A PROJECT REPORT ON

THE PAINT INDUSTRY

SUBMITTED BY:PRASHANT KUMAR Roll No.:511010877 FOURTH SEMESTER, SMU

A PROJECT REPORT
Under the guidance of <> Submitted by <> In partial fulfillment of the requirement For The award of the degree of MBA IN MARKETING MANAGEMENT

<MONTH> AND <YEAR>

ACKNOWLEDGMENT
An Endeavor to transform itself into success needs efforts. These efforts are individual, standing in isolation. Such individual efforts require three things for their further development. These three things being Reason, Rationality and Self Esteem. The combination of these three basic traits delivers Productivity. However, time and again this productivity requires encouragement and guidance. This much requisite support comes in the form of Professionals furthering the development of Amateurs. This acknowledgement is an effort to recognize these professionals who have made this project a combination of the three fundamental traits. I take the opportunity to express my sincere gratitude to all those who have guided motivated and inspired me in the completion of my project. This project report and the learning process behind it would not have been possible without the guidance of my Faculty Guide,<----->. He was able to impart me with the right approach that my report required for its successful completion.

(PRASHANT KUMAR)

Bonafide Certificate

BONAFIDE CERTIFICATE
Certified that this project report titled THE PAINT INDUSTRY Is the bonafide work of PRASHANT KUMAR who carried out the project work under my supervision.

SIGNATURE DEPARTMENT

SIGNATURE HEAD OF THE FACULTY IN CHARGE

CONTENT
Acknowledgement -----------------------------------------2 Bonafide Certificate------------------------------------------3 Abstract--------------------------------------------------------5 Industry Profile-----------------------------------------------11 Introduction---------------------------------------------------25 Objective of the project------------------------------26 Limitations---------------------------------------------26 Main Text------------------------------------------------------27 Product at a glance------------------------------------28 Market survey-----------------------------------------47 Interpretation of data---------------------------------51 Market analysis-----------------------------------------------55 Porter Model ------------------------------------------------55 Growth-share Matrix----------------------------------------59 Advertising management and Sales promotion----------62 Recommendation-------------------------------------------------77 Conclusions-------------------------------------------------------81 References---------------------------------------------------------83

ABSTRACT

Paint: A historical background Story of paint is considered to be as old as the history of human civilization. The origin of paint has been traced back to the prehistoric period. The cave dwellers those times expressed their artistic abilities by daubing colored mud on walls, of their caves painting pictures of food giving animals as well ass their fellow men. Primitive painting was done with different ends in view. Some was done to ensure good fortune while some to hold evil spirits at bay or to honor the dead in their graves. These prehistoric paintings have been located in the caves of Altimara in Spain and lasasue in France. These prehistoric paints were made by mixing colures mud and water. Animal fat was used as binder. They used their fingers and sticks as brushes. The Egyptian during 3000 BC painted their houses of tail pieces about happening of those days. Battles, priestly rites etc. they used yellow, red, blue, black & white colors. The tombs were supposed to have been painted to welcome the soul when it comes back to reenter the body which was kept well protected by secret preservatives. It was by 18th century that people realized the need for a long lasting paint rather than frequent repainting. Paint factories started operating. Paint was a costly product of hard labor by master craft man, who reared & mixed their own raw

Materials from a secret formula handed over from generation to generation, which was now ready for the mass production stage. The 20th century revolutionized the concept of paint & paint application. The ever increasing demand of paint necessitated the introductions of new synthetic pigments & binders and new application technology. Keeping in line with the development of technology in other areas, the development of paint technology in the last quarter century also surpassed the development in all the previous years put together. The new technology has transformed an ancient art into a modern science. Modern Perceptive Modern houses are made of concrete and bricks which are porous in nature and allow water penetrate. Concrete is highly alkaline by nature and hence protects the reinforcement made of steel form corrosion. However carbon di-oxide from the atmosphere reacts with the alkali in the cement forming calcium carbonate which gradually reduces the alkalinity of concrete exposing the reinforcement to the attack o corrosion. This cannot happen in dry conditions; but in the presence of water coming trough plaster the reinforcement get corroded and weaken the structure. Since corroded material occupies more volume than the steel, they push the plaster out culminating in cracking and flaking. The painting of an exterior wall serves both the purpose of preventing carbon dioxide and water penetration into the inner parts of concrete protecting the reinforcements and structure. A well formulated paint fortified with effective biocides

Protects the surface from the attack of micro organisms like fungi and algae maintaining its original beauty. One important point to be remembered while painting is that no paint file is stronger than the surface on which it is applied. Surface defects like rising, dampness, leakages, cracks, microbial growth etc. should be well attended to before taking up the painting job. Post painting remedial measures are always cumbersome and do not offer permanent solutions. Incidentally, the causes of paint failures are the factors without which life is impossible o earth. They are the panchamahabhutas earth, water air, heat, light and of course there are the man made hazards like industrial environment ad gasses. Once you get on the job of painting you will realize that the time spent on the preparation of surface is more than that required for the actual application of the paint. In total analysis this exercise is worth while because most of the paint failures arise from the poor surface preparation. This first step before any painting is the thorough inspection of the building, checking for peeling paint, cracks, leakages, rusty nail heads and microbial growth. In short the success or otherwise of any painting job will be decided by the above factors. About the Paint Industries The paint industry is facing an upward movement and growing at a CAGR of 10% per annum and is likely to grow at 10.5-12%. New dealers are cropping up everywhere and this project tries to study the distribution channel followed by Paint Industry, Analyzing the Marketing Strategy of the Giants (Asian, Nerolac, Berger, and ICI) as well as Comparative analysis among the Major Players. Every organization tries to increase its market share by strengthening its distribution

Network and expanding itself to the regions where penetration is low. The project would come out with a comparative analysis of the performance of five major paint manufacturers and highlights the various critical success factor and key strategies to be followed by Paint industry in the coming years to increase its customer base.

To increase the profitability and market share in a business the most important strategic choice any company makes, is choosing the customers it wishes to do business with. It is the choice that defines the business. It must be a conscious choice based on the desires and values of the owners and managers of the business, as well as the assessment of the companys strengths and weaknesses, resources and capabilities, compared with those of competitors. It should be based on the management vision of the potential of the company for creating and serving markets, for exploiting its unique strengths, and for achieving substantial profitability. And it is through Market Segmentation only a company can recognize that customers have distinctive needs, preferences and buying patterns. It is the process of analyzing the market in order to define, creatively, distinct groupings of customers for whom the firm has the potential to offer superior value. These different groups will respond differently to the firms product offering and product communications. The same thing applies for the paint business also. For a paint company the main customers are end customers. Hence if the paint company comes to know about their behavior pattern, needs and expectations then it will be easier for the company to push its products in the market and generate more sales turnover and grow. Moreover at present the Indian Decorative paint industry is riding high on

10

The growth in hectic constructions in the housing segment, improving infrastructure and increase in per capita income. The competition in the market has considerably increased after the entry of foreign players in the Indian industrial scenario. So in the long run, to survive in this competition every company has to update to the latest technology, go for diversifying itself in new markets and satisfy the growing customer expectations.
Highlights :-

The Indian paint industry is a $ 49 billion sector. The demand for paints is equal relative price-elastic but is linked to the industrial economical growth. The per capita consumption of paints in India is very low at 0.5 kg per annum if compared with 4 kegs in the South East Asian nations and 22 kegs in developed countries. The global average per capita consumption is 15 kg. In India the organized sector controls 70 percent of the total market with the remaining 30 percent being in the hands of nearly 2000 small-scale units.

11

In India the industrial paint segment accounts for 30 percent of the paint market while the decorative paint segment accounts for 70 percent of paints sold in India. In most developed countries, the ratio of decorative paints and industrial paints is around 50:50.

All the industry majors have a vast dealership network and are required to maintain high inventory levels. Most of the paint leaders have technical tie-ups with global paint leaders.

