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Latha Venkatraman

Mumbai , Sept. 8

THE Indian paint industry, which has been maintaining an upward curve in its sales and profits, is expected to continue its growth momentum and turn in a 10-per cent growth in the current fiscal.

"With the automobile sector picking up and the housing sector continuing on its positive growth mode, both industrial and decorative segments of the paint market are expected to turn in good sales," Mr H.M. Bharuka, Managing Director, Goodlass Nerolac Paints (GNP), said.

Having ensconced itself well in the industrial paint segment, Goodlass Nerolac is focussing on growing its share in the decorative paints market.

"We are looking at a shift in our revenue mix to 70:30 decorative/industrial paints from the current ratio of 55:45," Mr Bharuka said. However, this does not indicate that the company would lose focus on the industrial segment of the market, he said.

"On a larger turnover base, 30 per cent would still be higher than what it is today," Mr Bharuka said.

Goodlass Nerolac is a leader in the automotive paint segment of the industrial paint market with a 65 per cent share. The company is banking on the continuous upturn in the housing sector to drive its decorative paints portfolio. According to an analyst, housing loan disbursements have been growing at 30 per cent. This factor should augur well for the paints industry.

According to Mr Bharuka, despite the growing trend in the decorative segment, the base in India is low because per capita consumption is quite low. The growth in the housing sector has prompted paint companies to look at the decorative segment. The industry has assumed an FMCG kind of approach to its consumers.

"Earlier this segment was contractor driven. With aggressive marketing the industry has brought the consumer to the forefront," Mr Bharuka said adding that the paint companies have worked towards expanding the market.

Even as the expansion of the market was taking place, the paint companies worked to bring down the cost, according to Mr Bharuka. Cost pruning measures have been in place at Goodlass Nerolac. Restructuring carried out at the company has helped reduce costs. "We increased our distribution network and reduced manpower by 20 per cent over the last two years," Mr Bharuka said. "Having brought out costs down we are better on in topline and bottomline," he said.

Goodlass Nerolac is in the process of setting up a plant at a cost of Rs 90 crore at Bawal, Haryana. The capacity of the plant, which will manufacture industrial paints, powder coating material and auto pre-treatment chemicals, is around 20,000 tonnes and is expected to be ready by October 2004.

It is also looking at the export markets, initially at South-East Asia and West Asia. However, exports would largely depend on the company's distribution strengths. Overall, factors for the paint industry have been favourable. With a satisfactory monsoon, there is expectation of improvement in rural demand for paints. After a drought like situation last year, this year's well-distributed monsoon rains should be an additional favourable for the industry. Besides, crop prospects of castorseed, soyabean and linseed are quite good. The paint industry uses the oils of these oilseeds as raw material.

However, the upturn in the prices of crude oil has been a dampener for the paint industry.

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