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OEM Update
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Paint industry to boost Processed Chemicals demand [Oct 2011]

November 11, 2011 5:28 am

Paint is a raw material intensive industry. It takes over 300 different raw materials, used in form of processed chemicals. Over the last ten years the paint industry has grown at a CAGR of 12-13 per cent and in the next five years it is expected to grow at the CAGR of 11-12 per cent. Therefore, the anticipated growth in paints industry to drive demand of processed chemicals. An OEM Update reportDemand of processed chemicals required to produce paints seems to be quite buoyant. This is because paint industry which is the prime consumer of processed chemicals seems to perform quite well despite recession. The per capita consumption of paints in India is still low at 1.25 kg as against 51.7 kg in Qatar, 38 kg in Singapore or 25.8 kg in the United States. Even China has a per capita consumption of 2.5 kg and Sri Lanka 3.5 kg. India has a long way to go therefore, the future of the industry in India is quite bright and altogether for the processed chemical industry based on the demand potential.
The potential processed chemicals sector holds, on account of the size of the Indian paint industry, can be estimated from the fact that the size of the Indian paint industry is ` 13,600 crore both organised and unorganised sectors. Of this ` 8,600 crore is contributed by organised sector which constitutes 54 per cent of the total volume and 65 per cent of value.
Over the last ten years the industry has grown at a compounded annual growth rate of 12-13 per cent and in the next five years it is expected to grow at the CAGR of 11-12 per cent. The industry has a positive correlation with the country’s gross domestic product as both have the same growth drivers.
Paint is a raw material intensive industry. It takes over 300 different raw materials, used in form of processed chemicals; most of the raw materials are petroleum based. Titanium dioxide is the largest consumed raw material. It constitutes about 30 per cent of the total production cost. Besides, this, there are petroleum based raw materials which constitute 40-50 per cent of total processed raw material consumed. Hence any movement in crude oil prices will impact the prices and profitability of paint companies.
Market Profile & Growth TrendsKey paints players are expandingThe leaders in organised paint industry, which are also large consumers of processed chemicals, are Asian Piants with over 40 per cent market share, Kansai Nerolac (20 per cent) Berger Paints (19 per cent) and ICI paints (12 per cent).

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