12

INDUSTRY PROFILE

13

Major Players: The major players are Asian Paints, Kansai Nerolac, Berger, ICI and Shalimar. Recently world leaders like Akzo Noble, PPG, Dupont and BASF have set up base in India with product ranges such as auto finishes, powders and industrial coatings. Kansai paints of Japan, which entered into collaboration with Goodlass Nerolac in 1984, is now the holding company for Goodlass Nerolac with 72 percent equity holding. In 2006, Goodlass changed its name to Kansai Nerolac Paints Ltd. to give it a new corporate identity. PPG has a joint venture with Asian Paints to manufacture industrial coatings. Jenson & Nicholson and Snowcem India are not active players because of dwindling sales in recent years. Asian Paints India Ltd. Asian Paints India Ltd. (APIL) has the distinction of being the market leader in the paints industry and commands a market share of 33 per cent. It commands 38% in the decorative paints segment and 15% share in the industrial paints segment. The company's dominance is on account of its presence in almost all types of paints segments such as primers, wood finishes and metal paints besides wall paints while other players cater to niche markets, APIL sources its raw material requirements of pthalic anhydride and pentaerythritol from its own in-house plants, which provides it an edge over its competitors by reducing its raw material costs. The company has a strong presence abroad with joint ventures in Fiji, Tongo, Solomon Islands,

14

Nepal, Mauritius and Australia. What keeps it ahead of its contemporaries is product innovation; for instance it was the first in the industry to tap the exterior paints segment. It has a domestic installed capacity of 162,700 TPA for paints. With the government planning a thrust in the housing sector, players like Asian Paints stand to benefit, as demand for decorative paints will grow. Taking advantage of the increase in the automatic approval of overseas investments, Asian Paints acquired the entire paint business of Pacific Paints Co. Pty. Ltd., Australia, for Aus$375,000.Asian Paints had also acquired the largest paint company in Sri Lanka. Asian Paints' vision is to be among the top five decorative paints companies in the world by 2007. Kansai Nerolac Paints Ltd. Kansai Nerolac Paints Ltd. [KNPL] with its two wholly owned subsidiaries Saurashtra Paints Ltd., Ahmedabad and GNP Madras Ltd., ranks second in the industry with 18% market share. It is recognized as the leader in the industrial paints segment with a market share of 41 per cent. The parent holding company, Kansai Paint Company of Japan, is a world leader in paints. Having derived maximum income in industrial paints from Maruti Udyog Ltd. (MUL) until recently, the company has now widened its client base to include many other automobile manufacturers like Mitsubishi Lancer, Hyundai Motors and Telco. Significantly, the company continued to fare well despite the slowdown in the automobile segment and with the industrial paints segment likely to witness good growth in the medium term, KNPL appears to be in a fairly advantageous position

15

And should be able to reap rich benefits in the future. Kansai Nerolac Paints manufacturing capacity is 88,140 TPA. Berger Paints Ltd. A leading player in the industry, Berger Paints boasts of a market share of 15 percent. The company also has the distinction of being the third largest player in the industry. It is predominantly engaged in the decorative paints segment, which is responsible for two-thirds of its sales, remaining earnings come from the industrial paints segment. Berger Paints acquired Rajdoot Paints Ltd in FY1999. Installed capacity is 56,420 TPA. Berger has two plants located at Howrah and Pondicherry for producing synthetic resins and paints respectively; besides these it also owns a wholly owned subsidiary Beepee coating, a manufacturing unit in Gujarat. The company enjoys the benefits of technical tie-ups with Valspar Coatings, USA and Herberts, Germany for heavy-duty coatings and automotive coatings respectively. Berger Paints is a company with fairly sound fundamentals and a steady financial track record. In addition to increased focus on its existing industrial paints / protective coatings business, the company has entered into a 50:50 joint venture with ICI India Ltd, exclusively for automobile and industrial paints. Both companies will have equal representation on the board of the JV. The automobile and industrial paints business of ICI India, along with the assets at Rishra, exclusively used for the paints business, will be transferred to the joint venture for an aggregate consideration of Rs.165 mn.

16

ICI India Ltd. ICI India Ltd. (ICIIL) is a part of the Imperial Chemicals Industries (ICI), UK which is a world leader in paints. The company has diversified interests and is not purely a paints company. Backed by a market share of 13 per cent, ICIIL is recognized as the fourth largest paints manufacturing company. The company, which was a leader in the premium emulsion paint market, has now lost out to Asian Paints in the same category. The decision of the parent to invest more funds in the company could prove extremely beneficial. Shalimar Paints Ltd. Shalimar Paints Limited is the oldest paint company in India, which was set in Kolkata in 1902. Shalimar Paints are the leaders in the Aluminum Paints Category. In the 1990s, helped by growing economy, the paint industry has recorded a healthy growth of 12-13 % annually. This was mainly due to drastic reduction in excise from a staggering 40% to 16%.In the budget of FY 2006-07 as well, peak customs duty has reduced from 15%to 12.5%.This would bring down the cost of raw materials thereby positively impacting the profit margins of paint manufacturers. However the growth was restricted in 2000-03 to single digits. There was a revival in 2003-2004 with a robust growth of 13 % and moving with the double-digit growth thereon. The industry has two market segments- industrial and decorative paints. While the industrial paints are used for corrosion and rust to steel structures, on vehicles, white goods and appliances, decorative paints are used in protecting the valuable assets like buildings. The decorative paint business has a

17

Share of 77 %( about Rs 3640 crores in the organized sector) in total sales. In foreign countries 50 to 70% of the business is from the industrial segment. The trends are likely to shift in India too but at a slower pace in favour of Industrial paints. The per capita consumption of paint in India is 700 grams against 19 kg in the U.S. and 2.7 kg and 5.8 kg in other develop countries like China & Brazil. As consumption goes with affordability, the low Indian figure is not a surprise. Within the decorative segment the share of exterior paints is 21%, interior emulsions 11%, distempers 30%, solvent based enamel paint 36% and wood finishes 2%. The exterior category, particularly exterior emulsions is the fastest growing segment 20% for the last 3 years. In the industrial business share of high performance coatings 30%, powder coatings 10%, coil coatings 5%, marine coatings 5% and automotive coatings 50%. Organization System Most of the organized companies have a nationwide presence with multi location manufacturing facilities. The companies in the unorganized sector are mostly regional spread in and around there and manufacturing facilities dealing in low value products. Major players have created a nationwide marketing setup with the focus on all interior/Small markets. Not only the companies are able to establish themselves in interior markets the demand percolated to main towns and the company could enlist support of large customers.

18

Being FERA companies and some under MRTP, most other players were not allowed to increase the production capacities till nineties. With liberalization, these shackles were removed and other companies have expanded. Another winning point for the companies was strategy to focus on smaller packs rather than focusing on larger packs. They have also been bringing new product categories, which helped, in expanding the market. This made distribution still more complex as precise forecasts for over 3000 stock keeping units (SKUs) became a challenge for every organization. With the advent of color dispensing machines supported by all paint companies and sophisticated IT enabled distribution tools, the situation have eased considerably. Business Re-engineering With the industry business-becoming complex, most companies have gone into restructuring and have used information technology as the key drivers for reengineering. They have aligned their organized structures on the basis of expanding business and its complexities. This was essential in order to tighten the controls as well. Today companies have divided their sales organization into decorative, industrial and high performance coatings. The country level organization structure is split into zones, regions and branches. The colour dispensing machines both computerized and manual, have transformed the business, particularly on the manufacturing and the distribution sides. Earlier paint companies were required to manufacture all the shades (30-50 depending on a product line) in all the packs (5-8 packs). The demand pattern was difficult to predict even when with the support of historical data/ trends as consumer preference was changing first. The machines altered the production pattern from
19

