By: Loy Lobo Aapa Angchekar Priyanka Bendale

POSITION OF PAINT INDUSTRY IN INDIA

Paint industry in India is estimated to Rs. 135bn. Unorganized sector accounts to 35% of total paint market. Volume growth is estimated at 15%. Indias share in the world paint market is 0.6%. Per capita consumption of paint in India is 1.2kg/annum.

Indian market share scenario

Introduction to Asian Paints

Asian Paints was started in 1942 by four
entrepreneurs: Champaklal choksey, Chimanlal choksey, Suryakant Dani, Arvind Vakil

The company was started under the name ASIAN OIL

& PAINTS COMPANY. Within three years, their turnover reached 3.5 lacs. In 1967, Asian paints became the 10th largest paint company in the world.

GROWTH OF THE COMPANY

A.
B. C. D. E. F.

1942-1967: Evolution Phase

1967-1982: Extension and Consolidation Phase 1982-1986: The years of Excellence 1987-1997: Moving Closer to the Consumer 1997-1999: Changing rules of the game 1999: The new Asian Paints

Asian Paints is Indias largest paint company and Asias third largest paint company, with a turnover of INR 54.63 billion. The group 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. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans.

Vision
Asian Paints aims to become one of the top 5 Decorative Coatings companies worldwide 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.

OBJECTIVE
1. TO BE THE LARGEST DECORATIVE
PAINT CORPORATION WORLDWIDE 2. IT AIMS TO BE THE 5TH LARGEST PAINT MANUFACTURING COMPANY WORLDWIDE 3. TO PROVIDE BUSINESS STRATEGY FOR ASIAN PAINTS. 4. TO COMPARE THE SAME WITH OTHER COMPETITORS FOR INDIA CENTRIC BUSINESS.

ORGANIZATION STRUCTURE

Asian Paints- Today

CURRENT PROGRESS
Vertical integration has seen it diversify into products such as Phthalic Anhydride and Pentaerythritol, which are used in the paint manufacturing process. Asian Paints along with PPG Inc, USA, one of the largest automotive coatings manufacturer in the world has begun a 50:50 joint venture, Asian PPG Industries to service the increasing requirements of the Indian automotive coatings market. Another wholly owned subsidiary, Asian Paints Industrial Coatings Limited has been set up to cater to the powder coatings segment which is one of the fastest growing segments in the industrial coatings market.

Mergers, Acquisitions & JV

Buys Taubmans Paints (Fiji) In September 2003. Acquires ICI Indias Unit (February 2007). Sells stake in Australian Unit (June 2007). Joint Venture with PPG, USA (1999)

Marketing, Sales & Distribution

Rural Marketing Initiatives since 1960. Distribution is one of the main strategy of Asian Paints. Advertising & Promotional Expenditure started in 1980s Advertising Methods- Radio, TVCs, Print, Internet, Advertisements Promotional Expenditure grew from 15% in 2003 to 21% in 2008

Financial Analysis

NET SALES

Profit after tax

Earnings per share

RETURN ON CAPITAL EMPLOYED

MARKET CAPITALISATION

DIVIDEND

DEBT-EQUITY RATIO

Various plants in India

Asian Plants Kasna (Uttar Pradesh) in India

Asian Plants (Rohtak, Haryana)

Asian Plants Bhandup (Maharashtra) in India

Asian Plants Sriperumbudur in India

Supply Chain
Asian Paints has harnessed the powers of state-of-the-art supply chain system using cutting edge technology to integrate all its plants, regional distribution centers, outside processing centers and branches in India. All the company's paints plants in India, two chemical plants, 18 processing centers, 350 raw material and intermediate goods suppliers, 140 packing material vendors, 6 regional distribution centers, 72 depots are integrated. The supply chain runs through a wide spectrum of functions right from materials planning to procurement to primary distribution. It has played a pivotal role in improving operational efficiencies and creating agile procurement, production and delivery systems. It has also enhanced the flexibility of operations, lowered output time and reduced delivery costs, while improving customer-servicing levels and profitability. The Supply Chain Management is backed by IT efforts that help the company in demand forecasting, deriving optimal plant, depot and SKU combinations, streamlining vendor relationships, reducing procurement costs and scheduling production processes for individual factories

Supply Chain Cycle

350 raw material & intermediary good supplier

2 chemical plants & 18 processing centers

6 regional distribution centers & depots

140 packaging & material vendors

Human Resources
Asian Paints believes that people are its strongest assets A company can go only as high as its people aim.

