Technological Analysis of the Paint Industry

About the Indian Paint Industry

The Indian Paint industry, estimated to be a Rs.21,000 Cr. Industry. 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. The industry consists of two segments, namely
Decorative Segment caters to the housing sector and Industrial Segment - consists of powder coatings, floor coatings and other protective coatings catering to the automobile, marine and other industries.

Working of the Paint Industry

Major Inputs Raw Material (56%) Selling & Administration Expenses (23%) Employee Cost (12%) Industrial Products Major Products End User

Decorative Products

Households, Construction Firms (70%)

Automobile OEMs, Consumer Goods, Marine Industry (30%)

Berger Paints India Ltd.

Established in 17th December, 1923 Headquartered in Kolkata, India. A distribution network of 82 stock points and 12,000+ paint retailers. Business revenue more than Rs 2400 crs. Seven manufacturing facilities in India and more than 85 depots, several regional & area offices, besides four facilities overseas & countrywide distribution network of 15000 plus dealers. Our current market share is 20%.

R&D Activities of Berger Paints

Development of new products. Cost reduction with product upgradation. Development of low VOC products. Adaptation & reproduction of Collaborators Technology. OEM specific products. Lead free products

Technological Prowess Made

Technological Prowess Made 2007-08 1. External Insulation and Finishing Systems from Bolix S.A. of Poland, to tackle concerns of energy savings in India. 2. ERP project is on track and to be completed by calendar year 2008. 3. Technical License Agreements with (a) DuPont Performance Coatings in the area of Automotive Coatings, (b) Orica Australia Pty Ltd. in the area of Protective Coatings, and (c) TIGERWERK Lack-u. Farbenfabrik GmbH & Co. KG, Austria for specialized powder coatings.

2008-09

1. Successfully implemented the ERP project in the factories and the production system throughout its geographical spread. 2. New products for retail market (both Interior & Exterior) e.g.,Water Repellent Exterior Emulsion, Water Based Anti-corrosive Primer. 3. Products of Powder Coating offered to General Industrial & other specific customer through absorption of collaborators technology. 4. 4. Development of new decorative products Silicone Resin Emulsion Paint Heat Reflecting Emulsion Paint

Technological Prowess Made 2009-10 1. Gradually replaced lead and other harmful minerals from paints. 2. Newer, energy efficient formulations are being introduced and different shades with various quality attributes are becoming more popular through a wider spectrum of population. 3. The Company introduced WeatherCoat All Guard, in the exterior coating category. It repels water and protects buildings from moisture. 4. Setting up a state-of-the-art water based paint plant along with emulsion manufacturing facility in Hindupur, Andhra Pradesh

2010-11

1. In a major technology advancement the company started offering products with odorless and have unique corrosion and heat resistance properties. 2. The ERP system will now be extended to the British Paints Division. 3. New Protective Coating products like Anti-graffiti Polyurethane Paint for Railway High Solid Polysiloxane Paint High Solid PU Top Coats DTM Polyaspartic Coatings (A/c. Power & Infrastructure)

Expenditure on R&D (` in Million)

Expenditure on R&D (a) Capital (b) Recurring 2007-08 2.11 10.44 2008-09 4.30 10.70 2009-10 1.87 24.42 2010-11 2.99 24.93 2011-2012 12.30 45.30

(c) Total
(d) Total R&D expenditure as a percentage of Total Turnover
180 160 140 120 100 80 60 40 20 0 2007-08 2008-09

12.55
0.08%

15.00
0.09%

26.29
0.14%

27.92
0.12%

57.60
0.19%

(d) Total R&D expenditure as a percentage of Total Turnover (c) Total R&D Cost

(b) Recurring

(a) Capital

2009-10

2010-11

2011-2012

Year (2011-12)
Technology
During the FY 2011-12, technology efforts have been focused on environmentally compliant technologies: 1. Water borne Acrylic Emulsion 2. Water borne Alkyds 3. High solids 4. Low VOC solvent borne; VOC = Volatile Organic Compounds.

Investment
Capital Expense Rs. 6.49 Crores Recurring Expense- Rs.37.24 Crores Total ExpenseRs. 43.73 Crores R&D Expense as %age of net revenue from operations 0.55%

Year (2010-11)

Technology
During the FY 2010-11, technology efforts have been focused on environmentally compliant technologies: 1. Eco friendly binders in Emulsions 2. Alternate Raw Materials 3. Low VOC solvent borne; VOC = Volatile Organic Compounds.

