Challenges Faced by Indian Paints

The prices of paints essentially depend on the cost of raw material. There are around 300 odd raw materials required for the creation of paints. The major raw-materials are titanium dioxide, phthalic anhydride and peutarithrithol. These constitute around 50 percent to total cost. Titanium dioxide by themselves contributes 30 percent to the cost. The other raw materials like linseed, castor, soyabean natural oils, etc. soon add up to the whole natural materials cost of 70 percent of total cost. So, the prices of paints are extremely much dependent on raw materials and any fluctuations in the price of raw materials will eat up the margin of the company.

Nearly 30% of the 300 recycleables are petroleum centered derivatives. So, any change in crude essential oil prices will lead to change in the costs of raw materials. From last 2-3 years, there were great deal of fluctuations in crude petrol prices because which margins of the color companies got strike. The pressure further increased credited to downturn and there after decrease in consumption.

Cyclical dynamics of attractive paints

The demand of ornamental paints is cyclical in characteristics i. e. it does increase for a period, then diminishes and after certain time period it again heightens thus demonstrating cyclical pattern. It is really because people generally have their houses white-wash during festive conditions. Also, once houses get colored, then it needs a white wash after 4-5 years.

The demand is inspired by monsoon also. When there is a good monsoon, then there is an upsurge in agricultural and industrial output. It has a positive effect on disposable income with people and therefore a good demand. If the monsoon is not good, then the demand will get affected especially in attractive paints portion.

Environmental hazards

The majority of paints created in India contain a sizable amount of lead, mercury and chromium. These elements are very hazardous in character and can present a risk to health of humans. Now the policies are becoming very strict and so companies must come up with newer manufacturing techniques so as to produce paints with a low amount of VOC (volatile organic and natural ingredient) and minimal aromatic content. Also, the content of business lead, chromium and mercury should be very less in that way making the paint eco safe.

Other threats

Import insurance policies - The transfer policies plays an extremely significant role in identifying the prices of paints because around 30% of the raw materials must be imported from international countries. So, any change in transfer tax routine will have an impact on the costing.

Exchange rate - Since the major raw materials are imported, any motion in rupee-dollar prices is very critical and therefore need to be closely looked. For instance, whenever rupee depreciates against dollars, the buyer has to shelve out additional money.

Supply chain - The car paint industry takes a lot of working capital because the manufacturer must buy 300 recycleables and from different sellers. So, the business that includes a very robust vendor and syndication network will basically benefit from it.

Technology developments - the paint industry is highly technology intense scheduled to which small players find it very difficult to invest in newer technologies and so succumb to competition from international companies. Large players have tangled up with overseas companies and they're still dominant in the market.

FUTURE PROSPECTS

In India, the per capita use of paints is suprisingly low when compared with other developed countries. So, there's a lot of progress potential for car paint companies. The major areas where Indian Color Companies can leverage their development potential are

Rural Market

Around 70% of the total population of India resides in rural areas and the rural sector contributes only 10-15% of the full total usage of paints. So, you can find a large growth probable in rural market. In rural areas, there are extensive households who've throw-away income but distribution network is not set up. Also, in this season, improvement in agriculture and allied sectors, coupled with good monsoon has improved upon the needs. Also, the various government techniques have improved the earnings of rural people. the industry can increase its earnings from rural market by producing low cost paints and coatings. Also, the firms must increase advertising cover rural areas coupled with developing distribution network.

Industrialisation

In India, immediate industrialization is taking place because of liberal plans and huge international investment in India. India is becoming an commercial hub for cars, consumer durables and various other industries. Together with the rapid progress, demand of Industrial coatings will continue increasing.

At present, the talk about of professional paints is 35-40% that includes a potential to touch 50% in few years. Also, anticipated to large opportunities in steel, power, refinery areas, the sales of high performance coatings and coil coatings is increasing.

Real real estate sector

India is registering a frequent GDP expansion of around 7. 5% to 9% after there was a slowdown in market two years again. Now the true estate sector is booming with large opportunities in casing sector and construction sector. There is a rapid increase in sales of decorative paints and architecture paints and it will continue in future. Also, the client inclination in buying paints is moving towards drinking water paints because of environmental issues.

South Parts of asia and Developed economies

Indian paints employ a good market in USA, UK and Europe. With the recessionary measures used and the revival of global market, the exports will revive and can steadily move around in upward course.

Also, the other strategies of progress are growing economies like Nepal, Bangladesh, Sri Lanka, Pakistan, Bhutan, Mynmmar and Arabian countries like UAE, Egypt, etc.

India as a color manufacturing hub

The Indian paint industry saw a substantial change in reduced amount of excise obligations, custom obligations which resulted in reduction in the prices of recycleables. Also, there was a limitation on increasing the capability of plant that was removed afterwards by the federal government. Now, since India offers cheap labor and different other taxes benefits (sponsored by centre and states for inclusive progress), it has a profound potential to become a major processing hub of decorative and professional paints.

The major Indian players have previously started out taking steps in this direction. The sector experienced a whole lot of capacity enlargement, joint endeavors with international companies, overseas acquisitions and purchases in technology within the last decade. Thus, India has turned into a very viable option for establishment of coloring manufacturing vegetation.

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