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Technology
shifts in coatings offer opportunities for speciality chemicals
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The
emphasis likely to be given by the current government for
development of all types of infrastructure and on promoting
manufacturing augurs well for the coatings industry in the
country. This excites not just the companies offering paints &
coatings for industrial or architectural use, but also the many
suppliers of chemicals – commodity and speciality – that serve
the industry. Companies in both categories are bolstering their
presence – enhancing manufacturing capability, stepping up
marketing & promotion efforts, and emphasising innovation –
to be in a better position to cater to this exciting, demanding,
yet price sensitive market. This week’s news in the following
pages highlights some of these efforts, but a lot more is
happening in the dynamic coatings industry in India.
Nascent
industry
Although
a valuation of about Rs. 40,000-crore (about US$6.7-bn) for the
Indian coatings industry seems impressive, in the light of the
size of other emerging markets (let alone developed ones), it is
disproportionately small, and represents just about 4% of the
global market. The good news is that the growth prospects are
robust – conservatively estimated at around 12% per annum for
the medium-term. Several factors will drive this growth: rising
economic prosperity, accelerated urbanisation, the emergence of a
sizeable realty industry (at least in Tier 1 & Tier 2 cities)
and faster industrialisation – to name just few. If every
building in just urban Indian environment is painted once a
decade, demand for architectural paints will increase many times
over. So will it if ambitious plans to build tens of thousands of
houses announced by the government in the recent Budget are
implemented.
Nearly
70% of the Indian market is still dominated by architectural
paints – the kind that covers the interiors and exteriors of
houses. While this segment will continue to be an important driver
of growth, the industrial segment – serving a wide range of
end-uses including automobile, electronics and packaging – has
the potential for even faster growth (albeit from a very small
base). In this segment, coatings serve not just an aesthetic
function, but also a performance one, protecting the underlying
surface from corrossion (in an automobile for instance), or
keeping contents intact (as in a can containing food).
Lacking
in standards
An
important driver of growth for the coatings industry is standards
and India lags behind. Both in the standards per se, and their
effective implementation. Standards are required for both the
product as well as the application for best results – and again
India is lacking in both counts. Some of the leading architectural
paint companies in India are now looking to address this issue
individually by offering comprehensive product and application
services backed by warranties for a reasonable period of time,
including the promise of repainting if required.
Although
the Bureau of Indian Standards has been in existence for decades
and has several standards for the paints & coatings sector,
their relevance in a rapidly changing world with new technologies,
new ingredients and fresh assessments of safety of ingredients in
the light of new scientific evidence, is questionable. Many of
these have been framed decades ago, and are today disconnected
from the realities of the marketplace. The industry must share
some of the blame of affairs as it has never felt it necessary to
actively engage with the regulatory authorities and work towards a
common goal of technological upgradation.
In
industrial coatings the problem with standards is not so much of
an issue, and reasonable – if not contemporary – standards
exist and are complied with by end-users. A big reason is that
industrial consumers are typically more well informed and have the
capabilities in terms of manpower and financial muscle to ensure
compliance to technical agreements based on sound science and
standards. In the architectural segment, however, it is a very
different story, with few standards existing and even fewer
complied with.
Opportunities
for speciality chemicals
Contemporary
standards will serve to qualitatively upgrade the coatings sector
to ensure that safer and more environmentally acceptable products
are used. Across much of the developed world, solvent-based
coating systems are giving way to water-based and high solids
coatings. These switches do not happen unless there is strong
consumer pull or a legislative push. The former is just about
emerging, and if reinforced with the latter could hasten a
transformation that has gone a considerable distance in other
countries.
While
such shifts will ultimately benefit all stakeholders (but not
without costs) – by making products safer to manufacture, apply
and use – they will also pose a significant opportunity for
suppliers of several speciality chemicals. While the basic
formulation of a paint is relatively simple – including largely
a carrier (water or a solvent), a resin and a pigment – advanced
performance is brought about by the use of several speciality
chemicals. In modern formulations, such as water-borne ones, the
demands for these speciality ingredients are greater, in part to
compensate for the absence of solvent. While solvent-based systems
have a lion’s share of the industrial coatings market,
water-based systems are only now beginning to make their presence
felt, and will provide suppliers of speciality chemicals many
opportunities for innovation and differentiation.
Speciality
chemicals can also play a significant role in optimising
formulations and making them cheaper. The most expensive component
of paint is usually the pigment, titanium dioxide, which provides
hiding power and enables formation of a durable film that protects
and preserves. Any success in reducing its content, without
jeopardising functionality of the coating, will go a long way in
reducing overall costs, and that is exactly what a polymeric
system from Dow Chemicals can do. This product is now finding
traction in the Indian market simply because the value-proposition
is right. No legislative push required here; competitive market
pressures serve the purpose.
But
that is not so for another technology from the same company: one
that claims to absorb formaldehyde – a well known indoor air
pollutant with harmful properties – and converts it into benign
water. In the absence of standards for indoor air quality, in
general, and formaldehyde levels, in particular, such offerings
are only likely to gain traction slowly, if that.
In
marine, anti-fouling coatings, the ban on use of organo-tins in
many developed countries, has provided an opportunity for
alternate, more benign systems (e.g. copper-based systems) and
even radical solutions (e.g. enzyme-based systems and coatings
with covalently attached toxins that do not leach into the water).
Likewise, several biocides – used in significant volumes in the
Indian coatings industry – are now being outlawed in the west
due considerations of safety and these waves will trends will
eventually wash home – even sooner than many believe.
While
the coatings industry and their ingredient suppliers have hitherto
not paid much heed to these trends, they will do well to do so
now, lest they be caught unawares in some time!
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RAVI RAGHAVAN CHWKLY140916
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