shades to producing bases thus providing economics of scale, reduced inventory level and eliminated redundancy of stocks. It has cut down the new products introduction cycle considerably. This has helped expand the range of shades for each product category, offering a choice of shades to consumers (in hundreds). For the retailers also, it eliminated the sale loss for want of range/desired shade. The machines have brought a total change in the way business is transacted and revolutionized business processes as well. There are around many colour-tinting machines installed at the dealers ends including multiple machines on some counters. Also popular are the gear mixers for 2K finishes in auto refinishes, which are installed at the dealers end and at leading garages. The dependence on IT has increased remarkably from corner room EDP operations to playing a pivotal role in the way business is transacted. While Asian has invested on i2 technology, Kansai Nerolac has backed up IBM enabled APO and has gone for the latest 3.1 version to improve its distribution and optimize production scheduling. Both companies are operating on ERP (SAP R3) operating system through full connectivity across the factories and branches via V-SAT, thus virtually working on live data for sales, accounting and purchase. Kansai Nerolac has gone one step ahead by launching its intranet-employee portal to capture knowledge sitting in the minds/desktops of individuals to a common platform, which can be assessed by all employees. It has also invested in advanced business plan performance measurement tools like balanced score cards to track, review and align performance. Most companies in the paint industry are functioning on multi-division models with individual functions controlled by
20

business heads. Some manage their business through sub-committees. As in the case of KNPL there are two levels of team managing/ guiding business. While all the policy and major decisions are taken by the management committee (MC), which reviews operation on a monthly basis there is a parallel team named business analyst team (BAT), which analyses the business, discusses the new initiatives, in a way working as a think tank for the company. Asian Paints adds 25% of Storage Space for SAP Application Database without any investment. Challenge:The SAP database is in Terabytes and increasing at the rate of Gigabytes per month. The major challenge faced was in fragmentation and the release of space for near future. There was an inescapable need to manage the space. Any activity to be performed had to be carried out in a very short span of time as the estimated downtime for this project was 192 hours. The SAP tool was not able to substantially free up space to accommodate for near future growth. As a result of the space congestion, the response time had also gradually dropped. Issues in Brief: Storage Space Database Fragmentation Response Time to user operations Non-availability of Downtime at a stretch

21

The Solution:A complete study was performed of database usage, peak time, growth pattern, object sizes, transactional and master. A project plan was created to re-organize the SAP database from back-end using export/import and object movement. The complete action plan was implemented successfully in the TEST environment. The same activity was planned on PRODUCTION environment with distributed downtime. Although the distributed downtime was scheduled for a total of 8 downtimes of 24 hours each, the entire project was complete 48 hours before the schedule. With precise planning and control over the activity, the project was completed in 25% less than actual downtime scheduled. Storage Space : Released near about 1 TB of storage system which has enabled Asian Paints to sustain with same hardware. Database Fragmentation: Removed fragmentation from database as well as object level fragmentation. Response Time: Removing fragmentation and converting table spaces from Dictionary managed to locally managed has reduced the I/O in turn improved the response time.

22

Non-availability of Downtime at a stretch : Distributed downtime was scheduled for a total of 8 down-times of 24 hours each. Asian Paints could enhance the performance for business users in terms of response time as well as saved (earned) from buying additional storage capacity. This not only increased the return on investment on the existing infrastructure but cut down unnecessary investment on buying new hardware.

Product Culture: Most companies have an identical range of products for the decorative. In the industrial range is more customized and guided by the technological support provided by the collaborators. In the case of decorative products the technology has been more indigenously perfected over the years and the products can be divided on the basis of interior and exterior application or in categories like water base and solvent base. Moreover, most companies have been advertising their products in exterior emulsions category, which has expanded the market and triggered a shift from cement paint. While solvent-based enamels are still popular in India, outside there is a clear shift visible from solvent to water based glossy enamels. India will take some time before this change is accepted on account of three hurdles currently faced on this-cost (water based is expensive), low level of gloss in water based enamels, psychological barrier that water base cannot be superior to solvent protecting wood or metal surfaces.

23

Companies not working on operational efficiency business models have been losing. Asian and Nerolac have been aggressively working on cutting costs/

Operating expenses. Berger has been managing well with economical yet acceptable formulations and low operating costs. The industry is not capital intensive and depreciation charges are not significant. Working capital requirements are moderate. However most companies in the lower rungs are slack on realization of debtors. Added to this has been the problem related to collection of installments on colour dispensing machines which are mostly given on lease. The biggest efficiency required is the physical distribution. The poor forecasts of demand result in poor distribution. On account of this, the companies are investing in sophisticated supply chain management tools. Margins have remained under pressure on account of dropping prices, which has been more strategic and forced by the market leader. Companies have been working in improving internal efficiencies to retain profits. The pressure from original equipment manufacturers to reduce prices has also been a cause for low profits for paint companies. Even with the turnaround of the economy, the pressure has not relented. The customer (retailer) has also been dictating his terms as most companies have common counters to meet their objectives. So they have no choice but to lure more customers through incentives. Low productivity of high cost labour in the old units has been another problem. This in totality has increased operating pressures and resulted in stressful working.

24

Some of the international players are already present in India, but mostly for industrial coatings. They include Akzo Noble, BASF, Henkel, PPG, ICI (decorative) and Dupont (auto refinishes). A few others are present through collaborations like Kansai, Nippon. For decorative range of products it is difficult for international companies to set up shop on stand alone basis because of existing Barriers such as strong network of existing players, brand image, range of products (Indian context) and required distribution logistics. Therefore the safer route will be to tag along with existing companies. For industrial products, however this may not apply and based on their tie-ups in home countries and their OEM customers, the required range can be made and sold. There is however room for niche players, with radical and unique range of products, properly conceived and marketed in Indian context and supported with machines.

25

INTRODUCTION

26

OBJECTIVES OF PROJECT: To do the comparative study of the paint companies (ASIAN PAINTS, Kansai Nerolac, Berger, ICI and Shalimar. To understand the types of paints and finishes. To understand the Marketing and Advertising Strategy. India's position on the global Map in terms of competitiveness. LIMITAIONS:Although the project is my sincere effort to derive a comprehensive analysis out of the data collected, it has some inherent limitations because of deviations in market conditions: The implications of the analysis may not apply to every market and product because of variation in markets and market conditions. Chances of biased responses from the consumers and competitors.

27

MAIN TEXT

28

PRODUCT AT A GLANCE:Paint is a mixture of four 4 elements - solvents, binders, pigments and additives. Solvents give the paint a liquid flow while the binder binds to the surface. Pigments impart color and opacity to the paint and the additives give it special resistance properties. The recession in the construction and automobile sector had thrown in shades of grey across the Industry spectrum, but the revival in these sectors is cause for cheer for the paint industry as well. The balance sheets of the industry majors are now tainted with bright colors. On product lines, paints can be differentiated into decorative or architectural paints and industrial paints. While the former caters to the housing sector, the automotive segment is a major consumer of the latter. Decorative paints can further be classified into premium, medium and distemper segments. Premium decorative paints are acrylic emulsions used mostly in the metros. The medium range consists of enamels, popular in smaller cities and towns. Distempers are economy products demanded in the suburban and rural markets. Nearly 20 per cent of all decorative paints sold in India are distempers and it is here that the unorganized sector has dominance, to make their presence felt in this segment the paint majors are now indulging the customer in the process and

29

Preparing shades according to the needs and wants of the customer, that is, the decorative paint segment is more or less customized. Industrial paints include Powder coatings, high performance coating and automotive and marine paints. But two-thirds of the industrial paints produced in the country are automotive paints. Market profile:The leaders in the organized paint industry are as follows: Asian Paints (India) Ltd. (APIL) Kansai Nerolac Paints Ltd. (KNPL) Berger Paints ICI (India) Ltd. Price sensitivity factors:Various factors that have influenced the pricing of paints are summarized below: The industry is raw-material intensive. Of the 300 odd raw materials, nearly half of them are imported petroleum products. Thus, any deficit in global oil reserves affects the bottom-line of the players. The major raw materials titanium dioxide, phthalic anhydride and eutarithrithol constitute 50 per cent of the total cost. Besides, this, there
30

are other raw materials such as Astor, linseed and soybean oils, turpentine. The raw materials cost sums up to a whopping 70 per pent.