Investment
Capital Expense Rs. 3.67 Crores Recurring Expense- Rs.32.23 Crores Total ExpenseRs. 35.90 Crores
R&D Expense as %age of net revenue from operations 0.57%

Year (2009-10)

Technology
During the FY 2009-10, technology efforts have been focused on environmentally compliant technologies: 1. Removal of lead from international products 2. Self Cleaning Paints 3. Research on new functional polymers, Emulsions and Nanotechnology 4. New Surface coating Process

Investment
Capital Expense Rs. 1.21 Crores Recurring Expense- Rs. 28.43Crores Total ExpenseRs. 29.64 Crores R&D Expense as %age of net revenue from operations 0.58%

Year (2008-09)

Technology
During the FY 2008-09, technology efforts have been focused on environmentally compliant technologies: 1. Lead and Heavy metal removal from decorative paints 2. Developing products with low Volatile Organic Component (VOC) in both water based and Solvent based products in decorative and industrial paints 3. Strengthening the internal capabilities.

Investment
Capital Expense Rs. 25.90Crores Recurring Expense- Rs.27.46 Crores Total ExpenseRs. 53.36 Crores R&D Expense as %age of net revenue from operations 1.25%

Year (2007-08)

Technology
During the FY 2007-08, technology efforts have been focused on environmentally compliant technologies: 1. Up gradation of processes to reduce environmental concerns 2. Identification of alternate raw materials

Investment
Capital Expense Rs. 34.19 Crores Recurring Expense- Rs. 17.66Crores Total ExpenseRs. 51.85 Crores R&D Expense as %age of net revenue from operations 1.52%

R&D expense as %age of Net Sales

1.60%

1.40%

1.20%

1.00%

0.80%

Percentage

0.60%

0.40%

0.20%

0.00% 2007-08 2008-09 2009-10 2010-11 2011-12

AkzoNobel
A dutch company headquartered in Amsterdam, Netherlands Present in more than 80 countries Entered India in 1980 Has acquired ICI (Dulux paints) Key products are
Automotive & Aerospace Coatings (A&AC) Industrial Coatings Wood Finishes and Wood Adhesives Powder coatings (POW) Marine and protective coatings (MPC) Packaging coatings

Research and Development

Activity - R&D in areas of coatings and surface chemistry to bring environment friendly paints. - Focused R&D efforts - R&D to increase production yields with innovative production management. Benefits - Launch of new and innovative products as per customer needs. - Minimized environmental impact. - Reduced manufacturing costs -Paint which can reflects IR rays keeping buildings cooler -Paint with non-fading properties -Reduced VOC -Paints which reduce scratches and covers hairline scratches -Anti-fungal and anti-bacterial properties -Improved material usage efficiency -Improved value to customers -Optimisation of products and processes -Value engineering

Year

2007-08

2008-09

2009-10

2010-11

2011-12

Expenditure Rs 41 million Rs 40 million Rs 47 million Rs 49 million Rs 144 on R&D million R&D 0.4% expenditure as a % of turnover 0.4% 0.5% 0.5% 0.7%

R and D expenditure in Rs (Million)

R and D expenditure as a percentage of revenue

160 140 120 100

0.8 0.7 0.6 0.5

80
60 40 20

0.4
0.3 0.2 0.1

0 2007-08 2008-09 2009-10 2010-11 2011-12

Technology
AkzoNobel's proven global SAP solution called 'SATURN' has been implemented at all sites in 2009-10 Zero effluent technology End to end automated plant Color mixing and dispensing machines at retail outlets Spectrophotometer To match colour samples

Growth Drivers
Increasing per capita income and disposal income Urbanization Growth of automobile, realty and infrastructure sectors Availability of financing options Penetration in the rural market

Challenges
Cost of raw materials MNCs entering the Indian market Environment concerns Presence of Counterfeit paints: Lead to crucial downtime for customers and damage to brand value

Future trend
Smart Coating Nano coatings are considered a type of smart coatings as they are composed of extremely tiny particles and consist unique characteristic such as extreme flexibility, easy adhesion, resistance to corrosion and micro-bacterial growth. High Performance Coating Fluoropolymer coatings well known for its high performance property. It has a long life cycle and hence, is more cost efficient. Sustainable Coating The growing interest in greener coating has spurred many manufacturers to look into several technologies that will make them more environmentally friendly. Therefore, demand high functionality coating which also has less capability to help conserve energy is expected to increase in the coming years.

Thank you