A

PROJECT REPORT ON

EXERCISE “DOOSRA KADAM”

COMPANY:

CO-ORDINATOR’S NAME:- Mr. ANKUR JAIN, MANAGER, Q A.

PHONE NO:- 01202344111.
E-MAIL ID:- ankur.jain@asianpaints.com.

HR REPRESENTATIVE :- Mr. RAJDEEP BHATTACHARYYA, MANAGER, HR.

PHONE NO :- 01202344021
E-MAIL ID:- rajdeep.bhattacharyya@asianpaints.com.

TEAM MEMBER’S NAME:-

 DEEPAK KUMAR THAKUR (TEAM LEADER)

 DUSHYANT SINGH

 NARBIR SINGH

 LOVEKUSH PANDEY

 PANKAJ KUMAR
 TABLE OF CONTENT

 INTRODUCTION

 COMPANY PROFILE

 PRODUCT DETAILS

 COMPETITOR DETAILS

 FINANCE

 OPERATIONS

 MARKETING & SALES

 SUPPLY CHAIN MANAGEMENT

 HUMAN RESOURCE MANAGEMENT

 SAFETY, HEALTH & ENVIRONMENT

 MAJOR ACHIEVMENTS BY ASIAN PAINTS

 BIBLIOGRAPHY.

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 INTRODUCTION
THE INDIAN PAINT INDUSTRY
The paint industry of India is 100 years old. Its beginning can be traced to the setting up
of a factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II, the
industry consisted of just a few foreign companies, and some small, indigenous
producers. The war led to a temporary stoppage of imports leading to many more local
entrepreneurs setting up manufacturing facilities. Nevertheless, foreign companies
continued to dominate the industry. Even now, they remain active contestants, though
their foreign shareholdings stand reduced, with two of them having become totally
Indian. Currently, the industry has a sales turnover of about Rs.3, 600 crore. In terms of
volume, it corresponds to 5 lakh tonnes. The industry is composed of two sectors, the
organised and the unroganised. The organised sector controls 70 per cent of the total
market. The remaining 30 per cent is in the hands of the unorganised sector, consisting
of 2000 odd small-scale units. The industry is not capital intensive. It is however
working capital intensive. The demand for paints is fairly price-elastic and is linked to
economic and industrial growth. Demand is somewhat seasonal in nature-low during
monsoon months, high during festival seasons.

THE MAIN SEGMENTS

The industry comprises two main segments decorative/architectural and industrial paints.
The decorative/architectural paint segment accounts for 70 per cent of the total paint
market while the industrial paint segment accounts for the remaining 30 per cent. The
industry is, however, expected to undergo a structural shift towards industrial paints in
the next few years, when its share is expected to go up to 50 per cent in line with the
global trend. Industrial paints thus holds greater growth potential in the coming years.
Actually, with the decorative segment gradually bottoming out, companies are already
increasing their focus on industrial paints. Industrial paints are technology intensive. The
industrial paints segment can be further classified into automotive paints, marine, powder
coatings, high performance coatings, and others. Original equipment manufacturers
(OEM) of products such as automobiles, furniture and white goods such as refrigerators
are prime consumers of industrial paint. The automobile industry accounts for 50 per
cent of the industrial paint market. A good part of the demand is from shipping and
heavy industry. Navy being the largest customer in shipping.

THE MAIN PLAYERS

Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar
are the leading companies in the organised sector. The top six manufacturers account for
about 80 per cent of the market in the organised sector in value terms. AP is the industry
leader, with an overall market share of 33 per cent in the organised sector. Threat of
global competition is minimal in the industry. AP dominates the decorative segment, with
a 38 per cent market share. Goodlass, a Tata company, is number two with a 14 per cent
market share. Berger and ICI have 9 per cent and 8 per cent shares, respectively, in this
segment followed by Shalimar, with 6 per cent.

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Goodlass dominates the industrial paints segment, with 41 per cent market share. AP is a
poor second here, with a 15 per cent market share. Berger, ICI, and Shalimar are the
other substantive players in the sector, with 10 per cent, 9 per cent and 8 per cent shares,
respectively. The dominance of Goodlass in industrial papints is largely the result of its
technical associated with the Japanese paint major, Kansai Paints, which has a 29.5 per
cent equity stake in the company. Goodlass has a lion’s share of 70 per cent in the OEM
passenger car segment, 40 per cent share of two-wheeler OEM market and 20 per cent of
commercial vehicle OEM market. Goodlass also holds 20 per cent of the white-goods
segment.

COMPANY’S PROFILE

Asian Paints is India's largest paint company and ranks among the top ten decorative
coatings companies in the world today, with a turnover of Rs.66.80 billion. It was formed
as a partnership firm by four friends in 1942. The company has an enviable reputation in
the corporate world for professionalism, fast track growth, and building shareholder
equity.Driven by its strong consumer-focus and innovative spirit, the company has been
the market leader in paints since 1968. Today, Asian Paints becomes the 10th largest
decorative paint company in the world.Asian Paints is more than twice the size of its
nearest competitor.It is one of the most admired companies in India. Asian Paints
operates in five regions across the world viz. South Asia, South East Asia, South Pacific,
Middle East and Caribbean region through the four corporate brands viz. Asian Paints,
Berger International, SCIB Paints and Apco Coatings. Asian Paints has 23 paint
manufacturing facilities in 17 countries with a combined total manufacturing capacity of
around 370 million liters per annum. The company is servicing 65 countries through
Berger International Limited and in 5 markets in the South Pacific through Apco
Coatings. In Australia it also owns the Pacific Paints brand, in Fiji & Samoa Islands it
also operates through Taubmans, and in 6 countries through Asian Paints.