Any increase in the prices of these raw materials would adversely affect paint prices. Most of the paint majors have to import nearly 30 per cent of their raw material requirements thus changes in import policies can affect the industry. The prices of packing materials such as HDPE, BOPP and tinplate have reduced considerably. However, the decision of the Central Government to ban import of tinplate waste could lead to a spurt on the prices of the tinplate in the near future. WHAT ARE THE TYPES OF PAINTS USED IN BUILDINGS? For painting your home, there are basically 5 types of paints to consider:1. Exterior Paints, 2. Interior Paints, 3. Metal Paints, 4. Wood Finishes 5. Special Application Paints. 1) EXTERIOR PAINTS:When choosing exterior paints for the exterior surface/walls, look for ease of application against weather and quality. They should be attractive yet durable
31

enough to withstand weathering. The paints for exterior surfaces (such as brick, cement, stucco, cinder block and asbestos-cement) include the following types:

CEMENT PAINTS - These are water based paints and are applied on the outer surface of the house. They provide a coating that assures effective, medium range protection against the weather. They are highly water resistant and are the best option on a newly concreted surface. Special additives equip them to stand up to the rigours of outside exposure. Available in matt finish and a range of standard colours, they are adequately fade-resistant. A sound application of cement paints, after proper surface preparation, can stretch your repainting cycle to 5 years. EXTERIOR ACRYLIC EMULSION Emulsion paints are also water based, along with vinyl or acrylic resins added to make them hard wearing. Emulsion paints give various degrees of sheen and are available in matt, egg shell, silk, satin and full gloss ranges. The paints become harder wearing as the shine increases. Special additives make them exceptionally resistant to algae, fungus, atmospheric erosion and extremes of heat and cold and rain. Given careful and correct surface preparation and priming, they create a tough, enduring coating with superb adhesion and flexibility. Available in a wide range of colours, they are also fade resistant and can last for 4-5 years. TEXTURED PLASTER - These are also emulsion based exterior finishing coats. Textured Plasters provide even stronger protection than Emulsions, besides unusual visual appeal. Their thick surfaces can be designer-patterned by sponging,

32

stippling or patterned rollers. Washable over and over, their attractive colours and patterns blend smartness with heavy duty protection.

2) INTERIOR PAINTS:-

DISTEMPERS - The traditional economy paints, they can produce a perfectly satisfactory finish at reasonable cost, given proper application and workmanship. Their lifecycle is shorter than that of emulsions. Dry Distempers (which come in powder form) and Oil Bound / Synthetic Distempers are not washable. Acrylic

33

Distempers, being partly based on acrylic resins, produce greater smoothness and wash ability. Properly maintained, they keep their good looks for 3 to 4 years. INTERIOR EMULSIONS (PLASTIC PAINTS) - Emulsion paints have water as a base with a fine dispersion of vinyl or acrylic resins, which on drying, create a

Remarkably tough, adherent, durable coating. Emulsion paints give various degrees of sheen and are available in matt, egg shell, silk, satin and full gloss ranges. These paints are harder wearing as the shine increases. Special additives in plastic emulsions give them an incomparably smooth finish, in beautiful shades that last for years. These paints are also washable, resistant to chemicals, fungus, and algae and easy to maintain. They are extremely durable but are not suitable for application on external surfaces, wood and iron surfaces. They come in three categories namely: SILK EMULSIONS (PREMIUM ACRYLIC EMULSIONS) - They are premium acrylic emulsions, with silky smoothness and a luxurious silk-like finish. Their very high acrylic resin content enhances durability and creates reflection and smoothness of such a high order that dust cannot settle on it. A silk wall looks fresh even after several years. REGULAR EMULSIONS they produce a smooth eggshell finish, in a wide choice of colours, and have almost the same durability as Silk. Combining silk and regular judiciously could give your painting project just the right balance between great looks and a long-cycle economy.
34

ECONOMY EMULSIONS - offer the basic strengths of emulsion paint at economy prices. They are still a generation ahead of Distempers on durability, wash ability, fade-resistance and smoothness.

3) METAL PAINTS:Doors and windows, metal grills and furniture have a common type of paint for coating them namely the Enamel paint. Enamel paints are not water based. In addition wooden surfaces and furniture may be protected by synthetic transparent finishes like PU and Melamine.

35

SYNTHETIC ENAMELS - are alkyd resin based formulations that work equally well on wood, metal and even walls. Besides a brilliant and smooth finish, they also provide very good protection against atmospheric corrosion, including rusting.

PREMIUM ENAMELS - are extremely tough, provide long protection and mirror-like finish. They withstand extreme climatic changes and can be used both inside and outside. GENERAL PURPOSE ENAMELS are also tough, provide a durable and pleasing, though less glossy finish. They are not recommended for exterior surfaces. Two coats of general purpose enamel give good long term protection for hardworking surfaces where durability and economy are chiefly wanted. 4) WOOD FINISHES:POLYURETHANE (PU) AND MELAMINE - are the modern alternative to oldfashioned varnishes. These are synthetic, and provide an extremely tough, transparent protective coating. They allow the beauty of the wood grains to show through. But unlike varnishes, they are to easy too maintained and stand up to rigorous wear and tear, heat and liquid and stains. Available in both matt and glossy finishes, they can be used on a wide variety of wooden surfaces including furniture old and new and cane.

36

5) SPECIAL APPLICATION PAINTS:FLAT OIL PAINT FOR BATHROOMS AND KITCHENS Flat Oil Paint is recommended over emulsion based wall paint to correct staining and flaking, especially in Bathrooms and Kitchens. The advantage is that they can be wiped down with a damp cloth to keep them clean. Condensation of moisture, fumes, grease stains, etc. cause paint breakdown, flaking and mould infection.
37

ANTI-TERMITE PROTECTION FOR WOOD - It is absolutely essential to pre-treat all wooden surfaces with a transparent Melamine coating, brushed onto bare wood to guard against termites, wood borers, etc. .Its greatest advantage is that it allows subsequent over painting with paints, synthetic finishes and polishes. BITUMINOUS PAINT FOR WATER TANKS Concrete and galvanized iron water tanks are susceptible to algae and fungus attack, besides corrosion. Nontoxic Bituminous paint will keep the inside of the water tank free of algae, fungus and corrosion. ALUMINIUM PAINT - To protect the outside of Water Tanks use Aluminium Paint, with reflective silver-like luster that also reduces internal temperatures. Aluminium Paint can also be used effectively to increase the life of gas-holders in kitchens WHAT ARE THE TYPES OF PAINT FINISHES? When Surface Coatings (Top coat of Paint) dry, they produce films with varying degree of sheen. The range extends from Flat or Matt finishes which have no sheen, through increasing degree of Luster to high gloss finishes. Based on the reflectance level of the dried film of paint we can classify the finish in to following four heads: MATT: It is the kind of finish, which has the lowest level of gloss. When the gloss on a panel painted with Matt finish paint is measured in a glossometer at 60-

38

Degree angle, the reading is less than 5. SATIN OR EGG-SHELL: This finish has silk like gloss, explains the name Satin finish. When the gloss on a panel painted with Satin finish paint is measured in a glossometer at 60-degree angle, the reading is 6-20. SEMI-GLOSS: This finish has more gloss than a satin finish. When the gloss on a panel painted with Semi-Gloss finish paint is measured in a glossometer at 60degree angle, the reading is 21-70. GLOSSY: This is the finish with highest level of gloss. When the gloss on a panel painted with a Gloss finish paint is measured in a glossometer at 60-degree angle, the reading is more than 70.

39

HOW ARE PAINTS STORED? It is difficult to reseal the paint container and store the paint well for a long period of time. It should be stored upside down, for a good seal. Storage should be in a cool dry place, protected from freezing. Interior/exterior house paint tends to separate when stored, the heavier components settling to the bottom. Therefore, it should be mixed before use, with a flat wooden stick or a paint mixing accessory. HOW IS PAINT DISPOSED OFF? LIQUID PAINT - Proper disposal of left over paint is a challenge. To dispose of paint, one method is to dry it, either by leaving the lid off until it solidifies or by pouring it into a disposable drying device. Once dry, the paint may be discarded with normal trash. WET OIL BASED PAINT should be treated as hazardous waste, and disposed of according to local regulations. RECYCLING PAINT - Sometimes it can be recycled: Old paint may be usable for a primer coat or an intermediate coat, and paints of similar chemistry can be mixed to make a larger amount of a uniform color.

