Demand Growth Drivers are in place
Indian Paint industry is pegged at Rs. 285bn (FY13) & has grown at a CAGR of ~15 percent in the last three years and expected to grow at a CAGR of ~14 percent to reach Rs. 495bn by FY17E (IPA & AC Nielsen). Decorative paints (~70 percent of overall market) has grown at a CAGR of ~16 percent in the last three years and expected to grow at a CAGR of ~16 percent to reach Rs. 365bn by FY17E (IPA & AC Nielsen). Despite the near term concern on demand scenario, consumers shift from unbranded to branded products will aid volume growth as ~25-30 percent of total market is unorganized. Shortened repainting cycle (from 5 yrs. to 3-3.5 yrs.) will also aid decorative volumes to grow as repainting constitutes ~75-80 percent of decorative market. Industrial paints (~30 percent of overall market) is likely to perform better with expected economic revival going ahead as its fortunes is linked to economic environment. Apart from thes e, India’s low per capita consumption of paints (2.6 Kg/annum vs. global average of 15 Kg/annum), economic growth, higher disposable income, increasing urbanization & changing lifestyles, easy availability of credit and a concurrent growth in construction, auto and consumer durables segments will continue to act as the driving force behind the rise in consumption of paints going ahead.
One of the top 5 company in Indian Branded Paints market
Shalimar Paints Ltd (SPL) is India’s 5th largest branded paint company and one of the world’s oldest organized paint company having 111 years of existence with more than 54 branches & depots and 7000 dealers. It has three manufacturing facilities at Howrah, Nashik & Sikandrabad and two R&D Centers – one each at Howrah & Nashik.
New Greenfield Plant to help increase its presence in South
SPL is likely to commission its Chennai plant in Q1FY15 which will increase its installed capacity by ~30 percent to 85800 MTPA. With the commissioning of this plant, SPL will have a manufacturing presence across India which is likely to kick-in operational efficiencies and enhance its market share in South & West because currently both South & West is being catered by its Nashik plant & this new plant will free up capacity for SPL to cater exclusively to the West market.