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SPMM Assignment on Paint Industry

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Industry:Paint Industry in India

An Overview

The paint industry worldwide is classified into 2 segment viz. decorative and industrial

segment in India constitutes nearly 70% of the market whereas the scenario is just the

reverse in the developed countries.

Decorative Segment is dominated by the unorganised sector which now accounts for 70% of

the total paint production as against 75% three to four ago. The unorganised sector has an

advantage over the organised sector since it is fully exempted from the 20% excise duty and

other government levies.

Major Players in the Indian Paint Sector

Dulux India:

Dulux is an internationally available brand of paint. It is produced by AkzoNobel (formerly

Imperial Chemical Industries). AkzoNobel India manufactures and markets paints, specialty

chemicals and starch. With an employee strength of about 900, AkzoNobel India's

manufacturing sites, business and sales offices and distribution network span the length and

breadth of the country.

Berger Paints:

Established in 17th December, 1923, the company then known as Hadfiled's (India) Limited;was a small paint company based in Kolkata having its only manufacturing facility at

Howrah, West Bengal to produce ready mixed stiff paints, varnishes and distempers. From a

production capacity of 150 tonnes and sales turnover of around Rs. 25 lakhs in 1947, the

company has come a long way to become at one point of time; a part of the worldwide

BERGER group in 1983 and thereby acquiring its present name Berger Paints India Limited.

With seven manufacturing facilities in India and more than 85 depots, several regional &

area offices, besides four facilities overseas. It has a workforce of over 2500 employees and

a countrywide distribution network of 15000 plus dealers.

Nerolac:

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Kansai Nerolac has been a cherished name in millions of households across the length and

breadth of India. The company manufactures a diversified range of products for every

surface. It is the second largest coating company in India and the market leader in

automotive and powder coating. Nerolac paints as it is known popularly is an established

brand in decorative paints.

Asian Paints:

Asian Paints is Indias largest paint company and Asias third largest paint company, with a

turnover of Rs 77.06 billion. It is one of the largest paint corporation that operates in 17

countries and has 23 paint manufacturing facilities in the world servicing consumers in over

65 countries. Besides Asian Paints, the group operates around the world through its

subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans.

Industry Outlook:

The paint industry has been doing well for the past couple of years. In spite of globaleconomic slowdown the industry is performing well. The Indian paint market has the

potential to grow over the decade at 15-20% per annum as the current per capita

consumption is much lower as compared to other developing economies. The per capita

consumption of paints in India is 1.25 kg against 51.7 kg in Qatar, 38 kg in Singapore or 25.8

kg in the U.S. Even China has a per capita consumption of 2.5 kg and Sri Lanka 3.5 kg.

Product category:-

1. Decorative paints

2. Interior wall paints, Exterior wall paints

3. Wood surface paints, Metals surface paints

4. Industrial coatings, Protective coatings

5. Floor coatings, Road markings

6. Automotive: Body coatings, Plastic coatings

7. Ancillaries etc

Brands:

Ace & Apex Apcolite, Apex Ultima, Asian Paints, Colour Next, Premium Gloss, Enamel,

Royale Play, Touchwood, Tractor Emulsion and Utsav.

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Raw materials identified: Resins, Orthoxylene, Monomers, and Pigments.

Raw Materials used in Manufacture of coating

Solvents: - Solvent constitutes 60% of paint. Asian paints produce the solventthemselves.

Orthoxylene: - Asian paints consumed 26555 Tonnes of Orthoxylene; the averageamount spent per tonne is Rs.54140.Reliance industries Ltd., is the only producers of

Orthoxylene.

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Capacity: 420000 Tonnes per year.

The above table shows the production capacity of Reliance Industry which is good enough to

meet Asian paints needs and the Cost benefit that Asian Paints could have if a strategic

partnership with Reliance Industries is made.

Specifications of Raw Materials:

Orthoxylene is a colorless liquid, with a characteristic odour. Xylene is used as a solvent and in the

printing, rubber, and leather industries. Xylene is used as a feedstock in the production of terephthalic

acid, which is a monomer used in the production of polymers. It is also used as a cleaning agent for

steel and for silicon wafers and chips, a pesticide, a thinner for paint, and in paints and varnishes. It

may be substituted for toluene to thin lacquers where slower drying is desired. It is found in small

amounts in airplane fuel and gasoline.