40

Colour is the most powerful decorating element in our homes. Colours evoke emotions in us and affect us in ways that we are not even aware of. It has been scientifically confirmed that colours affect our mood, health, happiness in different ways. When choosing colours for your House, it is best that you make the decision instead of trusting someone else because you will be the ones who eat and sleep, entertain, play and rejuvenate in the spaces. Since there are hundreds of options in paint colours, it may seem to be a difficult task. But just as you coordinate colours

41

Everyday in what you wear, you can choose colours of your choice for your rooms. But before that, an understanding of colour and its basics can really be helpful. COMMON PAINT DEFECTS AND REMEDIES:Many problems can occur after painting. Sometimes, they occur simultaneously during painting. Understanding the causes of some of these defects can make the paint job easier. Here are some common paint defects and their solutions:

Blistering: Blistering or Swelling of paint is caused due to the trapping of air, moisture or solvent between the surface and the paint film. The solution- Remove any unstable paint films and allow the wall to dry thoroughly. Then repaint with a recommended paint. Avoid painting under direct sunlight. Bittiness: Bittiness is caused by dirt from the atmosphere or the surface or from brushes that are inadequately cleaned or due to bits of dried-up paint that gets

42

Stirred in. The Solution- Use clean brushes and paint on clean surface and strain the paint through a cloth before use. Algae/Fungus growth: Algae and fungus can grow when the surface is continually damp and dirty. Insufficient fungicide/ algaecide in the paint can also worsen the situation. The Solution - Remove algae / fungus by high-pressure washing. Wash again to remove any residue and allow the wall to dry before applying with recommended paint.

Brush marks: Brush marks are caused due to under-thinning of paints or due to poor application of the final coat of paint or due to poor quality brush. The Solution - Ensure paint of the right viscosity is applied using a good brush. Chipping: Chipping of paint film is due to excessive use of putty or due to very thick coat of paint or defective surfaces. The Solution - Regulate the use of putty and paint.

43

Chalking: Chalking occurs when ultraviolet rays cause the paint binder to disintegrate. It can happen when interior paints are used for exterior surfaces. The solution- Remove any unstable paint films. Allow the wall to dry thoroughly, and repaint with a recommended paint. Make sure the paint is not adulterated with foreign materials. Cissing: Cissing or tiny craters are caused by oily or greasy surface/due to water based paints being applied over glossy or smooth enamel paints. The SolutionClean the surface thoroughly with soap solution and water. Roughen the enamel paint with Sandpaper or use a barrier coat of matt primer.

Efflorescence: Efforescence or formation of white powdery deposit on walls after painting is caused due to salts present in the building material like brick and mortar, which surface later on. The Solution- Give a long time gap between plastering and painting (about 6 months including one monsoon) Use paint with a porous film like emulsions and distempers.

44

Loss of gloss: Loss of gloss is caused due to poor surface preparation or due to presence of oil or due to over thinning of paint. The Solution- Clean surface thoroughly and take all recommended steps for surface preparation. Discolouration: After paint is applied, it may fade or discolour. This is caused by particles in the wall reacting with the paint when it is drying. Discolouration could also be caused by water seepage, or by contaminants in metal or wood. The Solution - Repair water seepage. Make sure the surface is dry before painting and apply an alkaline-resistant or oil-based paint.

Flaking: Flaking-off of paint film is due to improper application of primer coat over putty, and not being completely covered. It can be due to application of paint on insufficiently dry surfaces. It can also be due to shrinkage or expansion of a surface causing the paint film to move. The Solution- Ensure that there are no gaps in covering putty with primer coat. Also ensure that the surface is dry and clean.

45

Patchiness: Patchiness or uneven finish is caused due to the highly absorbent nature of the surface. The Solution- Apply an extra coat of primer or use wellsealer.

Peeling: Peeling is caused by moisture on the wall, poor surface preparation or using an incorrect painting system. This defect happens on walls as well as wood or metal surfaces. The solution for Walls -Check and repair water seepage. Ensure walls are dry before painting. Use an alkali-resistant basecoat or sealer. Patch surface defects with putty. The solution for Wood - Prime wood before painting, sand surface and clean off dust. The solution for Metal - Remove all paint from metal before re-painting. Prime surface and re-coat with suitable paint. Sagging: Sagging happens when the paint droops downward after being applied on the surface. It is caused by the pigment separating from the paint and settling at the
46

Bottom of the container and comes as a result of insufficient stirring or shaking during storage or storing for too long or under too much heat or faulty thinning. The Solution- Avoid storing in hot locations for long periods. Store in accordance with the manufacturers recommended thinners. recommendations. Thin only with appropriate

Wrinkling: Wrinkling happens when the paint forms film-like undulating waves. Applying too much paint or drying during high temperatures or painting on a topcoat before the undercoat is dry can cause this defect to happen. The SolutionAvoid applying too much paint. Make sure no paint accumulates around bolts, rivets, etc. Wait until each coat dries before you re-coat. Slow drying: Non-drying or slow drying of paint film is caused due to humidity, poor air circulation, low temperature or presence of oil or grease on the surface or due to alkalinity of the surface. The Solution- Reduce the impact of atmospheric conditions to the extent possible; Scrub oil or grease off with a rag soaked in white spirit and wash with water and soap.
47

Many people find the technical terms associated with Paint and other protective coatings difficult to understand. I have explained these terms here in easy-tounderstand language.

MARKET SURVEY:Current Trends The industry is riding high on growth in the automobile industry, hectic constructions in the housing segments, improving infrastructure and overall increases in the per capita income of the middle class. Thirty percent of the paint business is contributed by painting of new construction area. GDP growth projections of 8.5% in the current year mean a growth of 10.5-12% in paint business. The growth will be 11-12% in the industrials and 10-11% in the decorative. The automobile industry has been doing remarkably well and will benefit the market leader in the segment Kansai Nerolac. As for the future outlook, the industry has predicted a CAGR of 12% for the next five years from the last Year growth levels of 27.4% for cars, 8.9 % in two-wheelers and equally encouraging current year trends. The housing industry is likely to do well in current year as well with last year growth rate being around 50%. Taking the continuing feel good factor for the overall economy as well as one safely looks at 10-12%growth rate for the paint industry in the next five years. Consumers can look forward to new products getting launched-some for application for special areas. Companies will be offering value addition to
48

customers by offering a variety of finishes through specialized and trained applicators. There will be more options like range of colour/finishes (clear) for wood applications through the tinting machines. The trend for water-based coating is likely to set in both for industrial and decorative applications. India is still away from the do-it-yourself concept as cheap labour is still available. Exclusive retail chain stores sponsored/ run by paint companies will become a reality. The industry has progressed well and is likely to be influenced by changing global scenario. New technologies, new innovative products, new associations, consolidation of industry and poor performers getting out of the scene will characterize future development. Ultimately there will be only four or five key players operating in the market. The company wise trend in Market Share shows that Asian Paints are the leaders in the decorative segment by a market share of 38%, followed by Kansai Nerolac Paints with a market share of 14%. Market Share of Five Major Paint Companies Decorativ Company Asian Paints Kansai Nerolac Paints Berger Paints ICI Paints Shalimar Paints Overall 33% 19.30% 15% 13% 5% e 38% 14% 10% 9% 8% Industrial 15% 41% 10% 9% 8%
49

