paints comes from two broad categories decoratives and Industrial. Decoratives: Major segments in decoratives include exterior wall paints, interior wall paints, wood finishes and enamel and ancillary products such as primers, putties etc. Decorative paints account for over 77.3 per cent of the overall paint market in India. Asian Paints is the market leader in this segment. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (September-December) is significant, as compared to other periods. This segment is price sensitive and is a higher margin business as compared to industrial segment. Industrial: Three main segments of the industrial sector include automotive coatings, powder coatings and protective coatings. Kansai Nerolac is the market leader in this segment. User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment. 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.