Huned Contractor writes about how the paint and coatings industry in India has not only been doing tremendously well over the past few years but is now poised to break new frontiers due to the buoyancy in the automotive segment

In his compact office located on the premises of New Coat (P) Ltd, the managing director of the company, Nishikant Dixit, is not too worried about the painting process that is underway in the unit. His focus is more on the ramping up of facilities at his huge plant at Pirangut, which is dedicated to the surface coating of various parts of Mahindra & Mahindra's 'Scorpio' and 'Bolero' SUVs. "The demand is going up each passing day and now we are also looking at developing coating solutions for the furniture industry," he says.

Dixit, who was recently honoured with the 'Indian Achievers Award For Industrial Excellence 2012', set up New Coat in the year 2000 and has been obtaining regular orders from companies like Visteon which designs and manufactures products for climate control and interiors and Tata Ficosa that makes interior and exterior mirrors, as well as gear levers, windshield washing systems and tanks and reservoirs for the new Tata Nano.

In terms of a larger perspective, Asian Paints, one of India's biggest paint manufacturers that has been included in the Forbes' magazine's Asia Fab 50 list of companies once again, has started commercial production at its new plant at MIDC's Khandala Industrial Area in Satara from February 20, 2013 to cater to the growing demand for home decorative paints. The plant has been established with an initial installed capacity of 3,00,000 KL per annum with state-of-the-art facility.

And if any evidence was required of how the paint market has been moving in recent times, here is what Tohead Khandvawala, proprietor of Steel House at Dhankawdi in Pune, has to say: "We started our business about two decades ago with cement and hardware items but gradually moved into paints because we could envision a lot of scope. Now we have our own computer-aided colour demonstrator to help our growing list of clients choose from such a wide range that is presently available."

The Indian paint industry today is valued at about Rs 49 billion and is linked to the country's industrial and economical growth. The Indian per capita consumption of paints is at 0.5 kg per annum as compared to 4 kg in the South East Asian nations and 22 kg in developed countries and that in itself shows what lies ahead. The organised sector in India controls 70 per cent of the total market with the remaining 30 per cent being in the hands of nearly 2,000 small-scale units. In India, 30 per cent accounts for the industrial paint segment while the decorative paint segment makes for about 70 per cent of paints sold in India.

"The Indian housing sector's boom, increasing urbanisation, and a shift from semi-permanent to permanent housing structures have been driving growth in the decorative paints segment accounting for nearly 65-70 per cent of the Indian paint industry. Also, in our country, the use of paints is also related to various seasons and festivals and it is common enough to find the business peaking during Diwali," says Pune-based builder and developer Suhas Mantri.

The types of paints available in the market and their utility include acoustic paint especially designed for acoustic tiles, alkyd resin paint for good trim, doors, faux finishes and other maximised use areas, dripless paint which is thicker and most suitable for application on ceilings, latex paint that is good for applicability and dries quickly while being easier to wash, one-coat paint which is the more expensive version of the latex and alkyd paints and is mostly chosen for surfaces that require flawlessness in colour, primers which are used in the initiation for all interior paint works, rubber-base paint that is best for concrete and bricks and textured paint used to cover any flawed surface in a house.

With such leading companies as Asian Paints, Nerolac Paints India, Berger, Dulux India Paints and Shalimar Paints contributing a major share in the organised sector, experts say that the market for paints in India will grow at 1.5 to 2 times the GDP growth rate in the next five years. With the GDP growth expected to be over and above 7 per cent levels in time to come, the top players are likely to clock above industry growth rates. "There are high volumes of low-cost distempers sold in India, which amounts to approximately 2,00,000 tonnes per annum at an average cost of Rs 35 per kg at the present rate," a report states. Distemper is mostly affordable by all and used in the suburban and rural markets. Interestingly, 20 per cent of all decorative paints in India are distempers.

Moreover, the Indian paint and coatings industry has been well attuned to the need for innovation and compliance with environmental norms. For instance, the demand for eco-friendly paints has steadily picked up in the Indian market with people having become exceedingly aware of the various hazards of using low-quality paints.

According to Percy Jijina, Sales Director (Decorative Paints), Jotun Paints India P Ltd, "People take active interest in understanding indoor pollution and volatile organic compounds (VOC)." Conventional paints use various newly created chemical components with little research conducted on their long-term effect on both humans and the environment. These chemicals lead to health problems or worsen the existing ones. And as Jijina points out, these days, consumers don't mind spending a little extra considering that children and senior citizens would be staying there too.

Jotun Paints is believed to be the first company to use eco-friendly paints, derived from natural raw materials like citrus peel extract, beeswax, seed oils and tree resins. The Jotun Group has 74 companies and 39 production facilities in all continents and in India it has its manufacturing facility in Ranjangaon, near Pune. The total capacity of the plant is more than 50 million litres of paint and 10,000 tonnes of powder. Jotun's strong presence in India is indicative of the market potential that exists here. For instance, the revenues of the top five paint companies in the organised sector aggregated Rs 11,000 crore last year, up by 19 per cent from previous year.