Asian paints are the industry leader with an overall market share of 33 per cent in the organized paint market. It has the largest distribution network among the players and its aggressive marketing has earned it strong brand equity. The Berger Group and ICI share the second slot in the industry with market shares of 17 per cent each. KNPL has a market share of 5 percent in the organized sector. The market can be further split into decorative paints and industrial paints. The demand for decorative paints is highly price-sensitive and also cyclical. Monsoon is a slack season while the peak business period is Diwali festival time, when most people repaint their houses. The industrial paints segment, on the other hand, is a high volume-low margin business. In the decorative segment, it is the distribution network that counts while in the industrial segment the deciding factor are Technological superiority and tie-up with automobile manufacturers for assured business. APIL dominates the decorative segment with a 38 per cent market share. The company has more than 15,000 retail outlets and its brands Tractor, Apcolite, Utsav, Apex and Ace are entrenched in the market. KNPL, the number-two in the decorative segment, with a 14 per cent market share too, has now increased its distribution network to 10,700 outlets to compete with APIL effectively. Berger and ICI have 10 per cent and 9 per cent shares respectively in this segment followed by Shalimar with 8 per cent shares. The share of industrial paints in the total paint consumption of the nation is very low compared to global standards. It accounts for 30 per cent of the paint market
50

with 70 per cent of paints sold in India for decorative purposes. In most developed countries, the ratio of decorative paints vis- -vis industrial paints is around 0:50. But, with the decorative segment bottoming out, companies are increasingly focusing on industrial paints. The future for industrial paints is bright. In the next few years, its share would go up to 50 per cent, in line with the global trend. KNPL dominates the industrial paints segment with 41 per cent market share. It 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 0 per cent of commercial vehicle OEM market. It supplies 70 per cent of the paint requirement of Maruti, India's largest passenger car manufacturer, besides supplying to other customers like Telco, Toyota, Hindustan Motors, Hero Honda, TVS-Suzuki, Mahindra & Mahindra, Ashok Leyland, Ford India, PAL Peugeot and Bajaj Auto. KNPL also controls 20 per cent of the consumer durables segment with clients like Whirlpool and Godrej. The company is also venturing into new areas like painting of plastic, coil coatings and cans. APIL, the leader in decorative paints, ranks a poor second after Kansai Nerolac in the industrial segment with a 15 per cent market share. But with its joint venture Asian-PPG Industries, the company is aggressively targeting the automobile sector. It has now emerged as a 100 per cent OEM supplier to Daewoo, Hyundai, Ford and General Motors and is all set to ride on the automobile boom.

51

Berger and ICI are the other players in the sector with 10 per cent and 9 per cent shares respectively. Shalimar too, has an 8 per cent share.

INTERPETATION OF DATA/FINDINGS:-

Sector Wise Consumption of Industrial Paints

52

MARKET SHARE

53

54

Asian Paints is India's largest paint company and the third largest paint company in Asia today. The company has an enviable reputation in the corporate world for professionalism, fast track growth, and building shareholder equity. Asian Paints operates in 21 countries and has 29 paint manufacturing facilities in the world servicing consumers in over 65 countries.

55

MARKET ANANLYSIS

Porters model:-

To understand the competitive landscape of the paint market better, it can be useful to employ Michael Porter's model of market competition. In this model, one can analyze the paint market from 4 key angles: the buyers, raw material suppliers, potential new entrants and threats from substitute products being introduced into the market.

56

Buyers becoming stronger Paints are sold through direct sales as well through distributors. While architectural paints mainly follow the retail channels, industrial paints are sold directly to enduse companies. It has been observed that these buyers, both direct end-users and retail channel, are becoming increasing powerful with their growing bargaining power. End-users are demanding higher quality paint for the same or a lower cost. Paint manufacturers are continuously being forced to reduce prices, and those who fail to do so are losing out to the closely fought competition. . High raw material prices squeezing paint supplier's margin Resins prices have been rising in the past few years for almost all kind of paints. Thus, paint companies are getting squeezed from both directions resulting in thinning of their profit margins. Another challenge on the resin front is that the introduction of newer technologies and newer types of resins are pushing out few conventionally used resins. Governmental regulations against paints containing volatile organic compounds (VOC) will be a major factor in throwing out certain kinds of paints from the market. This will definitely affect the resin situation in the market and would require the paint companies to adjust accordingly. Paint consumer looking to other alternatives to paint Last among the key factors of competition in Porter's model is the threat from substitutes and this is one issue which is, slowly but surely, irking the paint suppliers. As countries in the Asian region become affluent, there is an increasing demand for more trendy and easy-to-use alternatives to paints. Colorful patterned wallpapers and wall paneling are being preferred by some for architectural use
57

instead of regular emulsion paints. In terms of industrial use, the use of coatings for office equipment is decreasing significantly. Equipment suppliers prefer to use metallic finishes and oxidation process to give a more matt and sleek look to the Equipment. Also, these metallic options are considered more hassle-free as there are no issues of paint chipping, re-painting etc. In conclusion Based on the above-stated factors, it can be clearly concluded that the paints & coatings industry is facing challenges from almost all directions in the competitive landscape. Paint suppliers have to act aggressively and efficiently to stay abreast in this highly competitive market. The key to success in this market lies in building a strong brand image through aggressive marketing strategies and gaining customer loyalties. Technology collaboration All the paint majors have tie-ups with global paint leaders for technical know-how. Asian Paints has formed a JV with PPG Industries Inc service the automotive OEMs. Berger has a series of tie-ups for various purposes. It has a technical tie-up with Herbets of Germany in addition to its joint venture with Decker Industrifag. With the agreement with Herbets to an end in 2001, Berger has now allied with the Japanese major Nippon Paints to boost its OEM turnover since the Indian roads are
58

being flooded with Japanese automobiles. It also has an agreement with Orica of Australia Pvt. Ltd. to produce new generation protective coatings. The company also has tie-ups with Calspar Corp and Teodur BV for manufacturing heavy duty and powder coatings.

Incidentally, ICI makes paints with the technical support of Herbets, which has been recently, acquired by E I Du Pont de Nemours of the US. Interestingly, Du Pont, which is a leader in automotive coatings in the US, has a technical tie-up with Kansai Nerolac for the manufacture of sophisticated coatings for the automotive sector. Goodlass also has technical collaborations with Ashland Chemicals Inc, USA, and leader in the petrochemical industry, Nihon Tokushu Co and Oshima Kogyo Co Ltd, Japan. Overseas expansion If the global Goliaths are poring into the Indian paints market aggressively, the Indian paint companies are also spreading their wings. Asian paint exports its paints to over 15 countries. It also has joint ventures in Fiji, Tonga, Nepal, Vanuatu, Solomon Islands, Australia, Oman and Mauritius. In October 1999 it acquired 76 per cent equity stake in Delmege forsyth & Co (Paints) Ltd, the second largest paint company in Sri Lanka with a 12 per cent market share in Sri Lanka's Paint Industry. Within a short span of just five years, the company has emerged as the number one player in these markets.
59

Budget Impact There is a great emphasis by the Finance Minister on rural and infrastructure development. But these are typically the long-term growth drivers for the sector as a whole. While benefits from these initiatives are unlikely to be immediate, nevertheless, these are steps in the right direction. Perhaps, one would have expected a more aggressive stance on rural and infrastructure development.The reduction in excise duty on small cars is likely to benefit both Asian Paints and Kansai Nerolac in a significant manner, as the prices of cars will decline. In a scenario where domestic players are increasing capacity and new players are expected to launch products in the small car category, the top two paint companies will witness traction at the top line level. The reduction in customs duty is a big positive for paint majors, considering the fact that imports as a percentage of sales were around 6% of sales for companies like Asian Paints. The reduction in excise duty on plastic (the main packaging material as far as the paint sector is concerned) should cushion the impact on increase in other raw material prices. Growth- Share Matrix:-

In the BCG model, the two dimensions are the industrial growth rate and the market share. Industry growth rate is said to be high if it is more than 10%, low if it is less. Market Share is defined as market share relative to the market share of the largest competitor, on a logarithmic scale. Thus a firms position is measured by dividing its market share by the largest competitors share. The result is a number, which is more than 1 if the SBU is a dominant competitor. If it is less than
60

1, it is not dominant. If the SBU is not the dominant player, it has an inferior cost position and is an inefficient competitor with weak prospects for success in the market.