A talent pool of over 5500 employees employed across 27 countries brings in a unique
blend of mindsets and skills. The Group's principal activities are to manufacture and
market paints.

VISION
Asian Paints aims to become one of the top five Decorative coatings companies world-
wide by leveraging its expertise in the higher growth emerging markets. Simultaneously,
the company intends to build long term value in the Industrial coatings business through
alliances with established global partners.

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MANUFACTURING FACILITIES IN INDIA:-

 Bhandup, Maharashtra.
 Kasna, Uttarpradesh.
 Sriperumbudur,
 Rohtak, Haryana.
 Ankleshwar, Gujrat.
 Patancheru.
 Sarigam.
 Baddi, HP.

MANUFACTURING FACILITIES OVERSEAS:

SOUTH ASIA:-
 INDIA
 SRI LANKA
 BANGLADESH
 NEPAL

SOUTH EAST ASIA:-

 SINGAPORE

SOUTH PACIFIC:-
 TONGA
 FIZI
 SAMOA ISLANDS
 VANUTUA
 SOLOMON ISLAND

MIDDLE EAST:-
 OMAN
 BAHRAIN
 DUBAI
 EGYPT

CARIBBEAN:-
 JAMAICA
 BARBADOS
 TRINIDAD & TOBAGO

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 PRODUCT DETAILS

Asian Paints produces a wide range of paints for decorative and industrial
use. It also manufactures intermediate products like Phthalic Anhydride and
Pentaerythritol. The chemicals business which contributes 5% to overall
sales of the group is managed for value. APIL's product range includes Wall
paints, Metal paints, Wood Finishes, Primers, Wall puttys, powder coating
and others.

Apart from offering the customers a wide range of decorative and industrial
paints, it even custom-creates products to meet specific needs.

Following are few of the famous products of Asian Paints.

DECORATIVE PAINTS:-

 EXTERIOR WALLS

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Asian Paints offers a range of emulsion paints for your exterior walls. You can choose
from ACE, Apex, Apex Ultima, Apex Duracast and more, based on the specific demand
of surface area.

 INTERIOR WALLS

 Distempers
Distempers offer strong performance to the interior wall surface in terms of
protection and adhesion. Tractor Acrylic Distemper, with better durability, is one of
the best performing distemper made by Asian Paints.

 Emulsions
Interior emulsions are advanced water based paints with better quality and shade
range. Adhesion to wall surface, anti fungal properties and durability is more in
emulsions. Check out products range for more information.

 METAL SURFACES

Suitable for metal surfaces, this enamel product brings a suitable effect. With
different surface preparation and undercoat system, read the directions for usage
carefully before application.
 WOOD SURFACES

Clear Finish
Clear Finishes act as protective coatings providing a high degree of resistance from
water, dirt, grime, chemicals and abrasion, along with enhancing the natural beauty
of the wood.
Opaque Finish
Wood Palette, the range of opaque wood finishes from Asian Paints brings you a
high gloss, tough scratch proof coloured wood finish that brings new style and
sophistication that’s beautiful and stays that way under heavy usage.
Enamels

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These are essentially enamel paints suitable for wood surfaces. With different surface
preparation and undercoat system, read the directions for usage carefully before
application.

ANCILLARIES PAINTS:-
 Asian Paints Decoprime Wall Primer WT

Asian Paints Deco-Prime Wall Primer (WT) can be used as primer for painting of water-
based wall finishes such sa distempers & plastic emulsion paints.Its special features are
easy brushing,excellent covering,alkali resistance,quick drying & good sealing
properties.It is specially fortified with fungicides.
 Asian Paints Decoprime Wall Primer ST

Asian Paints Deco-Prime Wall Primer (ST) is suitable for use as primerfor masonary
topcoats like distempers, emulsions,lustre & matt wall finishes.It helps in providing a
suitable surface for applicationof subsequent coats of putty & finish paint.It seta fast,has
good sealing properties,good resistance to wall alkalinity, moisture & fungus.

 Asian Paints Acrylic Wall Putty

Asian Paints Acrylic Wall Putty is water_based putty.It is one of the best product of its
kind available in the market.It provides a very strong durable foundation & brings out the
best performance from the finish paints.both in looks & durability.

 Asian Paints Exterior Wall Putty

Asian Paints Exterior Wall putty is a specially designed product based on white
cement, redispersible polymer & functional additives for application on exterior
rough plasters to give a smooth finish.

