May 8, 2000|
Paint – a perspective on market share
The Indian paint sector can be divided into two categories, the organised sector, comprising the majors like Asian Paints, Goodlass Nerolac, ICI India, Berger etc. and the unorganised sector comprising the small-scale industries. The share of organised sector is moved up from 69% in 1996 to 86% in 1999 due to the reduction in the excise duty, which narrowed the difference in the end product prices between the organised and the unorganised segments.
Asian Paints, a major in the decorative segment, with its strong distribution base and the brand value has been able to tighten its hold on the market gradually. For example, the company’s market share has increased from 31% in 1996 to 36.4% in 1999.
But on the other hand, the market share of Goodlass Nerolac in the decorative segment (Goodlass is the leader in the industrial segment with 40% market share) has come down slightly from 16% in 1998 to 15.3% in 1999. This could be partially explained by the fact that while the decoratives’ market itself has expanded Goodlass was expanding its automotive paint capacity.
In the current year both housing sector and the automotive sector have seen a good demand growth. The premier housing finance institution HDFC alone has seen a 30% rise in total loan disbursements to Rs 5.3 bn in FY2000. Further, there has been a 56% growth in the passenger car demand in FY2000 due to a number of new launches in this segment.
The current trend does seem to favour Asian Paints and Goodlass Nerolac. Asian Paints has had a good third quarter clocking a 48% increase in sales due to the festival season falling in the third quarter in the current year. Goodlass Nerolac with new launches from Maruti, Mitsubishi etc coupled with a strong growth in automotive demand in FY2000 should also report substantially higher profits. ICI India too, with a presence in both industrial and decorative segments, has also shown good results. Besides, the company has completed its restructuring exercise with the sale of its explosives division.
Overall, the organised sector seems set to continue, if not increase its dominance in the domestic paints market. Perhaps, the only grey area is the apprehension of a less than normal monsoon, which could affect the overall demand for decoratives.
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