presentation 1
TRANSCRIPT
Analysis of Paint Industry
Presented by: Group 8
• Alisha (09PG244)• Monil Modi (09PG326)• Rakesh (09PG039)• Prabhava Ram
(09PG430)• Subhanwita Pal
(09PG411)
Introduction The size of the paints market in India is at Rs 110 billion, with the contribution of the organized and unorganized segments in
the ratio of 65:35.
Decorative and industrial paints are the segments within the sector, in a 70:30 proportion.
APIL dominates the decorative segment with a 38 per cent market share.
GNPL dominates the industrial paints segment with 41 per cent market share.
OBJECTIVES OF THE STUDY:
To throw light on the emergence of the paint and coatings industry in India.
To study the global view of paint and coatings industry and the post recession impact on this industry
Study of the key financial ratios of the leading and the lagging companies under paint and coatings industry.
METHODOLOGY OF STUDY
An in depth analysis of paints and coatings industry based on the secondary data.
The selection of top three and mediocre two companies have been taken on the basis of sales turnover of the previous years
Data from Capitaline and company annual reports have been taken as a base for quantitative analysis.
Both Qualitative and Quantitative analysis for these companies have been done.
GLOBAL SCENARIO
The global Paint industry is estimated to be around $93 billion in the year 2009.
The sales volume increased by around 5 % and the revenue by around 7 %
The growth of this industry almost became stagnant during the global turndown.
Asia pacific Europe NAFTALatin America
14%35%
30%
21%
Chart Showing Total Sales Volume
PAINT INDUSTRY IN INDIA
CONTENT
MARKET STRUCTURE
COMPOSITION OF PAINT INDUSTRY
MARKET PROFILE COST STRUCTURE
FEATURES OF PAINT INDUSTRY
FACTORS DRIVING
GROWTH IN PAINT INDUSTRY
MARKET STRUCTURE• ORGANIZED BUSINESS(Rs.72.8 bn)• UNORGANIZED BUSINESS(Rs.39.2
bn)PAINT
INDUSTRY SIZE(Rs.110
bn)
• DECORATIVE-70%(HOUSING AND CONSTRUCTION SECTOR)
• INDUSTRIAL-30%(AUTOMOTIVE AND CONSUMER DURABLES)PRODUCT
COMPOSITION OF PAINT INDUSTRY
PAINTS
Decorative
Enamels (50%)
Distemper(19%)
Emulsions(17%)
Exterior Coating
(12%)
Wood Finish(2%)
Industrial
Automative Paints(50%)
High Performance Coating (30%)
Powder Coating (10%)
Marine Paints(5%)
Coil Coating(5%)
MARKET PROFILE
ON THE BASIS OF SIZE:
1. Leaders in the organized sector are APIL,GNPL,BERGER PAINTS, J&N LTD, ICI (INDIA).
2. Asian paints -33 per cent
Berger Group and ICI -17 per cent each. GNPL -15 percent
Contd.
ON THE BASIS OF PRODUCTS:
1. APIL dominates the decorative segment with a 38 per cent market share. GNPL, the number-two in the decorative segment, with a 14 per cent market share. Berger and ICI have 9 per cent and 8 per cent shares respectively in this segment followed by J&N and Shalimar with 1 and 6 per cent shares.
2. GNPL dominates the industrial paints segment with 41 per cent market share. APIL holds 15 percent market share. Berger and ICI are the other players in the sector with 10 per cent and 9 per cent shares respectively. Shalimar too, has an 8 per cent share.
COST STRUCTURE
FEATURES OF PAINT INDUSTRY
SEASONAL
STRONG DISTRIBUTION
NETWORK
HIGH WORKING CAPITAL
REQUIREMENT
PRICE SENSITIVE
FACTORS DRIVING GROWTH IN THE INDAIN PAINT INDUSTRY
CONSTRUCTION URBANIZATION
NUCLEAR FAMILIES
TECHNOLOGYINCREASE IN PER CAPITA INCOME
INDUSTRIALIZATION
INDUSTRY ANALYSIS
Expected growth of 11-12% due to
•Increased demand 1.22 - 2 million ton
•OEM sector growth 15%
•Automobile sector growth
•Reduced excise duty
SWOT
STRENGTHSUrbanizationStrong industrial growth Infrastructure growth Increase in manufactureRise in income
WEAKNESSPer capita consumption Poor DistributionRaw material unavailability
Environmental issuesNippon Foreign invade
THREATS
OPPORTUNITY
Industrial segment growth upto 50: 5030 % of total demand repainting ,exterior coatings segment.Financial institution leverage on housing loanCanning industryMarine coating
PEST ANALYSIS
POLITICAL
Largest Democracy. Taxation policyFair amount of political stability. Sound legal system – a factor contributing large foreign direct investment.