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  Asian Paints Wood Primer

Asian Paints Wood Primer is specially formulated to protect wood.It has an excellent
sealing & filling properties which protects wood from swelling due to absorption
moisture.Wood Primer penetrates wood fibre & gives excellent adhesion to substrates &
also serves as a sound base for application of undercoats & finishing coats.It also protects
the finish coat from exudation of resinous matter oozing out from wood.
 Asian Paints Exterior Wall Primer

Asian Paints Exterior Primer is water-based wall coating suitable for application on
exteriors as an undercoat to exterior emulsions.It has a good opacity & whiteness, which
helps improve the appearance of the emulsion top coat.Exterior Wall Primers doesnot
chalk & can be applied on freshly plastered surfaces that are adequately cured.It doesnot
require any water curing.

 INDUSTRIAL PAINTS

 Protective Coatings

Offers an extensive range of high performance, heavy-duty coatings for protection of

assets in aggressive industrial environments

 Floor Coatings

Offers a wide range of coatings and floorings for concrete floors and hygiene wall
coatings

 Road Markings

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The range includes hot melt thermoplastic road marking material, cold applied retro-
reflective and water / solvent based paint for marking roads.

GEOGRAPHICAL MARKETS

The countries that Asian Paints has presence are as follows:

South Asia
Bangladesh, Nepal, India and Sri Lanka.

South East Asia

China, Malaysia, Myanmar, Singapore and Thailand.

Caribbean Islands
Barbados, Jamaica, Trinidad and Tobago.

Middle East
Egypt, Bahrain, UAE and Oman.

South Pacific
Fiji, Solomon Islands, Tonga, Vanuatu and Samoa Islands.

FINANCIAL ANALYSIS & DETAILS

Consolidated Cash Flow Statement

For the year ended 31st March, 2010

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Particulars 2009-10 2008-09

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 A. Cash flow from operating activities 1257,24 619.14
Profits before tax and prior period items
Adjustment for
Depreciation 83.56 74.38
Impairment of goodwill - 1.24
Prior period items(Net) (0.22) (0.27)
Profit on sale of investments (62.72) (0.13)
Profit on disposal of subsidiaries (1.15)
Gain on disposal of assets (7.88) (6.54)
Interest expense 28.47 26.32
Interest incomes 11.06 5.69
Dividend income (22.62) (14.08)
Effect of exchange rates on translation of (17.29) 32.06
operating activities
Operating profits before working capital 1246.33 724.43
changes
Adjustments for:
Increase in stock (191.35) (59.94)
Increase in trade and other receivables (50.88) (92.22)
Increase in payables 376 4.05
Cash generated from operations 1380.10 581.32
Income tax paid (net of refund) (316.94) (191.92)
Net cash generated from operating activities 1063.16 389.40
B. Cash flow from investing activities
Purchase of fixed assets (395.31) (310.05)
Proceeds from sale of fixed assets 12.06 21.75
Purchase of investments (54.36) -
sale from investment 98.66 0.21
Interest received 11.40 5.23
Dividend received 22.62 14.08
Cash outflow on additional stake in subsidiary - (1.27)
Cash inflow arising out of disposal of subsidiary 5.91 -
Net cash used in investing activities 299.02 270.05
C. Cash flow from financing activities
Repayment of long tem loans (14.55) (2.56)
Repayment of short term loan (52.97) (1.56)
Interest paid (28.47) (26.32)
Dividend paid (235.89) (199.93)
Net cash used in financing activities (331.88) (230.37)
D. Net increase/decrease in cash and cash 432.26 (111.02)
equivalents
Cash and cash equivalents as at 31st March 210.37 308.88
2009
Net effect of changes in exchange rate on cash (5.16) 12.51
and cash equivalents
Cash and cash equivalents as at 31st march 637.47 210.37

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 2010

Consolidated Profit and Loss Account

For the year ended 31st March 2010
(Rs in
Crores)
Particulars 2009-10 2008-09
Income
Sales and operating income 7106.56 6044.51
Less: Exice duty 425.62 580.61
Sales and operating income 6680.94 5463.90
Other income 140.50 51.01
6821.44 5514.91
Expenditure
Material cost 3757.96 3370.64
Employee cost 436.28 371.52
Manufacturing, admin and selling expenses 5453.32 4793.83

Profit before interest, depreciation, tax and 1368.12 721.08

exceptional items
Less: interest 28.47 26.32
Less: depreciation 83.56 74.38
Profit before tax and exceptional items 1256.09 620.38
Add/less: Exceptional items 1.15 (1.24)
Profits before tax and prior period items 1257.24 619.14
Less: prior period items (net) (0.22) (2.27)
Profit before Tax 1257.02 616.87
Less: Provision for tax:
Current tax 373.18 179.34
Deferred tax 5.54 16.32
Fringe benefit tax - 7.36
(Excess) Tax provision for earlier year (5.61) (5.63)
Profit after tax 883.91 419.48
Less: minority interest 48.27 21.64
Net profit attributable to shareholders 835.64 397.84
Add: balance brought forward from previous year 230 200
Amount available for appropriation 1065.64 597.84
Appropriations
Dividend to shareholders of parent company:
Equity shares- interim dividend 81.53 62.35
- Proposed dividend 177.45 105.51
Tax on dividend 43.33 28.88

