(Photo caption: Inauguration of Hempel’s new manufacturing facility at Nashik.)
Hempel is one of the world’s leading industrial and marine coatings suppliers. After opening its first Indian manufacturing facility at Nashik in 2011 – within the same city, the company inaugurated a new manufacturing facility recently.
Umesh Singh, Group Vice President & CEO – Hempel India told Sandeep Menezes that the protective coatings market will grow on average about 15 per cent over next few years.
Excerpts from the interview:
Hempel set-up its first plant at Nashik in 2011, the company recently opened its second plant with plans to invest a further EUR 2 million in a second phase capacity expansion. How confident is Hempel about its aggressive expansion strategy in India?
Hempel started its operation in year 2010. In short period of four years Hempel has made its presence felt in Protective & Marine Coatings segment in South Asia Market. In Protective Coating segments; we had good success in Wind, Oil & Gas, Infrastructure and heavy equipment. In Marine we have already made inroads in New Building & strengthened our position in maintenance segment. With the investment in new plant; we have enhanced our capacity to cater to larger market with short lead time. This will enable us to increase our market share in South Asia market.
Going forward, does Hempel intend to look at other locations rather than concentrating all manufacturing operations around Nashik? Any plan to increase exports from India?
Existing location suits to our potential markets as of now. Secondly, Nashik is convenient location from Paint Raw Material sourcing point of view. In future Hempel would expand manufacturing facility in other locations depending on market demand in the region.
The current plant will cater to export requirements in neighboring countries like Sri Lanka, Bangladesh & Maldives.
Marine paints segment has not witnessed significant growth for last few years and since the global melt-down the shipping industry has not been able to recover. How do you foresee the future scenario in India vis-à-vis the global marine paints market?
Shipping Industry; which entirely depends on movement of goods across the continents is directly linked to global economic activities. Slowdown has reduced the movement of goods and this has affected the industry adversely. As such demand for Marine Coatings in India is less than a percent of total coating requirement. This has become worse due to global melt down. The increase in fleet size and Ship Building activities in India would enhance the demand for Marine Coatings. India has vast coastline and manpower resources to support new building activities. South Asia could become one of the preferred destinations of shipbuilding because of increasing cost in Korea and China.
India is expected to witness increasing investment in industrial sectors like wind turbines, cranes, construction equipment and infrastructures. Tell us about the cascading benefits on industrial paints segment?
The assets in these segments require protection against adverse climatic condition for longer period. This would increase the demand for high-end coatings. Hempel has strong presence worldwide in these segments and would certainly benefit with investment in these sectors.
What is the current and estimated future market-size of protective coatings segment in India? Tell us about the current, future demand drivers in this segment?
The current market size of protective coatings is estimated to be around Rs. 1500 crore. The proposed investment in infrastructure, power plant and oil & gas would considerably increase the demand for protective coatings. We expect the market to grow on average about 15 per cent over next few years.
With raw material prices rising – due you foresee increasing pressure on margins across the industry?
Increasing prices of raw materials put massive pressure on margins. It is not possible to pass on the entire impact of this cost increase to the customers due to long-term contracts. This affects the profitability. The industry is facing the challenge of margin management because of the fluctuation in prices of raw material like pigments, metals and petroleum products & its derivatives.
Tell us about your plans towards providing environment friendly paints, coatings in India?
Hempel is committed to reduce Carbon Foot Print. We have been constantly improving our technology to provide low VOC coatings. We are already selling high volume solid & solvent-free coatings in India.
We will look at possibility of introducing waterborne coatings as and when the demand rises.