Paint makers continue double-digit growth

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Paint makers continue double-digit growth
Competition is expected to intensify as RAK Group plans to enter market

Sajjadur Rahman

Bangladesh’s paint industry has been growing at a double-digit rate for the past several years riding on the increasing demand from the construction sector, market players said.

A recent study reveals its market size based on demand is estimated at Tk 1,000 crore and domestic production capacity Tk 920 crore. Leading private commercial bank Prime Bank conducted the study.

The demand-supply gap, according to the study, is Tk 80 crore.

“We believe there is still good prospect for paint industry here. It is growing constantly,” said Sangam Lal, chief financial officer of RAK Group, a UAE-based conglomerate that has been working on setting up a paint factory in Bangladesh.

The Tk 50-55 crore factory is likely to go for commercial production by the year-end.

Only a few players Berger, Asian, Roxy, Pailac, Aqua and Elite etc are operating in the market with over 90 percent market share.

The Prime Bank study shows Berger alone holds 48 percent market share, followed by Asian Paints 12 percent, Roxy 10 percent, Pailac and Aqua each 7 percent and Elite Paints 5 percent. Uzala and Navana paints are also in the market.

Market leader Berger grew by 25 percent in 2008 and Asian Paints that entered the market in 2002, whooping 50 percent.

The local housing industry, which grew 20 percent last year, may do well this year, despite internal and external obstacles.

Shipbuilding and automobile industries also consumed a good amount of paints, market operators said, without giving a specific percentage.

Key products that hold the major market shares are: plastic emulsion, distemper, outer coat (weather proof), synthetic enamel etc.

Plastic emulsion and distemper are close substitute of each other. Emulsion is basically used in high-end residence all over the country and distempers are economy class products having a demand in semi-urban and rural markets. Weather coat is growing very fast and presently hold 20 percent market share.

Touhidul Alam Khan, executive vice president (corporate banking) of Prime Bank, sees a good business prospect for new comers, as there is a gap in demand and supply.

Khan identified several reasons for the growth, which include growth in real estate sector, gradual increase in awareness of preservation of houses, widening urbanisation, availability of house loans and shift from semi-permanent to permanent housing structure, growth in shipbuilding industry and consistent growth of the economy at around 6 percent for the past five years.

Rupali Chowdhury, chief executive of Berger Paints Bangladesh, however, believes the market is already crowded and there is little business opportunity for the new entrants.

She said Berger has 50-55 percent market share in Bangladesh.

“Maintaining quality has helped the company to hold the market leadership,” she told The Daily Star.

However, Sangam Lal of RAK Group, said they are confident about grabbing a market share in the paint industry in Bangladesh.

sajjad@thedailystar.net