ECONOMIC
CAGR of 12-13% after 1992,and in the next five years, it is expected to grow at a CAGR of 11-12%.
The industry has appositive correlation with the country's gross domestic product (GDP) as both have the same growth drivers.
SOCIAL
Price sensitivity factorsRaw material importRise in price of titanium oxide, phalic anhydride.
SEASONAL FACTOR
TECHNOLOGY
Technology collaboration
All the paint majors have tie-ups with global paint leaders for technical know-how.
Example –
Berger – Nippon
ICI – Herbets.
2005 2006 2007 2008 2009
Asian Paints 0.14 0.15 0.16 0.13 0.0800000000000002
Berger Paints 0.26 0.25 0.310000000000002 0.380000000000002 0.26
Kansai Nerolac paints 0.27 0.27 0.24 0.19 0.15
Industry Average 0.53 0.600000000000001 0.51 0.41 0.310000000000002
Shalimar Paints 1.7 1.96000000000001 2.12 1.98000000000001 1.74
Hardcastle Mfg 0.710000000000001 0.3 0.13 0.1 0.07
0.25
0.75
1.25
1.75
2.25
Debt-Equity Ratio
2005 2006 2007 2008 2009
Asian Paints 1.08 1.13999999999999 1.22 1.14999999999999 1.13999999999999
Berger Paints 1.59 1.34 1.33 1.42 1.56
Kansai Nerolac paints 1.39 1.49 1.92 2.03 1.69000000000001
Industry Average 1.05 1.03 1.12999999999999 1.13999999999999 1.13999999999999
Shalimar Paints 1.17 1.18000000000001 1.18000000000001 1.13999999999999 1.12
Hardcastle Mfg 1.39 1.49 1.92 2.03 1.69000000000001
0.25
0.75
1.25
1.75
2.25
Current Ratio
2005 2006 2007 2008 2009
Asian Paints 3.46 3.87 4.38 4.69 4.89
Berger Paints 5.63 5.42 5.65 5.88 5.67
Kansai Nerolac paints 4.02 3.78 3.81 3.57 3.26
Industry Average 4.336 4.322 4.596 4.944 4.376
Shalimar Paints 5.66 5.83 6.27 6.54 6.45
Hardcastle Mfg 2.91 2.71 2.87 4.04 1.61
0.5
1.5
2.5
3.5
4.5
5.5
6.5
Fixed Asset Turnover Ratio
2005 2006 2007 2008 2009
Asian Paints 8.71 8.23 8.63 8.4 9.26
Berger Paints 6.8 6.09 5.85 5.84 6.31
Kansai Nerolac paints 9.58 8.37 8.27 9.12 9.67
Industry Average 7.7 7.58 7.5 7.58 8.09
Shalimar Paints 4.82 4.91 5.38 5.63 6.53
Hardcastle Mfg 8.4 7.73 8.98 15.87 7.77
1
3
5
7
9
11
13
15
17
Inventory Turn Over Ratio
2005 2006 2007 2008 2009
Asian Paints 16.47 16.77 16.06 16.75 17.86
Berger Paints 12.31 11.5 10.45 10.08 9.97
Kansai Nerolac paints 9.82 9.86000000000001 8.76 7.92 7.88
Industry Average 9.11 10.75 9.85000000000001 10.09 10.85
Shalimar Paints 5.81 5.42 5.1 4.79 4.7
Hardcastle Mfg 7.49 6.74 11.69 15.79 7.33
1
3
5
7
9
11
13
15
17
19
Debtors Turnover Ratio
2005 2006 2007 2008 2009
Asian Paints 42.22 42.32 35.57 42.84 35.31
Berger Paints 17.53 14.95 11.1 10.29 8.65
Kansai Nerolac paints 9.82 9.86000000000001 8.76 7.92 7.88
Industry Average 5.17 8.11 23.14 24.01 19.39
Shalimar Paints 2.72 2.71 2.52 3.3 2.06
Hardcastle Mfg 1.68000000000001 64.3 -2.59 -0.19 2.4
-5
5
15
25
35
45
55
65
Interest Coverage Ratio
Asian Paints
• Ranked 24th worldwide in the paint industry and is the No. 1 paint company in India.
