´Rapid urbanisation, upwardly mobile lifestyles and increase in disposable income are the key growth drivers of decorative paints,´ says Sameer Nagpal, Managing Director & CEO, Shalimar Paints. ´Robust manufacturing, industrialisation and infrastructure growth typically drive demand for industrial coatings.´
According to Umesh Singh, Group Vice President - South Asia, Hempel, ´The housing sector has been the key growth driver in the Indian paint industry. In the protective coating segment, the oil and gas, pipe and wind sectors have witnessed an increase in demand. The marine segment is facing tough times because of the slowdown in the global market.´
With the monsoon season getting to a close, decorative paint companies will be closely watching to see if growth during this festive season can better last year´s performance. In FY2014, top players Asian Paints, Kansai Nerolac, Berger Paints, AkzoNobel, Nippon Paints and Shalimar Paints registered topline growth on the back of strong demand from the rural sector and Tier-II and Tier-III towns. Assocham pegs last year´s annual growth in the rural market at 20 per cent. ´Consumer and government spending in Tier-II and Tier-III cities and rural areas propped up the decorative business growth,´ agrees Nagpal.
´It helped that we have a pan-India reach and are well-entrenched in Tier-II and Tier-III cities.´
This year, the industry is buoyant
over the new Central Government. ´The Government has raised the expectations of paint manufactures and retailers,´ affirms Tej Dialani, Head of Sales- Coatings, BU Pigments, Clariant Chemicals (India) Ltd. ´The market is upbeat with signs of recovery and there are new opportunities on the horizon. Growth in the housing sector will increase urbanisation, while cheaper loans will increase spending in the decorative segment. We expect an improvement in the per-capita paint consumption in the Indian market with the rise in disposable income. As the paint market is directly proportional to GDP, growth in increase in GDP will further boost demand for paints.´
Nagpal adds, ´We expect the overall decorative segment to continue to show a good return on the back of the Government´s thrust on rural housing and affordable housing.´
Decorative paint companies have been pleasantly surprised to find demand for premium paints growing in small markets. ´Aspirational and more aware consumers desirous of improving the look of their homes are moving from cement paints and distemper to emulsions resulting in value sales growing higher than volume sales,´ says Nagpal. ´This trend has made emulsions (top coat) our fastest growing category. We expect this movement to continue.´
The consumer´s growing appetite
for premium interior paints is creating space for companies to launch innovative products in that category. Kansai Nerolac has recently launched a first-of-its-kind ´high definition´ (HD) paint technology. Nerolac´s Impressions range of interior emulsions has been enhanced with ´micro-embedded brightness boosters´ for a brighter, richer look and superior finish. According to Anuj Jain, Director (Decorative), Kansai Nerolac Paints Ltd, ´HD paints extend the high-definition technology that has become synonymous with lifestyles today to homes.´
Another trend is growing demand for more durable paints, especially weather-resistant exterior paints. As consumers grow more aware and discerning of performance warranties, companies are offering extended warranties on the performance of their products.
Last year, growth was softer in the industrial coatings segment - ´no thanks to the slowdown in the economy and raw material inflation,´ points out Nagpal.
He does not expect any significant change in the situation until the new Government´s efforts to boost industry and infrastructure bear fruit.
Overseas players in the segment like Hempel faced margin pressures owing to the fluctuating Indian currency and, to some extent, expansion of business. Following on the success of its first manufacturing facility in the country, which opened in Nashik, Maharashtra, in 2011, the Danish company has inaugurated a second manufacturing facility in the city with a production capacity of about 10 million litre per year.
This year, the assurance of a stable Government is infusing a measure of confidence in industrial coating players, albeit some voices expressing cautious optimism. ´New infrastructure projects in roads and ports will increase the revenues of the coatings industry,´ says Dialani.
´We are seeing signs of a general recovery in industry and the automotive sector in particular as well as renewed thrust on infrastructure spending,´ says HM Bharuka, Managing Director, Kansai Nerolac Paints Ltd. ´These among other factors should help in the coming quarters. Concerns, however, remain on whether these factors can be sustained over the long term given the overall geopolitical climate as well as the short-term threat of a deficient monsoon.´
That said, the long-term forecast is positive. Hempel´s new manufacturing facility is a long-term investment that better enables it to serve customers in India, Sri Lanka, Bangladesh, the Maldives and Nepal. ´In future, we expect demand to grow from the power sector, especially thermal power that had slowed down last year,´ shares Singh. ´Oil and gas needs improvement in deep sea exploration and may see high investments. OEM (heavy construction equipment) is also expected to pick up.´
´India is one of the fastest growing coatings markets in the world and we expect further growth in the future,´ agrees Pierre Yves Jullien, Group President & CEO, Hempel.
Today, eco-friendly coatings are finding more takers. According to Dialani, ´Demand is now being seen for eco-friendly coatings with low-VOC and lead-free composition. Although Clariant is not into paint manufacturing, our range includes pigment preparations with low- VOC content and lead-free products, as per global specifications, and contributing to green chemistry.
We provide solutions to customers to replace lead chromes with organic pigments. Greater awareness about safer products will definitely spur the coating industry.´
Superior quality coatings are also trending. According to Singh, ´The protective coatings segment is seeing an increasing trend to use high-end coatings such as vinyl ester, polyester glass flake, epoxy glass flake and polysiloxane, which has helped Hempel make further inroads in the Indian market.´
Clearly, the acceleration of industrial development will help even out the demand for decorative paints and industrial coatings in the country - and thus help the Indian paint industry grow closer to the global standard.
According to Narender Bhargava, General Manager-Purchase, Raheja Developers Ltd, ´The paint industry in India is fairly well spread and diversified. It is populated by brands like Asian Paints, Berger, Duco and Nerolac, as well as local manufacturers of textured paints with waterproof qualities and different types of finishes. What would improve the quality of available paints is the packing and sealing of paints to eliminate scope for adulteration; the introduction of greater variety; the introduction of more stable paints in the face of climatic change; and increasing the possibility for the computerised mixing of colours.´
What sort of paints do developers prefer for their projects - and why? ´We only use branded paints for projects,´ says Narender Bhargava, General Manager-Purchase, Raheja Developers Ltd. ´We use EWS and oil-bound distempers for economy flats. We use plastic emulsion paints for the interiors of regular apartments. We use better quality paints like Velvet Touch for high-end, real-estate units. We evaluate the smoothness of finish, richness of look, stability and washability, non-toxic properties and cost of paints for interiors. We use texture paints for exteriors. This selection is based on the paint´s waterproof qualities, its fit in the overall design, coverage, ease of maintenance and washability, cost and application cost and procedure.´
´Tata Housing generally uses distemper or plastic paints for the interior walls and ceilings of its projects, cement paint or acrylic emulsion for exterior wall surface, varnish for wooden surfaces and enamel paint for metal surfaces,´ shares A Harikesh, Senior Vice President-Marketing and Sales, Tata Housing. ´In deference to the aim of giving buyers maximum value for their precious savings, we are extremely careful about the paint we choose. We patronise good brands and look for paints in sync with the design and layout of the project. The paint should be able to enhance the visual appeal of building surfaces and offer protection from termite attacks and, thus, have long-lasting features.