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 Transfer to general reserve 163.33 171.10
Balance carried to balance sheet 600 230
1065.64 597.84
Earning per share –basic and diluted-before 87 41.61
exceptional item
Earning per share after exceptional items (face 87.12 41.48
value of Rs 10 each)

Consolidated Balance Sheet

as on 31st March 2010
(Rs in
Crores)
Particulars 2009-10 2008-09
Funds employed
Shareholder’s fund 95.92 95.92
Share capital 1614.06 1107/25
Reserves and surplus 1709.98 1203.17

Loan funds
Secured loans 63.70 103.70
Unsecured loans 165.53 204.92
229.23 308.62
Deferred tax liability (Net) 56.23 53.31
Minority interest 94.45 75.57
Total 2089.89 1640.67

Application of funds
Goodwill on consolidation 36.73 50.55

Fixed assets
Gross block 1500.39 1461.41
Less: depreciation 627.57 648.38
Net block 872.82 813.03
Add: capital work in progress 407.23 92.11
1280.05 905.14

Investments 624.11 78.40

Current assets, loans and advances
Interest accrued on investments 0.21 0.55
Inventories 955.88 768.95
Sundry debtors 542.52 571.92
Cash and bank balances 105.83 210.37
Other current assets 64.63 49.12
Loans and advances 174.62 197.80

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 1843.69 1798.71

Less: current liabilities and provisions

Current liabilities 1379.65 1014.68
Provisions 315.04 177.45
1694.69 1192.13

Net current assets 149 606.58

Total 2089.89 1640.67

Financial Ratios
Ratios Mar ‘10 Mar ‘09 Mar ‘08 Mar ‘07 Mar ‘06
Gross profit ratio 18.11 11.90 14.62 13.32 13.09
Net profit ratio 14.29 7.97 10.28 9.11 7.59
Current ratio 0.89 1.13 1.02 1.24 1.15
Quick ratio 0.37 0.58 0.47 0.59 0.55
Fixed assets turnover 4.68 4,17 3.97 3.81 3.46
ratio

Inventory turnover ratio 7.95 9.80 8.03 8.27 8,80

Total debt/equity 0.04 0.05 0.08 0.14 0.11

Dividend per share 27 17.50 17.00 13.00 12.50

Return on long term funds 62.95 49.35 58.11 52.70 51.08

Operating ratio 19.24 13.16 15.83 14.77 14.95

Analysis
Looking at various accounting ratios of Asian Paints, we can get a good picture of the
company’s financial position. A same trend can be noticed in all the ratios, i.e. they are
increasing with every year. For example, the Gross Pts and Net Pts Ratio have been
increasing since 2006, except for ’09 due to recession. This shows that the company’s
profits have been increasing.
Similarly, fixed assets and inventory turnover ratio of the company show intensive
utilisation of fixed assets and efficient management of inventory.
Return on capital employed ratio and its dividend per share shows that the
management have well utilised the funds and investments made by creditors and
owners and the business given great returns to its investors. Company’s operating ratios
have also been low which shows their higher operational efficiency. Lower the operating
ratio higher will be the operating profit.

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 However, the company’s liquidity position is not as good. Liquidity refers to the
ability of a firm to pay its short term obligation as and when they become due. The
company’s liquidity ratio of past few years has been quite low which don’t show a very
good picture of company’s liquidity.

OPERATIONS

The paint industry is raw material intensive. Paint involves the mixing of various raw
materials in various proportions. The raw materials are of a wide variety. On an average,
raw materials account for 60% of net sales (industry average). In case of small-scale units
it forms up to 70% of the net sales.

Raw materials are divided into three major groups, namely, pigments (titanium dioxide,
zinc oxide etc.), solvents (mineral turpentine) and resins and additives.

Pigments are finely ground solids of different shades to give colour, durability,
consistency and other properties to paint. It is also one of the major raw materials,
accounting for one-third of the total raw materials cost.
Amongst the vital pigments used in the process of paint manufacture is Titanium dioxide
(TiO2) and the industry consumes around 60% of TiO2. This pigment is available in two
grades: anatase and rutile, of which anatase is exclusively used in interiors while rutile is
preferred in exteriors.

Solvents are volatile organic compounds (VOC) used to dissolve, suspend or change the
physical properties of other materials. They are generally used to bring down the
viscosity of paints to the desired level, which also reduces the cost of paint formation.
They constitute 70%-75% of the paint liquid and ultimate escapes into the atmosphere
when the fluid dries. Solvents such as ethylene glycols and alcohols are finding wider use
as co-solvents in new water-borne formulations.

Binders are generally oils, resins and plasticisers that give paints its protective property.
Most resin manufacturers make alkyds, polyesters, emulsion polymers, epoxy resins,
amino resins, powder coating resins etc.

Additives are added in small proportion to the paint to improve its performance
characteristics in various ways. Skinning inhibitors, fungicides, wetting agents, driers are
included in this category.Around 600 raw materials are required by the industry and all
raw materials are not directly related to crude oil. The basket of raw materials is quite
exhaustive. Raw materials, which constitutes around 60 per cent of total cost for the
paints industry is an important factor for maintaining operating margins. The industry
imports around 25 per cent of raw materials. But the most important raw material is
titanium dioxide, which accounts for around 25-30 per cent of raw material costs.

