News: Dutch firm paints Indian expansion

(TT 26/09/2006) Mumbai - The Netherlands-based Akzo Nobel is eyeing the household paints market in India.

The 13-billion-euro company already has a presence in houseware and powder coating segments in the country. Coatings comprise the largest segment of the company with sales reaching 5.55 billion euro globally.

“For decorative coatings in India, we are making a business plan to cover products, brands, supply and sourcing strategies. This will take us a few months. We are interested in the decorative coatings market in India and will enter it soon,” said a company spokesperson in a written reply to The Telegraph today.

Akzo Nobel’s coating businesses in India is in excess of Rs 250 crore in terms of annual sales. In total, the company employs more than 1,000 people in the country. The total size of the paints market in the country was Rs 12,000 crore in 2005 and it was close to 1.4 million tonnes in terms of volume. The market is growing at a rate of 12-15 per cent.

Almost 78 per cent of this market in value terms consists of decorative paints and 22 per cent of industrial paints.

“So you can easily figure out how big a market it is. And international players have been eyeing this market for a long time,” said an industry analyst.

International players like Nippon and DuPont have already made their intentions clear.

There are five major players in the Indian paints market.

“The growth rate in the decorative market is much higher. In any developed market, one-third of the paints market consists of decorative paints,” said Sumeet Budhraja of Edelweiss.

Recently, Japanese paint firm Nippon Paints has also announced its intentions to set up manufacturing facilities in the country.

Nippon Paints plans to invest about Rs 160 crore to set up two manufacturing units in India. Proposed to be set up at Chennai and Gurgaon, the units will start production from 2008 and will cater to the decorative and automotive paints segments. Both the units are expected to have a minimum capacity of 20,000 tonnes and will have the provisions to scale up to 40,000 tonnes.

Currently, top five players in the paints market are Asian Paints (19 per cent), Berger (8 per cent), Goodlass Nerolac (9 per cent), ICI (5 per cent) and Shalimar (2 per cent) according to Cris-Infac figures.

Almost 70 per cent of the market consists of organised players.