The description results in a two-by-two matrix. The divisions are as follows: Question Marks- Low Market Share- High Growth Stars- High Market Share-High Growth Cash Cows- High Market Share-Low Growth Dogs- Low Market Share-Low Growth

61

Sales and Distribution System:-

62

Advertising Management And Sales Promotion

Asian Paints: Every Color Tells a Story Brand: Asian Paints Company: Asian Paints Agency: O&M Brand Count: 211 Asian Paints is the market leader in the highly fragmented and highly competitive Rs 7750 crore ($1.73 Bn) Indian paint Industry. The organized sector constitutes around Rs 5400crore ($1.2 Bn). Asian Paints started its journey in 1942 with four young men in a garage in Bombay. The name Asian Paints was picked randomly from the telephone directory. The brand has traveled from that garage to become Rs 1000 crore brand. From 1968, this brand occupies a premium position in the Indian Paint industry. The story of the evolution of Asian Paints as a brand is interesting. The brand now has an iconic status in the industry thanks to some blockbuster big ideas from O&M. The brand once positioned as a mass market brand has evolved itself to a higher plane. Indian paint industry can be broadly divided into two segments:A) Decorative segment which constitutes the wall paints: exterior and interior, wood paints etc.

63

B) Industrial segment which consists of automotive paints, and paints for industrial sector. Decorative segment constitutes around 75 % of the total paint industry and Asian Paints is the market leader with around 44% share. In the Industrial segment, Nerolac is the market leader. In the decorative segment, it is interesting to see how Asian Paints have changed the buying process of the product like paints. Paints are usually considered to be a low involvement product. In earlier times, the decision of the brand was taken by the builder/contractor and the home owners do not involve much in the process may be the decision of color rest with the house owners.

Asian Paints realized the need for brand building even during sixties. But at that point of time, the company had a wide range of brands/sub brands. The focus of the company was on product innovation and service network and managing quality proposition. The brand focused on mass and rural market. Asian Paints had a mascot called Gattu who was created by the celebrated cartoonist R K Laskhman.These efforts made the brand a leader during the late sixties. Then the company realized that although volume justified the leadership position, share of mind for the brand was very low. That was the result of the mass

64

segmentation adopted by the brand. Rightly so because the industry was driven by channel driven promotions, building a brand at that time was" uncommon sense". During 1983, the company tried to reposition the brand as a premium brand. Asian

Paints initiated the corporate campaign aimed to position the company as the number one player in the industry. The objective was to upgrade to a more margin premium product marketer .The corporate campaign "Spectrum of Excellence" was aimed to increase the Salience of the brand in a quiet market. But this campaign failed to inspire any interest in the consumers and the company felt that the market is moving towards a commodity market where price is the most important differential. Asian Paints undertook a consumer research aimed at understanding the perception of consumers about the product category. The research revealed lot of interesting insights. Consumers felt that paints could change the mood of the space and it was a sign of festival and plenitude. It could make a gloomy place bright and pleasant. From this insight came the campaign of Asian Paints associating itself with festivals. Research also confirmed that customers tend to repaint their houses on the occasion of festivities. Thus born the campaign "Celebrate with Asian Paints". The campaigns were carefully crafted and there were different campaign for different regions. These campaigns effectively enhanced the brand equity of Asian Paints and established itself as a premium brand. More than that, these campaigns ensured an emotional connects with a Brand in a low involvement category. The brand also phased out many subbrands and rest of the subbrands was brought under Asian Paint's umbrella brand.
65

During the late nineties the brand had to be reinvented. Because no longer festivities formed an important part in ones life. Since many brands went after

festival seasons, the positioning platform has become cluttered. More over the consumer buying behavior has changed. The category was becoming less seasonal. People started associating more importance to home decor and interiors. The choice of color became a high involvement decision. From a low involvement category, paint was increasingly becoming a high involvement category. The brand also went in a brand overhaul. The logo was changed to a contemporary up market one designed by Enterprise IG based in Singapore. The logo/design was to convey self expression, sophistication and Technology.

66

Thus came the birth of a wonderful positioning strategy created by O&M. The insight was that the brand is about people and homes and homes reflect the people living in it. Hence Har Ghar Kuch Kehta Hai" translated to Every Home has a story to tell". This campaign is a perfect example of a brand laddering up and connecting to a higher level in the mind of the customer. The campaigns reinforced The brand as a premium emotional brand. Along with the campaign Asian Paints also ran parallel ads for its subbrands. Saif Ali Khan endorsed the premium brand Royale .For Apex Ultima, the campaign

was

highly

localized

and

was

different

in

different

market.

View Asian Paints ad here: Pongal :Saif Ad Taking a cue from the success of Ghar campaign, the brand took ownership of the COLOR. The insight is that each color has a story to tell. The latest campaign reflects on the color and uses the campaign Har Rang Kuch Kehta hai" translated to "Every color has a story to tell. The brand is so serious about the color that it has tied up with IIT to explore new colors and conduct research on colors. Asian Paints is a classic branding story and the brand is still exploring and growing. Kansai Nerolac Paints Limited The tagline Style that makes a lasting impression elucidates long lasting benefits of both the brands. Since the consumer scheme has been launched in Delhi, Punjab & Gujarat the body copy of the ad is in Hindi & Gujarati
67

Berger Paints: Natural colours

SCHEMES:68

Schemes are a form of incentives or a motivation which are given to the dealers/retailers/ painters/contractors etc so that they can push the product of a particular paint company in the market. In the paint industry the margins are not much in compare to some of the other industries, thats why the paint companies comes up with all sorts of schemes in order to attract all the interested parties. Schemes are considered to be one of the most important parts of the paint industry thats why only top management people of the companies are entrusted with the Task of designing a scheme. Almost all the schemes are designed in the headquarters and then they are distributed to the other branches. Why is it necessary to give the schemes: To attract the interested parties like dealers/retailers/painters/ contractors. To provide them with some sort of incentives/motivation. To force them to push the products to the customers. To achieve a better sale of their products. Types of schemes:Generally there are 2 types of schemes:1) Gift schemes. 2) Trip schemes. Gift Schemes:69

Gift schemes are the ones which are given to all the interested parties like dealers/retailers/contractors/painters etc. gifts are generally distributed on purchase of particular quantity of a particular product. All the gift schemes are designed by head office and are circulated to the other branches. The companies have different sets of gift schemes for different categories of people. For example- dealers & contractors who purchases in bulk are eligible for different scheme, and the painters & the small dealers with less amount of purchase receives lower range of gifts. The gifts are generally given on point system. Types of Gifts: The Company gives various types of items in the form of gifts. Items starting from the range of Rs.30-5 lakhs are given as gifts to interested parties. Starting from a coffee mug which comes for around Rs.30 to a Hyundai car or a Maruti car which is worth Rs.5 lakhs (approx.) are given as gifts.

70

Companies Asian

Gift schemes/ cash rewards

Total no. of gift items given

CD-player, mug, T-shirts, radio, dinner-set, caps, key chains, gold coin, watch, DVD14 player, washing machine(diwali (including some high price schemes), bicycle, Tiffin box, gifts) Philips fm etc. Cash coupons, silver, walkman, T-shirts, gold, hot-pot, bags, sweet pkts, brush, trays, 14 umbrella, torch, steel plates, pen (including some high price etc. gifts) Cash coupons, fan, sound system, Philips phone, key 7 chains, flasks, cup-plate etc. (including some high price gifts) T-shirts, dinner-set, mug, watch, cups glass, bicycle etc. 6

ICI

Berger

Nerolac

TRIP SCHEME:Trip schemes are bigger form of incentives for the dealers/ contractors/painters compare to the gift schemes. The targets which have to be achieved in order to avail the trips are not that easy. The trip schemes are of following two types:

71

a) LOCAL TRIPS:Local trips mean trip schemes which are located inside India. Its not possible for every dealer/contractor to achieve the huge targets set to achieve the foreign trip, thats why the paint companies also gives some local trip scheme so that the average & small dealers can easily achieve those schemes and can enjoy its benefit. Examples of the local trips provided by these paint companies are as follows:TARGET COMPANIES (POINTS/LITRE/Rs.) LOCATION (LOCAL TRIP)