Given this positive scenario, established foreign companies have entered the Indian market by acquiring existing Indian companies. Kansai Paints of Japan, for example, entered the Indian market by acquiring Nerolac, while Akzo Nobel, the world's largest paint company, entered India by acquiring ICI Paints. Above all, the fact that India is on its way to becoming one of the important global hubs for the automotive sector has also contributed to the brisk upward spiral in paints and coatings.

A reflection of this could be found in the recent media campaign launched by BASF to announce its global and Asia Pacific colour trends forecast for the coming two to three years in the automotive segment. In an interaction with Industrial Products Finder, Chiharu Matsuhara, Chief Colour Designer, Colour Design Centre Asia Pacific, BASF Japan Ltd, says, "Colours used in the automotive industry also strongly reflect the socio-economic sentiments in the region. In fast-developing Asian countries, the preference for more nature-related colours such as browns and greens suggests that people are gradually leaning towards a more leisure-oriented urban lifestyle, as opposed to focusing entirely on luxury."

BASF set up its first plant in India in 1995 and now has two production facilities at Mangalore and Bhawadi. In 2011, BASF in India registered sales of Euro 1.2 billion. "We have here 2,070 employees, nine production sites and two R&D centres that work closely with BASF's global technology platform. BASF Coatings develops, produces and markets a high-quality range of innovative automotive OEM coatings, automotive refinishes and industrial coatings as well as decorative paints. For our various products such as e-coats, primers, base coats, etc, almost all the automotive OEMs are our clients. In fact, we have consistently been awarded by companies like Nissan, Mahindra & Mahindra, Tata Motors, Honda Motorcycle & Scooter Ltd and Ford," says Christophe Cazabeau, Chief Executive, Coatings Solutions, BASF India Ltd.

As a spin-off, also catering to this growing demand in the automotive sector are domestic equipment companies, one of them being VR Coatings (P) Ltd, an ISO 9001: 2000 certified company based in Pune, which has been manufacturing and installing spray and dispensing equipments for a wide range of liquids and semi-solids like paint, sealant, adhesive, wax, oil, grease, solvent, etc. Some of its clients include Bajaj Auto, DaimlerChrysler India, Eicher Motors, Fiat India, General Motors, etc.

"The rising number of women and younger car owners is going to impact the future automotive colour trend and sales. These up-and-coming car owners are more style-conscious and the colour of their cars will be a statement of their personal taste. Manufacturers will therefore have to keep upgrading the products to suit such requirements," Matsuhara adds.

India, according to a report published a few months ago, has over more than 50,000 paint shops or outlets. The Indian paint companies' distribution policy directly caters to more than 25,000 shops and is unlike other industries where companies operate through distributors. Each paint company has a large number of depots to service these outlets and a large sales force for this purpose. And here too can be seen a gradual change in keeping with the customers' aspirations. While paints have traditionally been sold in hardware stores, some of the leading brands are now setting up their own retail route of multi-brand stores.

"The success of these outlets lies in the fact that the consumer can negate the time taken to choose between brands, and instead focus on product choice without having to worry about quality," points out Gulamali Khedwala, owner of Raj Traders, a hardware and paint shop in Pune.

But it's not just about paints. Equally huge is the coatings industry where some of the most interesting developments are now taking place. One such innovation now being promoted across India is by the Mumbai-based Effco Finishes & Technologies (P) Ltd that has quietly ushered in a revolutionary change in the surface coating process for fasteners used in the automotive and other sectors with the introduction of a zinc aluminium flake coating process that is free of hazardous substances and may become the norm of the future. The water soluble zinc flake coating technology is used for threaded hardware and metal parts and offers direct cost saving by not using solvents compared to other solvent-based products.

"These water-based coatings are environment-friendly and free of any hazardous substances. Also, they help do away with the problem of effluent discharges and are suitable for all kinds of rugged weather conditions," says Kalyan Dhakane, the company's managing director. Effco represents in India the products and technologies of Premium Products Inc. USA, Greenkote Plc., Israel and Junhe Technology Company Limited, China for various specified proprietary coating technologies, coating plant and equipments, process application engineering know-how, etc.

One of Effco's biggest clients is SKS Fasteners that has taken a shift towards zinc aluminium coatings to cut down on the use of water to a huge extent, have a low volatile organic content and remove the dangers of air pollution, thus making the production environment absolutely safe for the floor workers.

"We have done this at considerable cost just so that we can have a leading edge in providing fasteners that don't corrode easily. This is to primarily match the requirement of the automotive sector considering that OEMs like Tata Motors and Mahindra & Mahindra are now insisting on using such fasteners," informs SKS Fasteners' director Sudhanshu Bindal.

The fact that the coating industry is poised for a big take-off can be justified with what Azko Nobel has to offer. The company provides heavy-duty coatings which have been applied to Commonwealth Games stadiums, the highest river bridge in India across the Chenab and coatings for most of the tanks and trucks from its automotive refinish business. It also has powder coatings for all kinds of appliances as also coil coatings which go on to hot-rolled steel and plastic coatings that are used for mobile phones. To sum it up, in the words of Dixit, "We are looking at the beginning of a curve that's going to go up and up."