| PAINT
INDUSTRY
Chennaibest.com speaks to G T Verghese, Manager -
Market Development, MRF Limited - Speciality Coatings Division
on the Paint industry today.
When was the paints division started and why
did MRF branch off into this?
 The
Paint division was started in 1989, by the late Ravi Mammen,
as part of his concept of going beyond tyres. He felt that it
was not enough to be under the car, we should also be "on
the car". MRF is into speciality coating and we have about
80% of the market share in this division. The focus is on polyurethanes
and we have a technical collaboration with Bayers, Germany. We
were the first manufacturers to bring in polyurethanes-based paints
to India. Polyurethanes can be used anywhere. They give an element
of permanency to the sheen and the life of the coating lasts about
3 to 4 times longer compared to other paints.The curing technology
comes from Vapocure, Australia. MRF is the only licensee
for the curing system for all of South Asia.
Where do you source raw material from?
Initially we were importing raw material, but now we have started
sourcing from indegenous suppliers. The percentage of imports is
around 20%.
Who are the major players based in Chennai?
Addison paints from the Amalgamations Group is the
major player. But the all-India market is dominated by Asian
Paints, Berger Paints, Goodlass Nerolac, Jenson & Nickelson
and ICI.
What percentage of sales can be attributed
to replacement demand and what percentage to primary demand?
The basic applications are for the construction, automotive and
industrial segments. Secondary demand is mainly attributed to construction
and it is around 70%.
 What
are the environmental hazards related to this industry? How are they
being tackled?
Inhalation of paint fumes is a health hazard. It is important to
wear masks. Unfortunately in India, you have many people doing paint
jobs in the open, which pollutes the environment. For this reason
alone, we need the Government to bring in strictures to restrict
painting in the open.
Levels of technology adopted. Is it on par
with international standards?
Most companies have a technical collaboration with some overseas
player and therefore we are maintaining international standards.
Export and Import scenario?
In most countries the domestic industry is well developed. They
have high quality, cost effective solutions available, so there
is not much scope for Indian manufacturers. Also, most Indian Companies
are comfortable only with the domestic market. As far as imports
go, overseas palayers are waiting for us to lift the Quantity
Restrictions (QRS). Once that goes, the market is going to be
flooded with imported paints. Sherwin Williams, the world's
largest paint manufacturers are waiting to dump in India. So is
China. An imported emulsion paint cost Rs 35/- to Rs 40/-, whereas
Indian manufacturers sell at about Rs 85/- to Rs 90/- per litre.The
domestic industry will get wiped out in the process. The only solution
to this is to have collaboration with Chinese companies.
 How
important is the range and distribution network in this industry?
Range is most important at the lower end segments, and so is the
supply chain management. When there is demand for the product and
no supply due to a poor distribution network, it already cuts into
your profit. MRF has 26 stocking points all over the country and
as we are into speciality coating, there are not many players in
this segment.
Which is the more competitive segment - decorative
or industrial?
The decorative segment is most competitive, as it forms 70% of
the total demand. The Original Equipment Manufacturers (OEMs) and
other industrial applications are need-based and are specific to
each application.
Factors that determine consumption and pricing?
Pick up in industrial activity, construction activity and purchasing
power. Right now there is a recession in all these segments and
we are waiting for an optimistic budget for accelerated economic
activity.
What are the expectations of the industry
from the Government?
 Stringent
regulations are called for to tighten up the import regime. The
government should do away with the excise duty which is around 16%
now. 9 to 10% will be comfortable. Also, the Government should actively
promote the use of paints to reduce losses due to corrosion, which
is about Rs 40,000 crore per annum.
What role does branding play in the industry?
Brands are not so important in the lower end of the retail segment.
But India is still a brand-driven market and the Chinese are bent
on making it a commodities market, by selling at rock bottom prices,
where you are not bothered about the brand.
How important is the BIS mark?
Its not so important. We do get a quality check for paint performance
done at the National Test House (NTH), when specifically
asked for by some client.
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