ASIAN

Rs.4 lakhs

VISHAKHAPATMAN

ICI

12000 liters

PURI

BERGER

10000 liters,

GOA

KNPL

Rs.1.5-2 lakhs

BHUVANESHWAR

72

b) FOREIGN TRIPS:Foreign trips comprises of places like Australia, Europe, Bangkok, Dubai, China, London etc. The targets for achieving these trips schemes are very high, so only the high profile dealers/contractors are able to avail these sorts of schemes. The entire trip is for free except for the personal expenses (e.g. shopping). Only 4-5-dealers/ scheme are able to achieve such schemes. The chart given below shows the details of some foreign schemes given by the major players:YEARLY TARGET COMPANIES ASIAN (POINTS/LITRE/Rs.) RS.45 LAKHS RS.80 LAKHS ICI 50 LAKHS 60 LAKHS BERGER 150000 POINTS 200000 POINTS 75000-99999 POINTS KNPL 100000-149999 POINTS >150000 POINTS LOCATION (LOCAL TRIP) SINGAPORE EUROPE AUSTRALIA CHINA AUSTRALIA EUROPE BANKOK DUBAI AUSTRALIA

73

CURRENT PERFORMANCE OF INDIAN PAINTS & COATINGS INDUSTRY: Like all other industries, the Indian paint industry too has been affected by the current global economic downturn. This effect was witnessed strongly during the third quarter of FY2008-09. The current situation in India is quite volatile. The government has already started taking steps to curb inflation by slashing the interest rates on home loan and excise duty. I feel that this will have a positive impact on the overall economy. We have seen a direct co-relation of the growth of the paint industry with the growth of GDP in the country. The total contribution of the paint industry is anywhere between 1.5 and 1.75 per cent of the entire GDP. During FY2008 -09, the GDP is expected to grow anywhere between 6-7 per cent. It is difficult to forecast whether during this year, the paint industry would witness a single digit or a double digit growth. R&D INITIATIVES IN YOUR COMPANY: R&D has played a pivotal role in the growth of Innovation is not just the domain of technology development. It can also be a process to meet the demands of the consumers and make them come back for more, says Dr Mosongo Moukwa, Vice President-Technology, and Asian Paints. Armed with a PhD in engineering from the Universite de Sherbrooke, Quebec, Canada, this management graduate from Case Western Reserve University, Cleveland, US has over 20 years of experience. He has been one of the driving forces behind the exponential growth of his company by way of commercializing
74

New technologies, developing new markets and introducing a diversified product portfolio. In a tte--tte with Richy D Alexander, Moukwa shares his perspective on the Indian paint & coating industry and the latest trends. The overall demand in the paint sector will continue to be positive and is likely to get impetus through factors like the low penetration levels of paint in India, policies conducive to the growth of the construction industry, increase in government focus on infrastructure development. Asian Paints. Our company has always invested in research and development. We have set up one of the largest technology centres in the country for paints and coatings at Turbhe, Navi Mumbai. Our technology and product development is focused on enhancing the performance of paints and coatings. These improvements have been initiated with a view to implement new functions into coatings, in order to create products with additional properties. Secondly, there was a need to save energy and time and by forcing paint processing companies to reduce the use of volatile organic and hazardous compounds in coatings due to the environmental legislation of the US and the European community. The third reason was due to the use of new types of substrates in some industrial applications.

ENVIRONMENT-FRIENDLY PERSPECTIVE: In the wake of the constant change in the environmental legislations around us and the shift in the preference of the consumers who are demanding high quality and
75

environment-friendly products, our focus will continue to be on developing modern paints such as water based, high solids, radiation curable and powder. Coatings delivered in this manner are growing by at least 7 per cent, followed by the fastest growth rate witnessed in powder coatings at 12 per cent in India. The company has a strong portfolio of water-based paints for the decorative markets along with high solid coatings in the industrial segment. We are also quite active in the powder segments. In the future, new functions are increasingly important for the generation of adjustable multifunctional properties in addition to the classical functions of paints such as protection and decoration. In the next one decade, most research inputs across companies and research institutions will have to be focused in the following three coating functions: Easy-to-clean properties, self-cleaning (anti-staining, anti soiling) properties; Sensor properties, activity, switch ability (measurement of and reaction to external stimuli) and Defined flow characteristics and mechanical properties, long-term stability. This calls for hybrid materials with complex morphology and nano-composites and functional nano-particles.

INDIAS POSITION ON THE GLOBAL MAP IN TERMS OF COMPETITIVENESS

76

The per capita paint consumption in India is still among the lowest in the world at over 1.5 kg per person, whereas in the Western Europe and Japan, the figure is 15 kg per person. In the US and New Zealand, it is as high as 25 kg per person. This offers tremendous opportunity for us in India. As I drive through the streets of

Mumbai, and look at the many unpainted houses along the streets, I feel that there is a goldmine here.

77

RECOMMENDATION

78

STRATEGIES TO COPE UP WITH THE CHALLENGES:Innovation is not just the domain of technology development. It can also be a process to meet the demands of the consumer and make them come back for more. Innovation also deals with our ability to provide simple manufacturing solutions And ensure the highest quality of our products. In that framework, let me give you some examples of what we are currently doing. Most of our recent innovations have been focused on getting the consumer involved in the painting process. We have constantly invested in products and systems which provide a direct link with the consumers. For example: Colour World is a new direction for the paint industry in the current age of retailing and provides the consumer with a service interface. Asian Paints Home Solutions which offers consumers a hassle-free painting experience is the worlds first painting service brand. We have recently opened up a new signature store near Mumbai to educate the consumers about colours. This concept has few similarities in the world when you talk about paint companies.

FACTORS DRIVING THE GROWTH We feel that the overall demand in the paint sector will continue to be positive and is likely to get impetus through factors like the low penetration levels of paint in India, policies conducive to the growth of the construction industry, increase in Government focus on infrastructure development and the increasing reach of small screen (television).

79

LATEST TRENDS CATCHING UP IN THE SEGMENT We feel that the Indian consumer is getting more and more involved in the painting process. Emulsion paints have witnessed a positive growth in the recent times. The demand for water-based paints is on the rise. The growth of exterior paints has been phenomenal in recent past. A new trend that recently evolved has fuelled the demand for fashion finishes. Our company has entered into prediction of colour trends in India. Intensive research is carried out with interior designers, architects and the fashion community to get a grasp of the trend and movements in colour every year. The study termed as ColourNEXT Declares in advance, the shades which are going to dominate the Indian homes every year Indian paints are health hazards.

80

CONCLUSION

81

Over the last few years, the spurt in demand for paints was due to the rationalization of duty structures coupled with revival of growth in user industries. In the early 90s high excise levels made the products of organized players price uncompetitive against paints manufactured by small-scale units which paid no such taxes. However, in 1996-97, the growth surge of the previous year was not sustained by the paints industry due to the industrial slowdown and a cash crunch. Slowdown in decorative paints, the biggest chunk of the paints market resulted in industry sales turning sluggish. As compared to a growth of 12 to 14 per cent posted last year, the decorative paint segment registered a lower growth of 8 to 10 percent. On the other hand, industrial paints posted a growth rate of nearly 15 per cent compared to over 20 per cent in the previous year. Since the early 90s, the production of paints has been fluctuating. In fact, the production trend turned negative during 1990-91, for the next two years, the demand growth was marginal and only picked up from 1993-94. This was the time when excise duties were lowered and import duties slashed. Over the last three years, the domestic paints industry has been booming with growth rates moving into double digits. In expectation of an upsurge in demand, all major players are putting up fresh capacities apart from expanding existing ones. The industrial paints are slated to grow at an annual rate of 10 to 12 per cent per annum for the next few years. The industrial paint manufacturers would benefit from the burst in the passenger car sales. The two-wheeler industry has also registered a good show in the current year. The commercial vehicles segment, a
82

star performer last year with 33 per cent growth, is expected to average a growth of only 15 per cent this year. However, the raising titanium dioxide prices and the negligible growth in agriculture this year will play spoilsport. Considering the past trend, the paint industry is expected to show at least twice the growth of Indian GDP in the ensuing years. The reduction of excise duties from a high of 40 per cent to 16 per cent in the last five years has made the numerous small-scale units unviable, as they no longer have a price advantage over the organized sector. This has helped the organized paint Industry a lot. The industry is in a consolidation phase and only those Indian paint companies with a strong technical alliance, better distribution network and an ability to compete in the global markets would emerge victorious in the paint war.

83

REFERENCES: www.wikipedia.com www.google.com www.nerolac.com www.berger.com www.asianpaints.com

84