•International Operations: operates in 22 countries
•Joint Ventures: Technological advantage
•Manufacturing Capacity: Economies of Scale.
•New Product Launch: Color World, Royale Play.
Kansai Nerolac
Second largest coating company in India with a marke share of over 20%. It is the leader in powder coatings.
Dealer Network: Has a wide network of around 11,000 Dealers.
Strategic Alliances: For technology upgradation.
Distribution Network: Sales division across the nation to cater to local demand.
Manufacturing Strength: Total installed capacity is 173900 Mt/pa and is expected to increase by 20400 Mt/pa.
Berger Paints
Third largest paint manufacturer. More than 12000 paint retailers and 75
stock points. Second largest decorative paint
player. Gained entry into industrial paints
business by acquisition of industrial paints division of ICI.
Invested in Berger Cyprus to start operations in Russia.
Shalimar Paints
The Company has a wide product range in both Architectural and Industrial sectors.
Under the brand name "Color Space" the Company offers more than 9000 shades across all product lines.
Paint systems for every application - interior or exterior, for every surface - concrete, plaster, metal or wood.
R&D development in industrial paint segment (Oil & Gas , Fertilizers, Hydro Power plants and Marine sector)
Hard Castle & Waud Mfg Co.
Three divisions- synthetic resins, metal processing, and sealants.
Technical collaboration agreement with Oxyplast, Belgium for improving technology to produce special resins for coil coating.
Conclusion
• The paint industry witnessed strong growth on account of high economic growth.
• Companies that had prominent presence in industrial paint segment suffered due to slump in auto and consumer durables segment.
• Importance of technology is growing.• Foreign players entering the Indian market
leads to expansion of the organised sector.
Future Outlook
• Favorable Government policy towards housing and infrastructure sector.
• Volatile prices of raw materials.• Improved global scenario.• Consumer demand increases as government
increased the tax slabs and leads to increase in per capita income.
• Joint ventures are expected to increase as there is demand for improved technology.
SOURCES
The Conservation of Acrylic Emulsion Paintings: A Literature Review(www.goldenpaints.com/conservation/conservation.pdf)Elizabeth jablonski, Tom learner and James Hayes and Mark GoldenMukherjee P (2007),’Colourful Times for paint Industry’ Retrieved from http://www.rediff.com/money/2007/may/30paint.htm.Paint industry in India has grown to see a double digit growth year after year (http://www.financialexpress.com/news/paint-industry-has-grown-to-see-a-doubledigit-growth-yearafteryear/161438/) Posted: Sunday, Apr 09, 2006.Parthasarathy. D (2008).” The Indian Paint Industry”, Coatings world.http://findarticles.com/p/articles/mi_hb053/is_5_13/ai_n29437901/pg_2?tag=content;co11Asian Paints Topped FMCG Sector: (Survey by Franklin Templeton Mutual Fund) – TOI (http://timesofindia.indiatimes.com/biz/india-business/Asian-Paints-topped-FMCG-sector-Survey/articleshow/36081045.cms)http://www.coatingsworld.com/articles/2007/07/2007-topcompanies-report.phpwww.asianpaints.com
CONTD….www.capitaline.com
www.force10networks.com/company/customer_profiles/pdf/cp_AsianPaints.pdfhttp://www.i2.com/assets/pdf/CSS_PRO_Asian_Paints_css6846.pdf
Article by Sutanuka Ghosal, Leading paint makers likely to jack up prices published on 14 May 2008, on Times Now News.http://www.shalimarpaints.com/images/pdf/Annexure%20-%20II%20To%20Director's%20Reports_2006.pdfCompanies annual reports
www.nerolac.com/index.jsp?page=homewww.akzonobel.comACMIIL Report on Paint Industry Published on 15 April 2008.www.crisil.com