But even in this period, paints were considered a luxury item.

Only people with high incomes were expected to decorate their houses with the use of paints. Paints, as a protective element, were totally unheard of. The industrial segment, which was traditionally a low user of paints, vis--vis its counterparts in the decorative segment, too contributed to this notion. In line with this misconceived notion, the government drastically increased duties on paints in the early nineties with an aim to bolster exchequer revenues. The result was obvious. This inevitably brought about a downturn in the fortunes of the industry. The products, which are highly price elastic, saw a negative growth rate of 20 % in 1991-92. The next year was also not good, registering a growth of only 2%, bringing it back to the 1990-91 level, thus corroborating the fact that the industry needed lower excise levels to grow. The industrial slowdown during that periodalso did not help matters. In line with the liberalized policies and the realization that paints are not necessarily a luxury item, duties were progressively reduced from 1993-94.

This squared growth as most companies passed on duty reductions. Further, the entry of world majors in the automobile and white goods market in India since 1993 helped the market to expand. Demand for auto paints shot up suddenly. Form a modest 8% growth rate in 1993-94, paint demand touched 12% in 1995-96.

Rapid industrialization and improvements in the infrastructure such as transport, energy and communication during the last decade gave a further fillip to the growth of the paint industry. Aided by Governments liberal policy of technology import, the automotive and consumer durable segments expanded phenomenally, with a flurry of foreign collaboration. Increased demand for decorative, protective and functional coatings was a natural fall out, which brought, in its stride, a host of indigenous developments as well as the injection of new technology.

History:Paint has been used by mankind since its origin. The evidence can be found in the cave paintings. The Chinese are considered to be the pioneers of manufacturing paints thousands of years ago. In modern times paint is made artificially and is used in many different ways. There are three basic things required to make paint. You need a Pigment to get the exact color you want Binder to hold the paint together

Thinner so that it can be applied easily.

Types of PaintsThere are different types of paints available today. Till the 19th century the word paint was used to describe oil-bound types only. The paints bound with glue were called distemper. For farmhouses and cottages an alternative was found and was called lime wash or color wash.

Different things need different paints. The interior of the house is painted by different type of paint than the exterior of the house. Automobiles use different type of paint. The industrial paint is different than marine paint. Now colors are made by using different ingredients for specific surfaces.

For example enamel paint, when dries it becomes especially hard and usually has glossy finish. The term enamel paint today means hard surfaced paint and usually it is used in reference to paint floor coatings of a gloss finish or spray paints. It can be used for concrete, stairs, porches and patios. Fast dry enamel is ideal for refrigerators, counters and other industrial finishes. High-temp enamel may be used for engines, brakes and exhaust. Enamel is also used on wood to make it water resistant. The Indian Paint IndustryIn India, Indian Paint industrys total market size is US$1400 million. The organized sector of the industry is 55%. The 45% unorganized sector has about 2500 units. The big players and their market share-value of the organized sector are Asian Paints 37% Goodlass Nerolac 15.9% Berger Paints 13.8% ICI 11% Jenson & Nicholson 5.7% Shalimar 4% Others 12%The market segment is divided into two sectors. Architectural 70% Industrial 30%The total volume of the market is 600,000 MT.
CHAPTER-II INDUSTRY ANALYSIS

Government rules and regulations

Govt take steps to resolve paint industry crisisDecember 11, 2008 (India) Government has announced several relief measures to support the paint industry from time to time,

which has been representing that paint exports have been affected by the global recession. Steps taken by Government to help and improve paint industry include the following:

(i) The Technology Upgradation Fund Scheme (TUFS) was launched to facilitate the modernisation and upgradation of the paint industry both in the organised and unorganized sector. The Scheme has been further fine tuned to promote the rapid investments in the targeted subsectors of the paint industry. The cost of machinery has been further brought down by reducing the customs duty on imports.

(ii) To provide the paint industry with world-class facilities for setting up their paints units, meeting international environmental and social standards, a Public-Private Partnership (PPP) based Scheme known as the Scheme for Integrated paint (SIP) has been introduced in August 2005.

(iii) In 2004-05 Budget, the entire paint sector, except for man-made and filament yarn was provided optional exemption from excise duty. In 2005-06 Budget, Central Value-added Tax (CENVAT) on Polyester Filament Yarn has been reduced from 24% to 16%. These modifications in fiscal levies aim at attracting more investments for modernization of textile sector.

(iv) To facilitate import of state of the art machinery to make our products internationally competitive in post quota regime, in 2005-06 Budget, the customs duty paint machinery has been brought down to 10% except for 23 machinery appearing in List 49, which attracts Basic Customs Duty (BCD) of 15%. The concessional duty of 5% continues to be at 5% on most of the machinery items.

(v) Government has launched the Debt Restructuring Scheme w.e.f. Sept., 2003 with the principal objective to permit banks to lend to the paint sector at 8-9% rate of interest. (vi) Government has allowed 100% Foreign Direct Investment in the paint sector under automatic route.

vii) Government has de-reserved the readymade garments, hosiery and knitwear from SSI sector so that large-scale investments may be encouraged in these sectors.

(viii) National Institute of Fashion Technology (NIFT) has been set up to provide the leadership role in sensitizing the Industry to the concept of value addition by inducting trained professionals to manage the industry. This has resulted in an increased demand for trained professionals in various sectors servicing the industry. (ix) A series of relief measures to paint exporters such as enhanced DEPB & Duty drawback rates, reduced ECGC premium, subvention on credit rates, refund of service tax paid by exporters on various services etc.; (x) Apparel Export Promotion Council (AEPC) has established Apparel Training Design Centres (ATDCs) throughout the country to cope with the requirement of skilled / semi-skilled manpower for the paint industry. This information was given by the Minister of State for Textiles, Shri E.V.K.S. Elangovan in a written reply in the Rajya Sabha yesterday. Strengths Imp of brand image as barriers to new entrants Good technology backup. Weakness Raw materials scarcity Requirement of high working capital Real estate in a depression phase. Opportunities

Fiscal incentives provided by Government. Commodity to fmcg Rise in disposable income

Threats Foreign companies entering as sole players Industry present & future trends:The Indian paint and coatings industry is riding high on the growth in the Indian automobile industry, new construction in the housing segment and improving infrastructure throughout the country. Thirty percent of the paint business is comprised of new construction projects. GDP growth projections of six to 6.5% in the current year mean a growth of nine to ten percent in Indian paint business. The growth will be 12-13% in the industrial segment and eight to nine percent for decorative paint. The Indian automobile industry has been performing remarkably well and will benefit the market leader in the segment, Goodlass Nerolac. As for the future, the industry has predicted a CAGR of eight to nine percent for the next five years compared to last years growth levels of 27.4% for cars and 8.9% for two wheelers. The Indian housing industry is likely to do well in the current year as well, recording a growth rate of 35% last year. As a result of the overall health of Indias economy, it is safe to predict a nine to ten percent growth rate for the Indian paint industry in the next five years. Consumers can look forward to new product launches, some for application in special areas. Companies will be increasing the value added services available to customers by offering a variety of finishes through specialized and trained applicators. There will be more options like ranges of colors/finishes for wood applications through the tinting machines. Additionally, the trend towards water-based coatings is likely to set in both for industrial and decorative applications. While India has not yet embraced the DIY concept as cheap labor is still available, exclusive retail chain stores sponsored and run by Indian paint companies will become a reality. The Indian paint industry has progressed well and moving ahead is likely to be influenced by several factos including new technologies, new innovative products, new associations, consolidation of industry and poor performers getting out of the market. Ultimately, in the years ahead there will be only four or five key players operating in the Indian paint market.