PRODUCTION PLANNING:-

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Production planning is a centralised activity carried out by the Material planning
department for all the plants of the company.

Trade paints are classified under two categories:-

 Made to stock.
 Made to order.

SUPPLY CHAIN MANAGEMENT

The material function of supply chain of decorative business unit (DBU)/Industrial

Growth Business Unit(GBU) located at the Vakola office of Asian Paints consists of
Purchase department comprising of Material Planning and Distribution , the development
initiatives comprising of RM-PM vendor development, New product supports, New
initiatives.

DISTRIBUTION SYSTEM
At the time AP entered the Indian paint business, distribution was the most crucial task
for any new entrant. Both physical distribution and channel management posed
formidable challenges. The foreign companies and their wholesale distributors
dominated the business. The foreign companies appointed a few traders as their
wholesale distributors and allowed them to perpetuate a situation of monopoly. Each
distributor was assigned a large territory and was given the right to operate as the
exclusive channel of the company in the assigned territory. The trade terms were also
very liberal. The companies also extended virtually unlimited credit to the distributors.
The credit outstandings for the supplies made throughout the year were required to be
settled by the wholesale distributors only at the year-end, at Diwali time.

These distributors had neither the compulsion nor the motivation to invest in distribution
infrastructure. They were not required to move out to semi-urban and rural areas. They
concentrated on big cities where they could make the sales without much investment in
distribution infrastructure and market development. Also, they were shutting the doors
on any new paint company seeking an entry into the business. In other words, these
distributors controlled the paint business and were making it impossible for a new paint
company to enter and establish itself n the business. AP sized up the scenario correctly
and formulated a unique distribution strategy. In the normal course, a firm entering the
industry in this scenario would have opted for the low risk strategy of gaining a limited
access to the wholesale traders and be satisfied with a small share of the existing
business. But AP went in for a strategy that differed totally from the existing pattern.
AP’s strategy in fact, meant the polar opposite of the established/existing pattern.

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AP Creates a Large Network of Dealers
An extensive network of dealers and a matching physical distribution infrastructure play
a crucial role in the decorative paints segment. This is essential for ensuring easy
accessibility of the product to customers. In this, Asian Paints scored over its competitors
with a massive network of 15,000 dealers spread over 3,500 towns across the country. AP
has the largest distribution network among all the players. Goodlass has a network of
8,000 dealers.

AP Established a Network of Company Depots

AP established a large chain of company operated depots/stock points throughout its vast
marketing territory, from where the retail dealers could conveniently pick up their
requirements. AP’s basic strategie is a liberal approach in the matter of stock
points/depots. It also meant that the depots had to be company operated. After all, AP did
not have any wholesale distributors to whom the responsibility for operating the stock
points could possibly have been assigned. AP established a network of 30 company-run
depots, spread through out the country and serviced its retailers from them. The number
of depots varied from city to city. For example, Bangalore had just one depot while
Mumbai had four depots. The depots typically supplied to about 200-300 dealers.

AP creates a Marketing Organisation that Matched its Distribution Intensity

Effective control of the large number of depots, each having substantial stocks of 2,000
odd distinct items necessitated a matching marketing organisation structure. AP set up a
marketing organisation consisting of four regional sales offices, 35 branch sales offices
and a large number of sales supervisors and sales representatives spread all over the
country. The marketing organisation of the company is presented in Exhibit 4. It can be
seen from the chart that a very extensive structure has been created in the consumer
division. It is primarily meant for taking care of the massive distribution task involved in
this sector. Each branch sales office has its own depots and the various items are stocked
in the depots under the control of the concerned branches. The branches service the
dealers and customers in their territories.

These are supported by six regional distribution centres, which cater to 55 depots. Each
depot has a branch manager for supervision of several salespersons who cater to more
than 14,500 dealers in the more than 3,500 big and small cities all over the country. AP
faced many challenges.

LOGISTICS

As demand in India is dispersed and spread over a wide geographical area, Asian Paints
strategy to focus on building an extensive distribution (nearly 15,000 retail outlets) and
logistics management network has paid it rich dividends. As a result of its wider reach
and better logistics management, it has been able to market brands aggressively, thereby
outperforming the industry year after year

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In this rapidly changing Business Environment, what gives companies like Asian Paints
the Competitive Advantage...The answer is LOGISTICS. We can actually compare
logistics to the most precious element on this planet WATER. It’s the ability of water to
reach and occupy all available space and quench thirst, similarly it’s the ability of
logistics to reach wherever the consumer demand exists.

Logistics is a process of planning, implementing and controlling efficient and cost-

effective flow of materials and information from point of origin to point of consumption.
Hence, Logistics is nothing but the process of strategically managing the movement and
storage of materials, parts, and finished inventory from suppliers, between enterprise
facilities and customers.

Typically 10-15% of a companies turnover is spent on logistics, depending on the nature

of product and the distribution pattern adopted.

