Most of the paint companies in India have taken a massive transition from the solvent-based paint to water-based paints for much better performance. Because of the much-increased input cost of crude oil in the last few years, it has taken the massive plunge in their gross margins in the past few years. Nearly more than 55% of raw materials used by most of the paint companies and the crude oil derivatives and account for nearly 30-35% of the total raw material cost of the sector produced. In the past few months, prices of crude oil have a huge plunge by approximately e than 40%. Not only that, the cost of various pigments like titanium dioxide, iron oxide, and zinc oxide also remain elevated for the mentioned reason. So, considering the cost pinch of the process, there’s an elevating graph to use water-based paints, just because water-based paint is much less sensitive to movement in current crude oil prices. As the phrase suggests, for the water-based paints, the binding molecule is a water-based compound.
For the solvent-based chemical paints, crude oil is necessarily required. Furthermore, the most preferred for water-based chemical paints over solvent paints is because of the rising among different customers because it is much easier to clean walls painted with water-based paints than any other various methods, said an expert with a domestic brokerage house. Also, the earlier is more environment-friendly. The slew of recent capacity expansions that are announced by key paint companies is primarily focused more on water-based units only. For example, the market leader in decorative paints Asian Paints Ltd’s plant in Delhi has around 600,000 kilolitres per annum water-based capacity.
The company has a huge chunk of share of water-based paints than any other competitors if being pointed out brokerage house Jefferies India Pvt. Ltd. Additionally, most of the leaders in the industrial paints segment Kansai Nerolac Paints Ltd are very much consistently with increasing the considerable chunk of share of water-based paints in its recent portfolio.“ Around two-thirds of the revenue in the new decorative paints, category arises from water-based paints only. In general case, the gross margins are much better for any water-based paints as compared to that for solvent-based,” Peeyush, general manager at marketing at Kansai Nerolac Paints, said in an interview yesterday. He also added that in the whole world, consumption of water-based paints is growing fastly and demand is expected to remain very high. Meanwhile, currently, paint makers around the world are shielding their margins by taking huge price hikes.
Many paint companies increased prices by nearly 1.5% and 2% in March and May, respectively, of the recent calendar year. However, the growing share of water-based paints is expected to aid some margin growth in this long term. Environment-friendly colour is the buzzword nowadays. How is Berger pitching could be the cause? Green paints are the future of the industry. We are also looking at various ways to bring newer and better products in line with the current environment. The carbon footprint of paint is high as the chemicals evaporate very quickly. Therefore, the current focus on water-based paints is where the water will evaporate. Berger has also switched its entire old formulation in synthetic enamel to non-lead. Are you planning any price revision? We have the most likely price hike, and it’s after 19 months. The price of many decorative and industrial paints has also gone up by 4% and 4-5%, respectively. Most of the players are also looking at ways to increase prices quickly.