Asian Paints Ltd.

INTERNATIONAL BUSINESS DIVISION

PRESENTED BY
GROUP 1
Contents
 Paint Industry

Sales
 Value = $65 bn (2002) to $ 83bn (Est. 2007) – 5%
 Volume = 24.3 MMT (2002) to 28.8MMT (Est. 2007) – 3.5%
Segments
 Decorative & Industrial Paints
 Construction Industry and Automotive industry
 Asian Paints Ltd.

Vision: “To secure a place among top 5 decorative

paints companies in the world by end of this decade”
i.e. 2010
Started in 1942.
Largest paint manufacturer in India since 1967.
Ranked 10th globally in Decorative Paints sales.
Turnover of $570million. “Excluding Berger
International”
 International Business Division

Geographical reach in 23 countries (excluding India)

Comprises of 21 subsidiaries
 4 joint ventures
 7 Greenfield ventures
 10 acquisitions
Exited from Malta & Mauritius.
Continuous losses till 2004.
ROCE (global operations)< 10%.
 Porter’s Five Force Analysis

Industry Rivalry - High

 Top 10 companies = 51% market share
 Fragmented market
 M&A and Strategic re-positioning
 Decorative Paint Segment
 Price based competition
 Product performance undifferentiated
 Brand equity differentiates
Entry barriers - High
 High Investment requirements for Greenfield ventures
 Stiff competition in Developed Markets
 Porter’s Five Force Analysis (Contd..)

Substitutes – Low
 White cement, white wash, Brick & Stone cement
Customer – Low (Decorative) ; High (Industrial)
 Dealers/Retailers, Paint Contractors, Industries, Households,
Construction Project Cos.
 Consumer Education required
 Marketing tuned to local needs
Suppliers – High
 Raw materials as 50% of cost of sales
 Titanium Oxide and Crude-derivates with volatile pricing
SWOT Analysis (IB)
 Strength

Working Capital Management.

Culture of continuous innovation.
Brand Equity
MIS
Internal funding of expansion programs.
R&D, Regional Technology centers
 Improve sourcing & formulation efficiencies
 Develop new products, strengthen quality processes
 Improve inventory mgmt. & drive manufacturing efficiencies.
Localized Manufacturing
 Products calibrated to meet local consumer needs.
Economies of scale
Skilled workforce & management
 Weakness

Inability to produce profits till 2004, a marginal

profit in 2004-05.
ROCE<10%
Low risk appetite, conservative approach.
Non aggressive pricing strategy.
Inability to replicate domestic competencies in IB.
Limited presence and market share globally
compared to top companies.
Self supporting, no financial subsidies from parent.
 Opportunities

Paints Industry expected to grow at 5%.

Low consumption rate in India as well as other
developing countries.
 900g per capita in India.
 2-6 kg in other developing countries.
Extensive growth in Industrial as well as housing
sector in developing nations.
 Threats

Threat of getting acquired.

Threat of competitors merging together
 Forming bigger entity.
 Larger market share
 Expansive distribution system
Compliance requirements for environment, vary
with countries.
Exposure to crude oil price volatility.
7S Model
Structure
 Three – pronged structure
 Global: IB as single market; leverage expertise at this level.
 Regional: IB as five regional markets; synergize operations.
 Local: decentralization; empower decisions at this level
Systems
 V-SATs, small scale satellite telecommunications technology.
 IT systems
 Improve demand forecasting
 Provide real time data 24/7
 Integration of i2 & SAP models
 Improve service standards & reduced loss of sale (stock outs)
Style
 Decentralized decision making.
Staff
 Low Attrition
 Attracts best Managers from premier B Schools
 Compensation structure best in Indian Industry

Skills
Strategy
 Identification of new markets, (matrix approach)
 Using size of economy
 Size of paint market
 Nature of competition
 Investment potential
 Minimal requirements of target market
 GDP growth >6%/annum
 Limited competition (no MNC present)
 Opportunity to be among top 3 brands within 5yrs.
 Prefer acquisition of leading player in emerging markets than Greenfield ventures.
 Seeding of markets through exports (incase of Greenfield ventures)
 Localized Manufacturing
 Growth through Joint Ventures
 Leveraging lessons from APL

Introducing concepts like color world.

 Encouraging co-creation
 Awareness among customers in emerging markets
Production capacities close to market
 De-risk their operations.
 Enabling localization more effectively.
Recruiting local talents.
Global Brand
Global Brand – Significance
Developing potential candidates