Having exhausted all options in the areas of product differentiation, pricing, promotional
strategies and advertising warfare, corporations are increasingly turning to logistics.
Hence efficient management of logistics is critical for the profitability of any company.
To gain a competitive advantage over its competitors, a company needs to be flexible and
adaptable to the market demand. In this changing scenario the following are the needs of
the hour:

The company needs to reach the customer at the right time ensuring the availability of the
product on shop shelves

This calls for reduction in lead time, operating costs and inventory levels

And Improved asset productivity to leverage core competency

Modern business concepts advocate "let experts do the job". A paradigm shift could be
towards partnering with the professional in the field, which will positively impact the
bottom-line. This can definitely be achieved through Outsourcing.

Outsourcing logistics is the new weapon in the corporate arsenal. It is an easy access to
World-Class Logistics capabilities and better control over the distribution system through
an external agency offering specified services, which could be constantly improved upon.

SOME LOGISTIC FUNCTION OF ASIAN PAINTS

(a)Order processing:

Most paint companies are hit by the fact that they do not make the raw materials
themselves. For example, phthalic anhydride (PAN) is manufactured from orthoxylene

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and which goes into the production of paints along with titanium dioxide. Asian Paints is
the only paint company that manufactures PAN. The other paint companies have to
import their stock. Since PAN prices generally outpace international orthoxylene prices
by almost 50% paint companies end up paying a fortune when prices rise. In such a
situation Asian Paints benefits by selling PAN in the open market.

(b)Transportation Management

The company has outsource its transport management to Dynamic Logistic Pvt. Ltd.

(c)Inventory Management

The company prefers to maintain low inventory levels due to having large no. of
suppliers at bay. The company has 350 raw material and intermediate and goods
suppliers.

(d)Warehousing

The company has 72 warehouses scattered all over the India.

(f)Packaging

The company has 140 packing material vendors.

(g)Acquisition

The acquisition gives Asian Paints a foothold in an emerging market and also opens the
possibility of exporting to neighbouring countries. Asian Paints has already made its
presence felt in the emerging markets after its acquisitions in Singapore (Berger
International) and Egypt (SCIB Chemicals SAE). These acquisitions immediately give
access to both emerging markets and those in which Berger International has a strong
presence. In the industrial coating segment, the company acquired Hawcoplast Chemicals
in November 2001 for Rs 22 crore, which provided it with a presence in the growing
powder coating segment.

MARKETING AND SALES

Sales and marketing is organized under three strategies business units viz.
A: Through sales and marketing of deco SBU.
B: THROUGH MARKETING of industrial GBU.
C: Through business development group of international BU.

sales and marketing of deco SBU mainly sells the trade paints marketing of industrial
GBO mainly sells specialty coatings chemical resistant paint and general industrial liquid

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paint for general industrial liquid paints for industrial applications ,oil coating and road
marketing paints and business development group of international BU is responsible for
marketing support services and expand .

The sales and marketing of DESCO SBO set up consists of branches /depot/stock point’s
located allower the counter which sell finished across products to various dealers. Branch
/stock points are also termed as units. Each unit is headed by, an area manager or an
executive. Area manager report to divisional manager of the four divisions via: - north,
south, east and west.

Marketing of industrial GBU setup consist of five zonal offices headed by zonal manager
who are supported by officer’s .zonal managers who are supported by officers. Zonal –
west1, west 2 and north report to regional sales manager who reports to general manager
sales and marketing . zonal managerial south and east report to chief managerial south
and east report to chief managerial sold directs to end users. Some qualities are also sold
through the dealer network.

Marketing activities pertaining to trade paints are handled by the group brand
managers/brand managers and coordinated from Mumbai with the support of various
units marketing activities relating to industrial paints are handled by the chief manager
industrial sales and marketing group product manager and coordinated from Mumbai
with support from field units.
Sales and marketing is organized under 3 strategic business units viz.
A . Through sales and marketing of deco SBU
B. Through marketing of industrial GBU
C. Through business development group of international business unit{ IBU}while
reviewing the contracts , the following requirement of the customers are analysed:

1. Quality
2. Quantity
3. Price
4. Delivery

The new product introduction process consists of the following stages:-

A: idea generation stage
B: feasibility stage
C: design and development stage
D: validation stage
E: pre-launch stage
F: post-launch stage

Each stage is signed off by the NPI team also called the project team. The team
consists of the following people:

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 1: marketing manager.
2: group brand manager.
3: product brand manager.
4: development manager-technical.
5: distribution manager/manager-new products support.

Product: Asian Paints Colour World is the brand name for the one-stop colour shop of
Asian Paints, which are unique paint shops where shades are generated with the help of a
computer with software to choose and select 1,511 shade combinations, designed to reach
consumers in a direct `dil se' style.

Advertising Objective: Position Asian Paints Colour World as the ‘one stop paint shop’
with all the colors one could want. The advertising should create enough interest in
potential consumers to ensure that they come to the Asian Paints Color World outlet or at
least call the Asian Paints helpline.