Chemical and Mechanical Properties:

Term Standard

Appearance Transparent liquid without mechanical impurity

Purity % 99.5 min

Color(Hazen platinum-colalt color No) 20

Density(20),kg/m3 860-870

distillation range

initial boiling point

final boiling point

5Max

137Min

143Max

Acyl washing colorimetric Color of Acid layer is not darker than

1000ml, containing 0.5g Potassium

dichromate standard solution

Total sulfur content mg/kg 3

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Evaporation residue mg/100ml 5

Steel test Non-corrosive

Item of Analysis Standard

acidity (as H+)/(mmol/100g) 0.025

alkalinity (as OH-)/(mmol/100g) 0.025

assay99.0%

benzene 0.1%

color,Pt-Co 10

ethyl benzene19.0%

'readily carbonizable substances passes test

residue upon evaporation 0.001%

sulfur compounds0.006%

thiophene and its homologue 0.0001%

toluene 0.1%

water

0.03%

Packaging: Packaging is done my Drums packing and also supplied through tankerload.

Financial Stability

Sales turnover grew at a CAGR of 19% in the last decade which shows a huge growth in

business done by the company. The dip in the growth rate was minimal in 08-09 (recessionperiod) displaying robustness and strength in core business of the company. Total assets of

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the company accumulate to 2, 84,719 Crs and currently the Debt: Equity ratio stands at 0.44

which shows the financial strength of the company.

Past Performance and Reputation

Reliance Industries Limited (RIL) is an Indian conglomerate company headquartered inMumbai, India. The company operates through three business segments: petrochemicals,

refining, and oil and gas. RIL is the largest publicly traded company in India by market

capitalization and second-largest public corporation in India when ranked by revenue. The

company is listed on Fortune Global 500 and Forbes Global 2000. In September 2008

Reliance Industries was the only Indian firm featured in the Forbes's list of world's 100 most

respected companies.

QualityRIL has a very good quality control system, they have won many awards for their quality

control practices; a few awards are Institute of Engineers' 'Safety Innovation Award' for the

year 2010, "Distinguished" award at the "24thAnnual National Convention on Quality

Concepts" (NCQC - 2010) and so on.

Most manufacturing divisions have been certified to ISO14001:2004 certification of

Environmental Management Systems and OHSAS18001:2007 certification of Safety

Management Systems

Resins:-

Asian paints produce synthetic resins where as they partially buy the resins like Acrylics,

Alkyds, Epoxies and Polyesters.

Among the above suppliers the least selling price per tonne of resins is Rs. 1, 42,556(Cibatul

Ltd.,), whereas the amount spend per tonne of resin by Asian paints is only Rs.67, 347. This

indicates either Asian paints partially produce the Resins or/and they have a good

procurement strategy for Resins.

Among the given leat of suppliers, Atul ltd has the highest Production capacity.


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Paint includes either synthetic or natural resins such as cement, alkyds, acrylics, vinyl-

acrylics, vinyl acetate/ethylene (VAE), polyurethanes, polyesters, melamine resins, epoxy,

or oils. Acrylics and Melamine resins are largely used in paints

Chemical and Mechanical Properties of Acrylics resins:

1. Thermosetting acrylic resin

2. High hardness, good overall performance

3. Used in Car Paint\Furniture Paint

Characteristics

1. Functional Group number is 6 with high hardness and good abrasion resistance.

2. Excellent anti-yellowing and fast reaction speed.

3. This product isnt the main part of the UV curing coating; it has to be mixed with other resin

according to a certain proportion. It aims at improving the hardness and abrasion resistance of thefilm in a large scale. At the same time improving the curing speed.

Product category: Thermosetting acrylic resin

Product characteristics: High gloss High

hardness Good overall

performance

Usage: Employed for gloss polyester furniture paint and flooring

paint; Automotive

paint, and motorcycle paint;Technical index:

Appearance: Water white Or light yellow transparent liquid

Color (Pt-Co): 45

Sold content (%): 651

Viscosity s, 25C (Gardner): 50-80

Acid value (mgKOH/g) 10

Hydroxy value (Supply) (mgKOH/g) 85.83.3

Solvent: Xylene, Butyl Acetate

Packaging: It is done using large drums, bags and super sacks.

Melamine Resins:

Melamine is a good chemicals widely used in resin, plastic, paint, paper, textile, leather, electrical,

pharmaceutical and other industries.The main Uses of the Melamine are the following aspects: Decorative panel, paint: Molding powder:

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Paper: Fabric finishing agents, leather tanning Run agent, glazing agent and waterproof agent, rubber

adhesive, flame accelerant, efficient cement water reducer, steel diluted agent.

Chemical and Mechanical Properties of Acrylics resins:

Grade: 99.8Appearance: White powder

MELAMINE 99.8%

Physical Properties:

Density: 1.573

Melting point: 354C

Water-soluble: 3 g/L (20C)

Test Specification

Purity wt. %, 99.8

Moisture wt. % 0.1

Ash wt. % 0.03

kaolin turbidity degree 20

PH Value 7.5-9.5

Coloruity (PT-Co)through degree 20

Appearance White Powder

Packaging: It is done by bags and sacks.

