Paint makers mull price hike on higher input costs

Nerolac 48Asian Paints 45  Burger 13 Berger Paints 16  Nerolac 12 Figure in %  Nerolac has a market share of 48 per cent in the Rs 2,100 crore industrial paint market, followed by Burger with 13 per cent market share. Nearly 50 per cent of the revenues of the companies such as Nerolac and Berger Paints consist of solvent-based products, in which the main raw materials are derivatives of crude oil.  In the last six months, the costs of crude oil derivatives like mineral turpentine oil (MTO), a chief input used in decoratives, has gone up by nearly 50 per cent.  Further, automotive paints, which form about 12 per cent of revenues of Berger Paints, is dependent on the performance of the automobile industry that is in-turn reeling under input costs pressure.  The automobile has witnessed a decline of five per cent in sales last year, leading to a fall in demand for automotive paints by the automobile manufacturers.  Abhijit Roy, vice-president, marketing, Berger Paints, the second largest maker in the country of decorative paints said, "We are planning a five per cent price hike next month to offset slowdown. We would also focus on emulsions, as it is a faster growing segment over others."  Market leader Asian Paints is expected to be under lesser pressure as it has a diversified portfolio comprising more emulsions and decorative paints, that are growing faster owing to a rise in construction business, say analysts.  Emulsions are growing at a rate of 25 per cent and form 40 per cent of the turnover of Asian Paints and 45 per cent of paint maker ICI.  Domestic paint market is valued at nearly Rs 10,000 crore out of which 70 per cent is organised.  And decorative paints account for 70 per cent of the organised sector with Asian Paints having 45 per cent market share, Berger Paints 16 per cent and Nerolac 12 per cent.