Target Customers Demographics

Region: India, urban population

Occupation: Service/working professional/self-employed
Gender: Male
Religion: Insignificant
Social class: Upper Middle and upwards
SEC: B and upwards
Family life cycle: Middle aged

SEGMENTS

Segment Information
Asian Paints (India) Limited has identified two segments in line with the Accounting
Standards on Segment Reporting (AS-17). These are Paints and Others. Others include
the Chemicals business of the company viz. the manufacturing of Phthalic Anhydride &
Pentaerythritol.

Paint sales for the company recorded growth of 11.4 % at Rs. 14590.3 million compared
to Rs. 13096.7 million in the previous financial year. Segment results of the paints
business increased by 17.9% to Rs. 2579.9 million from Rs. 2188.4 million in 01-02.
Sales from the Chemicals business registered growth of 32.2% at Rs. 1147.56 million
compared to Rs. 868.19 million in 01-02. It is for the first time that the Chemical
business has recorded sales of over Rs. 1000 million. Segment results of the chemical
business increased by 190.8% to Rs. 182.9 million from Rs. 62.9 million in 01-02.

The company’s decorative business is the largest contributor to the revenue of the
company. In the decorative business, Asian Paints is the leader in all segments. All
product categories of the Decorative business registered good growth with exterior finish

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sales increasing by over 30%. The total number of Color World installed by the company
across the country is 3200 as on Mar 31, 2003.

The company products are broadly divided into two segments:-

Decorative Business Unit (DBU): Major segments in the decorative include exterior
wall paints, interior wall paints, wood finishes and enamel. Decorative paint's market size
stands at around Rs 32.5 bn. Asian paints is the market leader in this segment. Demand
for decorative paints arises from household painting, architectural and other display
purposes. Demand in the festive season (September-December) is significant, as
compared to other periods. This segment is price sensitive and is a higher margin
business as compared to industrial segment.

Industrial Business Unit (IBU): Three main segment of the industrial sector include
automotive coatings, powder coatings and protective coatings. Industrial paint's market
size stands at around Rs 9.5 bn. Goodlass Nerolac is the market leader in this segment.
User industries for industrial paints include automobiles engineering and consumer
durables. The industrial paints segment is far more technology intensive than the
decorative segment.

MARKET STANDING

Asian paints are the market leader in India’s paint industry with a commanding market
share of about 39% in the organized segment. It is among the top 10 players in decorative
segment in the world. The unorganized sector is a strong force and controls almost 35 per
cent of the industry involving estimated 2,500-3,000 players. A decade earlier, the
unorganized segment used to have a much higher share of the market but this is slowly
changing. Today's consumer is evolving and has become quality and brand conscious. In
addition, the reduction of excise duties from a high of 40 per cent to 16 per cent in the
last decade has reduced the advantage of the unorganized segment. Increase in raw
material costs will equally affect both the organized and the unorganized sector. Asian
Paints has been the market leader in the Indian paint industry for over three decades.
Today the company has a very high market share. The nearest competitor is half of there
size. Yet, despite the dominant position in the market, Asian Paints has been able to
consistently record an increase in market share. The company's market share has
increased over 3 per cent in the past seven years.

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 11.1%
0.4%
3.9%
17.3%

20.3%

46.9%

Asian Paints Nerolac Berger ICI J & N Shalimar

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 Comments –

1. The ware housing facilities are well maintained.

2. The company specially looks after the environmental aspects and tries to avoid
pollution and pollutants by adapting eco friendly production methods.

3. The company keeps low inventories in off seasons, and high inventory in festival
seasons.

4. The company has huge base of raw material suppliers, giving company bargaining
power resulting in higher profit margins than competitors.

5. The company has succeeded in establishing themselves in rural parts of India by large
distribution network, retail outlets etc.

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HUMAN RESOURCE MANAGEMENT:-

Asian Paints believes that people are its strongest assets, for a company can go only as
high as its people aim. It is people who innovate and invent, and who engineer the
efficiencies that make a business succeed. It is they who drive growth and lead to greater
heights. At Asian Paints, our human resources systems are designed to create a focused,
performance oriented and agile company. A talent pool of over 4700 employees
employed across 23 countries brings in a unique blend of mindsets and skills.
An open and interactive work culture brings out the best in our people. A sense of
ownership and freedom to experiment at their workplace brings out creativity and
innovation in every individual. Excellent training is provided to develop leaders and re-
strengthen competencies from within the organisation. Besides encouraging achievers
from within the organisation, we absorb the best talent from some of the best
management and technology institutes in the country.
We hire people who are best suited to the job and whose personal goals are in alignment
with our corporate purpose. Thus, the task is cut out for every individual within the
framework of result-orientation, market insight, customer perspective, trust, respect and
problem solving.
The commitment of our people and their sense of discipline and ownership continues to
drive growth for our company.

ORGANISATION RESPONSIBILITIES AND JOB DESCRIPTION

HR provides specialist support required for organized training in the choice of

appropriate training, methodology, selection & briefing of faculty & preparation of
course material. A compendium of the entire brochure received for various training
programmes are categorized & filled separately by the HR corporate centre.