Production Capacity:

Production capacity of Atul Ltd is 18850 tonnes per year which is appx 75% of what is

required by Asian Paints.

Financial stability:

Sales turnover grew at a CAGR of 11% in the last 5 years shows a considerable growth by

the company compared to industry standards. Recession of 08-09 had literally no effect inthe sales or the profitability of the company which shows the strength the company has in its

sector. The company has net current assets of 385 crs and debt to equity ratio of 0.4 which

is decent enough when compared to its peers. We feel the company is financially strong to

handle turbulances in the economy.

Past Performance and Reputation:

Atul Limited is a member of the Lalbhai Group, one of the oldest business houses in India.

Today, Atul is one of India's largest integrated chemical companies, with a turnover of Rs1,

500 crore. The Company is rated among the top five global producers in several niche

chemicals; it serves a number of industries in India, as well as around the world, in the fields

of aerospace, automobiles, agriculture, construction, fragrance and flavours, and paper and

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textiles. It utilises world-class technology and R&D facilities and has consistently contributed

to the progress and development of the country by developing resources and capabilities in

key industrial segments. Has received 2007 Rajiv Gandhi Memorial National Award for

Excellence in Indian Industries and 2005 Rajiv Ratna National Best Pollution Control Gold

Award in Chemical Division. This speaks of the reputation the company holds in the

chemical industry in India.

Quality:

Plants are ISO 9000 and ISO 14000 certification. They have adopted good manufacturing

practices likeZero Discharge Concept, Adoption of Clean Development Mechanism, Change

of Technology - Replacement of Mercury by Membrane Cells

Pigments:-

There are many Pigments producer in India but most of them do not have the productioncapacity as required by Asian Paints. Given below is the table having list of all the Pigment

manufacturers.

Production Capacity

Only Micro Inks Ltd has the production capacity which can meet the requirement of Asian

Paints. Micro Ink is only utilizing 10.2% of its capacity.


Organic pigment used in paint

1. Organic pigment

2. Pigment yellow 75

3. Organic pigment for paint

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Itern Name pigment YELLOW RX

Index NO. C.I.P.Y.75Main Properties Good Flow

Physical DataDensity 1.3-1.5

Oil Absorption 40-70

Fastness Properties

Light Fastness 3

Heat Resistance 160

Water Resistance 5

Oil Resistance 5

Acid Resistance 4-5

Alkali Resistance 4Alcohol Resistance 4

Offset Inks

Sheetfed R

heatset R

Coldset HR

Metal deco LS

UV HR

Liquid Inks

NC

Water base HR

PVB R

PA

Pub Gravure

HR-highly recommended R-Recommended LS-Limit suitability

Packaging: It is done by bags and sacks.

Financial Stability

The company has grown with a CAGR of 10% in the last 6 years which is relatively a strong

performance in the sector. There is a drop in the current assets of the company which is due

to heavy investments in expansion of the firm. Thanks to strong internal accruals over the

past few years, the debt-equity ratio progressively declined to a low of 0.3 times at the end of'07. However, since Micro Ink is heavily dependent on export revenues, the rising rupee has

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impacted its bottom-line. The company does look financially stable and a good supplier to tie

up with for the longer term.

Past performance and reputation

Micro Inks is Rs 1,200-crore Company and manufactures various kinds of inks, pigments,intermediates and enamels. It is the largest integrated player in the segment and sells the

complete range of inks and intermediates in India and over 70 countries. Initially promoted

by the Bilakhia group, Micro Inks was acquired by Germany-based Huber group two years

ago. While the Huber group holds over 70% in Micro Inks, the original promoter has now just

over 4% equity in the company.

Quality

Micro Inks ltd is certified with Quality management system ISO 9001:2008 and

Environmental management system ISO 14001:2004.Their quality culture is based on deepinsights and rigid internal discipline

Meghmani Organics Ltd.is another big producer of pigments of pigments.

Production Capacity

Its production capacity is 24420 tonnes per year which is only 10% of the total requirement

of Asian Paints.

Financial stability

In the last year 2011, the company has made a considerable growth in the top line but a big

dip in the bottom line numbers. Probably the competition in pigment supplier is eating up into

the margins of this firm. May be a temporary dip as the company seems to be fundamentally

strong and has good reputation in the market.


Meghmani Organics Limited is a leading manufacturer of pigment and pesticide products in

the country and is the recipient of several prestigious awards in recognition of its outstanding

business performance. Sound fundamentals, outstanding export performance, strongpresence in the domestic market and a focused management team has seen Meghmani

Organics Limited grow at a compounded annual growth rate (CAGR) of 17% and profits 10%

over the past 3 years.

