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Understanding Paint Industry

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Understanding Paint Industry

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Paint in simple term is any liquid, liquefiable, or mastic composition which after being applied in a thin layer along with a substrate gets converted to an opaque solid film. 

 
The right kind of painting helps in enhancing the beauty and overall decor of a building. In fact, an appropriate kind of protective covering is also applied while selecting the proper high quality paint for the house interior and exterior so as to prevent it from scratches or stains.
 
There are three essentials elements of paint which are as follows:
 
•The very first element is the “pigment” which is the core color in solid form. The pieces are just so tiny and well amalgamated that they appear to be a part of liquid. Pigments are usually different minerals or other chemicals that are colorful in nature. For every shade of paint there is a special mix of chemicals that is used along with it.
 
•The next part of paint is called as the “vehicle” which exists in liquid form. The vehicle actually acts as a carrier for the pigment. Pigment goes onto the object being painted with the help of the vehicle. These vehicles are made of resins, which are sticky substances and form a film when mixed with colorful pigments. Some of the commonly used vehicles are oils and acrylics
 
•Another important element of paints is called the “solvent.” In water-based paints, the solvent is water which makes the paint fluent enough so as to work and apply smoothly. 
 
It is a matter of fact that worldwide, the paint industry is an important part of everyday living. The statistics confirm that no domestic or commercial arena remains untouched from paint industry. With applications ranging from household and decorative paints, to coatings used in the automotive industry, paint industry has been present in every section of the world. 
 
Paint industry can be broadly classified into two segments: Industrial & Decorative. 
 
Industrial paints cater to automobile original equipment manufacturers (OEMs), industries & railways and decorative paints cater to the housing sector.
 
Fresh demand of Paint colors depends on the construction, housing and automobiles sectors. Just like any other sector, refinish/refurbishment demand is directly related to the disposable incomes and higher aspirations of consumers i.e. both the ability as well as the willingness to spend.
 
 
 
Indian Paint industry is going through a colorful & pleasant phase of time with demand rising sharply. Growth in housing, automobiles and construction are all driving the rise in consumption of paints.
 
A boom in the Indian housing sector, increasing rate of urbanization, easy availability of housing loans and a shift from semi-permanent to permanent housing structures have been driving growth in the decorative paints segment, which accounts for nearly 65-70% of the Indian paint industry. There is seasonality involved in the demand for decorative paints unlike industrial paint. Consumption certainly increases tremendously around festive time.
 
The Indian Paint industry has been growing at a rate of above 15% for the past few years. The organized players of the industry cater to about 65% of the overall demand, whereas the unorganized players cater to the remaining 35%, in value terms. The unorganized players majorly dominate the distemper segment.
 
A wide range of paint companies exist in India. Now-a-days many foreign players are also gradually entering in Indian paint industry. The availability of wide range of paint companies help in opening up a wide range of options while selecting pigments, varnishes, paints and coatings for the house interior as well exteriors, thereby exploring a wide variety of options for the consumers.
 
The standard of Indian Paint Industry is at par with the international companies. Some of the most renowned paint manufacturing companies in India are Shalimar, Nerolac, Asian Paints, Berger and Dulux. The top 5 companies make up for more than 80% of sales of the organized market. The market share of the organized sector is continuously improving as consumer preference is shifting towards better products offered by the leading brands.
 
Indian paint Industry has a bright future ahead and consumption of paint in India is definitely expected to go up.  It is certain that every mounting industry brings plenty of jobs along with its growth.
 
There are many factors that take Indian Paint industry graph upwards which are as follows:
Increasing level of income and education: The increasing proportion of young population along with increasing disposable incomes is leading to a change in consumer habits. With more income at their disposal, people are now ready to pay for better products and paint is no exception.
 
Moreover, educated consumers are more brand conscious and seek value in whatever they consume. Thus, paint companies offering value-added features like non-toxicity, weather protection, texture, eco-friendly production, etc. attract more demand. 
 
Increasing Urbanization: Urbanization is leading to a shift from temporary houses to permanent houses. Urban houses are well-designed in its interior as well as exterior. This calls for more houses being painted using medium and premium paints. For urban houses, interior design is becoming a fashion statement and a lot of paint is used to decorate the interiors. 
 
Increasing share of organized sector:  The Organized sector is expanding its distribution network and adopting the installation of tinting machines at retail outlets. These tinting machines offer a wide variety of color shades options to choose from. Shift in use, from distemper segment towards premier segment is also shifting market share from the unorganized sector to the organized sector.
 
Development of the Real Estate, Automobile and Infrastructure sector: The growth of the paint industry is largely dependent on the development of the real estate sector. The Automobile segment generates more than two-third of the demand for Industrial paints, and hence is the growth driver for Industrial Paints. 
 
Availability of financing options: Easier housing finance and auto finance is expected to favor more people to buy houses and travel in personal vehicles. This drives the growth of housing and automobile sector, which eventually increases the sales of paint industry.
 
Increasing Penetration in the Rural Markets: Paint usage in rural areas is generally in the distemper segment, hence dominated by the unorganized players. Paint companies are expanding their distribution network in rural parts of India, which is a relatively untapped market for the organized players. These factors supported by the increasing penetration of the paint companies will help drive the demand for paints in near future.
 
It is very much evident that the market share of paint industry in organized sector is likely to continue with increasing trend. Since India is moving towards becoming a developed economy hence, the decorative paint industry ratio will also change in rural India and it seems to be changing the ratio from 70:50 to 50:50. With this growth Indian paint industry seems to have a bright and colorful future.
 
For such topics of Basic understanding on the subject matter which will keep you motivated to crack  CAT 2011 along with various other MBA entrance tests. This would also be useful for extempore speaking , please keep on visiting www.mbarendezvous.com Portal with Management by objective approach.

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