The General Manager- HR is responsible for the recruitment of all officer & executive
in the Deco sales & Central function & training of all officers in Deco sales & central
function & all executive. He lays down the standard for recruitment of officers &
executive in Deco sale & central function & ensures that specified recruitment system &
followed to meet organization level standard at each unit. He prepared corporate training
plans for officer in Deco sale & central function & all executive & monitor process on the
same.

The senior Manager- Plant personnel/executive- HR who heads the plant personnel
department is responsible for the administration of the training system in the plant. He
assist line executive in assessing the skill & ensures the availability of suitable manpower
in term of both no. & skill. He also supervisor a continuous education effort to address
the training requirement of the address the training requirement of the quality system &
the development needs of individual.

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IDENTIFICATION & COMPILATION OF TRAINING NEEDS:-

Asian paints follow a 3i strategy for training. This strategy articulates the 3 main focus
area of training in Asian paint.
1. The first I – Integrating with company vision & functional strategy. The need here are
identified through discussion with the BV head / functional head on what their business
goals for the coming year are & what kind of training support they required.

2. The second I –Inspiring leadership & functional strategy. The programmes in the
series depend. The programme in the series depends on the leadership curriculum being
driven in the company.

3. The third I – improving career competencies. The programs in this series are identified
based upon identified for all employees during the PFMS exercise.
Identification of training need of an individual is done once a year based on the
assessment of the immediate superior of:

1. Identification of knowledge /skill area vise-a-vis the current job.

2. Identification of competencies required to assume a position of higher responsibility
3. Identification for his personal growth.

Generic training need (group training need) are determine by the senior manager/
manager-plant personnel/executive –HR for officers &workmen in the plant senior
manager-HR (corporate centre- T&D) for officers in corporate in Deco sales & central
function & all executive & senior manager- HR (GBU) for non-plants officer in GBU.
For plants officers & permanents workmen the generic training need are identified by the
senior manager/manager- plant personnel/executive-HR, once a year in the last quarter in
consultation with the general work manager, keeping in mind, the business objective of
the plants for the year, the departmental objective & the plant settlement where job
description are listed.

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 KASNA PLANT

ORGANISATION STRUCTURE OF DECORATIVE PAINTS HR:-

GLOBAL BUSINESS UNIT HR:-

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RECRUITMENT / SELECTION POLICY:-

The selection procedure of Asian Paints is highly comprehensive. The procedure consists
of three stages- the completion of the application form, the preliminary interview, and the
final board procedure.

The First Stage- In the first stage, the applications are examined with utmost care to
determine to what extent the candidate made the min qualification for job. Then a strict
standard for rejection is used and attempts are made to expose a brief preliminary
interview to as many applicants as feasible.

The Second Stage - It involves a preliminary interview consisting of 10 to 20 minutes and

purporting to discover as to whether or not the candidate is worthy of further
consideration.

The Final Board Procedure – It starts with the group methods of selection. The board
consists of four member including the members including the personnel director, the
director of the division for which the candidate is being considered, a senior manager of
the same division, and another senior manager.
After the completion of this discussion, there occurs a short interval during which the
board members discuss among themselves their impression of the participants in a
separate cabin.
Each board member is then required to indicate his comments for each précis and
summing up. And selected candidate are required to take a medical examination.

ENVIRONMENT, HEALTH & SAFETY

Environment, Health and Safety (EHS) is one of the primary focus areas for your
Company. Company’s EHS policy is to consider compliance to statutory EHS
requirements as the minimum performance standard and is committed to go beyond and
adopt stricter standards wherever appropriate. Company focuses on pollution abatement,
resource optimization and waste minimization, which leads to sustainable development.
Company also gives priority and attention to the health and safety of its employees and
trains all the employees to work as per prescribed procedures designed to meet all EHS
requirements of the Company. Company endeavours to educate its customers and the
public on safe use of its products, on a continuous basis.

Asian Paints had achieved zero ‘ZERO-DISCHARGE’ of industrial effluent,

minimization of waste through reduction at source and recycle/reuse are the key focus
areas of AP.

All the six plants of AP including two chemical plants have ISO 14001 certification.

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 AWARDS & RECOGNITION
 Awarded the "Sword of Honor" by the British Safety Council for all the paint
plants in India. This award is considered as the pinnacle of achievement in safety
across the world.
 Forbes Global magazine, USA ranked Asian Paints amongst the 200 'Best Small
Companies of the world' in 2002 and 2003 and amongst the top 200 'Under a
Billion Firms' of Asia in 2005.
 Ranked 24th amongst the top paint companies in the world by Coatings World -
Top Companies Report 2006.
 The Asset - one of Asia's leading financial magazines ranked Asian Paints
amongst the leading Indian companies in Corporate Governance in 2002 and
2005.
 Received the Ernst & Young "Entrepreneur of the Year - Manufacturing" award
in 2003.
 LID Free paints.
 Introduction of “ROYALE PLAY” customized paints where customer can select
their choice of colors and customized it accordingly.
 Special Focus on Customer grievances and feedbacks.

BIBLOGRAPHY
Our primary source of data is personal visit to Asian paints Kasna plant.

Our secondary source of data www.asianpaints.com

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