亚博体育官网首页

The Indian paint industry, estimated at approximately Rs 300 billion, is divided between decoratives (~70 per cent) and industrials (~30 per cent). Historically, India麓s paints industry has grown between 1.2x-1.6x GDP growth, and this growth is expected to be maintained for most of the companies, going ahead. Demand has been driven by steady repainting demand (60 per cent of demand for decorative paints), modest growth in the auto sector (40 per cent of demand for industrial paints) and significant capacity additions lined up by paint majors. The paint market is oligopolistic in nature - around 90 per cent of the market share is controlled by just four players. FY2016 saw healthy topline growth driven by double-digit deco volume growth for the paint companies, driven by new product launches and increased marketing spends. The crash in crude oil prices to the extent of over 50 per cent from their two-year peak has helped the paint industry to post strong profitability improvement. Savings on raw material costs also helped these companies increase their ad spends considerably. For example, Kansai Nerolac spent 6 per cent of its sales on ad spends, a marked increase over historical spends in the 3-4 per cent range. The fall in raw material costs has led to decline in working capital needs. This in turn, led to healthy cash flow generation across the board (Rs 17 billion for Asian Paints vs Rs 8 billion in FY2015). Free cash flow for Asian Paints jumped to Rs 17 billion in FY2016 from Rs 8 billion in FY2015, despite the capex of Rs 10 billion. Similarly, for Berger Paints, free cash flow went up to Rs 5.4 billion from Rs 727 million in FY2015. The strong monsoon and the Seventh Pay Commission payouts are the key near-term demand triggers, while increasing urbanisation and shortening repainting cycle will drive demand momentum in the long-term. Paint companies across the board launched new products in existing as well as new categories in FY2016. Asian Paints launched new products across the decoratives as well as waterproofing and wood finish segments, particularly towards the premium-end, and also entered the adhesives business via a tie-up with Henkel. Berger Paints introduced advanced paints to be used with Berger Express painting machines for better coverage and lustre. Kansai Nerolac has launched a second brand (麓Soldier麓) to cater to villages and Tier-IV and Tier-V cities, while Akzo Nobel is now focusing on the mid-tier paints segment as well, in addition to its offerings in the premium segment. There are signs of the industrial economy turning around in India, which could help the paint industry continue improving its prospects, going ahead. However, many major economies in the world, except the US, are still showing signs of global deflation. Hence, oil prices are likely to remain subdued - the same is likely to help paint companies enjoy high margins in their core business.