Quality

ISO 9001-2000 certified for the achievement of quality assurance in production, purchasing,

marketing and distribution. Consistently won awards for milestones done in export, quality

standards should be very good to have a high export volume.

Monomers:-

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Main producers of Monomers are Gujarat state fertilizers & chemicals Ltd., and Jubilant Life

Sciences Ltd, Asian paints require monomers in excess of 35000 tonnes .If we see the

above table Gujarat state fertilizers & chemicals Ltd do not have the capacity to meet this

requirement also their selling price is Rs. 122164 which is higher than the present sourcing

price of monomers of Asian paint (Rs.109765.)

From the Asian paints point of view they are spending the highest price per tonne on

monomers compared to all other raw materials also there are only 2 main suppliers of

monomers , which put monomers has a bottleneck item for the Asian paints.

The monomer suppliers likeJubilant Life Sciences Ltd. who have very high capacity but not

producing (may be because of lesser need and demand) can be strategically used by Asian

paints to fulfil their monomers requirement. This gives them the supply quantity they need

also strategic partnership and high volume sale will bring down the price. In a way it will help

Asian paints to move monomers from bottleneck item to leverage item.

Some trend analysis of Gujarat State Fertilizers & Chemicals ltd

Production Capacity

Gujarat state fertilizers & chemicals Ltd do not have the capacity to meet this requirement.



1. Low viscosity liquid monomer

2. Offers fast cure response

3. Low volatility during free radical polymerization

Chemical

Name:Trimethylolpropane Triacrylate

Characteristic:Low Volatility, Low Viscosity, Fast Curing, Weather Ability,

Chemical&Water Resistance, Abrasion Resistance, Heat Resistance

Molecular

Weight:296.3

Appearance: Clear liquid

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CAS No. 15625-89-5

Color (APHA): 60

Viscosity(cps,

25C):80-120

Moisture (%): 0.2

Acid Value

(mgKOH/g):0.5

Inhibitor(ppm): 400

Application: Coating, inks, adhesives, etc.

Packaging: Packed in heavy bags, plastic sheets and bags.

Financial Stability

The company CAGR of the last 5 years is around 8% which is well below the industry

average. The top line had been hit hard in the recession years taking almost a 30% hit on

the sales which show that the company is vulnerable to downturns in the economy. The

current assets of the company stands tall at 2355 crs and debt to equity ratio is 0.14 which

shows that the company is in a strong position financially. Being a government run firm

makes it a safe supplier to collaborate with for long term business.


The company based out of Vadodara in the state of Gujarat manufactures fertilizers,

plastics, nylons, fibres, industrial gases and varied chemicals including urea, ammonia,

ammonium sulfate, sulfuric acid, phosphoric acid & diammonium phosphate. The core

business of the companies is fertilizers. The chemical business forms a small yet significant

portion of the top line of the firm. Its a sizable government firm in the market since 1967.

Faces stiff competition from fertilizer giants like Chambal, Coromandel etc.

Quality

Many of its products being ISO 9001 certified, GSFCmaintains best quality, superior

packaging conforming to the strictest international standards. They have dedicated customer

service centre for industrial and agricultural customers.

Some trend analysis of Jubilant Life Sciences ltd

Production Capacity

The monomer suppliers likeJubilant Life Sciences Ltd. who have very high capacity but not

producing (may be because of lesser need and demand) can be strategically used by Asian

paints to fulfil their monomers requirement. This gives them the supply quantity they need

also strategic partnership and high volume sale will bring down the price

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Financial Stability

The top line of the company has grown at a relatively slow pace of CAGR 6% in the last 5

years. The company has shown no or negative growth the last 2-3 years which indicates a

stagnation point in the growth of this company. The debt equity ratio stands at 1:1 due to

heavy investments done into R&D services in the recent years. Financially the company

seems to be stretched and one needs to be a little careful in doing business with it.


Jubilant Life Sciences Limited, an integrated pharmaceutical and life sciences company, is

the largest Custom Research and Manufacturing Services (CRAMS) player and a leading

Drug Discovery and Development Solution (DDDS) provider out of India. Recently it has

been ranked at No. 6 position amongst the Top 10 Global contract manufacturing & services

outsourcing players of the pharmaceutical industry.

The Company provides Life Science Products and Services across the value chain, serving

its customers globally with its ground presence in India, North America, Europe and China.

The Company is well recognised as a Partner of Choice by leading life sciences companies

worldwide.

Quality

The company allocates resources to proactively adopt and implement manufacturing

processes to increase its adherence to environmental quality standards and enhance to

international safety levels. The company is following ISO 14001 & OHSAS 18001 system for

effective Environment, Health and Safety management.

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