In India, decorative paints account for around
70% of the total paint market and industrial paints for the balance. Worldwide
the situation is just the reverse with the ratio of decorative to industrial
paints being 3:7.
Paint is a raw material intensive business,
consuming over 300 raw materials, most of them petroleum-based. As raw materials
account for almost 70% of the production cost, any adverse movement in their
prices puts pressure on margins.
Current demand for paints is around 650,000
tonnes p.a., and this is expected to rise to nearly 1 mn tonnes by FY 03,
according to the Indian Paints Association. In the last five years demand
has grown at a Compounded Annual Growth Rate (CAGR) of 11% p.a. Demand for
decorative paints tends to pick up after the monsoon and during the festive
season, whereas demand for industrial paints is greatly influenced by automobile
sales.
Supply of paints, both decorative and industrial,
outstrips demand. This has prompted paint manufacturers to target overseas
markets.
Key Inputs
Titanium Dioxide - Rutile and Anatase
grade, Phthalic Anhydride (PAN), Organic Pigments, Pentaerythritol (Penta),
Orthoxylene, Glycerine, Paraxylene and Mineral Turpentine Oil (White Spirit).
Duty Structure
Product
Excise
Customs
(Basic)
2000-01
2001-02
2000-01
2001-02
Titanium Dioxide
16%
16%
35%
35%
Phthalic Anhydride
16%
16%
35%
35%
Pigments
16%
16%
35%
35%
Orthoxylene
16%
16%
15%
15%
Paraxylene
16%
16%
5%
5%
Pentaerythritol
16%
16%
35%
35%
Major announcements in previous
year’s budget
Although there was nothing specific for this sector,
abolishment of surcharge on customs duty had lowered the landed cost of titanium
dioxide.
Industry’s demands from Union Budget 2002-03
The Indian Paints Association has asked for
a reduction in customs duty on raw materials from the current level of 35%.
Titanium dioxide is critical for paint manufacturing
and import of the same should be brought under fast-track clearance.
Key Players
Asian Paints India, Goodlass Nerolac
Paints, Berger Paints, Snowcem India, ICI India, Jenson & Nicholson, Shalimar
Paints.
