Paint majors ride real estate boom

Riding on the back of a real estate boom, paint companies are extremely bullish on India, which is among the fastest growing markets across the globe.

Among the international companies that are increasing their investments is the Japanese paint major, Nippon, which is putting in about Rs 80 crore (Rs 800 million) for manufacturing facilities in Gurgaon and a 25-acre unit in Chennai.

With Akzo Nobel likely to acquire ICI Paints globally for $16 billion, the Dutch giant will increase its play in India, say analysts.

Akzo already has a powder coatings business in India through its acquisition of Courtaulds in July 1998, and it has also entered the decorative paints segment.

American giant Dupont, which supplies inputs like Titanium Chloride to paint companies in India, is also expected to expand its presence here. A company spokesperson confirmed that plans were being worked out, but refused to divulge details.

Industry experts expect other companies like Behr and BASF to step on the accelerator also.

The Rs 11,000-crore (Rs 110 billion) Indian paints market is growing at double digits and the decoratives segment, which accounts for 70 per cent of sales, is growing in excess of 20 per cent.

Asian Paints, the country's largest paint manufacturer, also has major expansion plans. The company is setting up its largest facility, which will have a capacity in excess of one lakh kilo litres, at Rohtak in Haryana. It will focus on emulsions.

"The demand has exceeded our capacity and hence we are looking at this new plant," said Ashwin Dani, vice chairman and managing director, Asian Paints. Competitor, Kansai Nerolac, is planning an 18,000-tonne plant at a cost of Rs 68 crore (Rs 680 million), which will start production in two or three years. Berger Paints has 75 per cent of its business in decorative paints. "In India, the housing sector is booming and this has provided a major boost to the decoratives business. This segment is expected to grow at 18-20 per cent," said Abhijit Roy, vice-president marketing, Berger Paints.

Now, industry sources say, even tile manufacturer NITCO is getting into paints. The company is said to be acquiring land in north as well as south India to set up new paint plants.