It is people who innovate and invent, and who engineer the efficiencies It is people who drive growth and lead to greater heights.
At Asian Paints, 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 bring in a unique blend of mindsets and skills.

Human Resources
Hunt for talent

Employ people who are best suited to the job and whose
personal goals are in alignment with our corporate purpose.

Besides encouraging achievers from within the

organization, they absorb the best talent from some of the best management and technology institutes in the country.

Cut out task for every individual within the framework of

result-orientation, market insight, customer perspective, trust, respect and problem solving.

Human Resources
An open and interactive work culture brings out the best in the 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 restrengthen competencies from within the organization.

Human Resources

Industry Analysis: Porters 5 force Model

Substitutes
1.White cement 2.White wash 3. Brick & stone Structure

BUYERS 1. Decorative: Fragmented Market. LOW POWER 2. Industrial: Low switching costs. Corporate have HIGH POWER

Existing Rivals
1. Berger 2. GN 3. ICI 4. JNPL

Suppliers
1.Tio2 Imported, 2.Few suppliers, 3.Availability of Substitutes of RM Low HIGH BARGAINING POWER

Threat Of New Entrant

1.Growth rate much higher than global so global player may be interested 2. Huge potential to increase per capita consumption. Thus Latent need exists. 3. Companies can erode into APILs industrial market by forming JVs.

Market Share Of The Competitors

Company APIL GNPL Berger Paints ICI Jenson & Nicholson Others Industrial Market 14.50% 42.50% 14.20% 7.80% 8.10% 12.90% Decorative Market 37.50% 10% 11.20% 7.80% 5.50% 38%

Identification Of Focus Area of Competitor

APIL
Focus on decorative Paints and complete vacant slots in product range Gain Market share in auto OEM through JV

GNPL
Provide paint shop management services to sell solutions rather than product

BPIL
Increase focus on southern markets in India

ICI
Increase capacities to strengthen presence in fast growing architectural segments

JNIL
Leverage on JV for growth in Industrial segments

SPIL
Consolidate position in architectural paints

SNIL
Consolidate position in Repainting exterior paint market

Overall Corporate Strategy Of Asian Paints

NEW
Exploit new markets by creating products /services by leveraging existing competencies differently

DISCOVER

DEVELOP
Build new competency to Create the Future

MARKET OPPORTUNITIES

DEFEND EXISTING
Defend existing market by strengthening existing competencies

DEEPEN
Build Complementary/new competency to fortify position in Existing Market

Distinctive Competencies

EXISTING

NEW

`DISCOVER:
This forms the basis of fast growth. AP has identified opportunities abroad in developing countries similar to India. To enter into these countries they adopted the process of acquisition.

DEVELOP:
Paint industry is primarily a product-oriented industry up till now. Huge potential exists in the service side also. Introduction of color-world, providing service in painting and interior decoration etc are steps taken to acquire the whole chain and becoming full service provider. Need to Ensure value-adding services are possible. These can be integrated to provide an umbrella service. Constant reminders to the customers to repaint, or upgrade.

DEFEND:
Consists of rural and the urban market in which AP is playing. They are a target to many global companies, which are playing in Indian market via Indian arm of their operations like ICI has Berger, Kansai has JN

DEEPEN:
Industrial segment of Indian paint industry where AP has a weak presence. It has a presence in automotive segment but ranks a poor second. It needs to form alliances with foreign players to enter into this segment. It can also look for tie-ups with the company, which have tie-ups with those companies whose daughter arm is operating in India, to lock the account. Its move of taking over Haucoplast is one step in this direction. Their tieup with PPG has given them a good presence in automotive segment, capturing clients like Santro, GM, Ford etc

Business Strategy: Asian Paints

Asian Paints has acquired short-term competitive advantages by using its distribution strength and logistical efficiency in order to raise the Cost of doing business for all its competitors to attain this advantage. The advantage is short-lived and ultimately imitable. Moreover, AP has established such an extensive network that getting incremental advantage would be very difficult. Futuristic approach should be gaining competitive advantage through channel control or occupying

mind space.

Business Strategy: Urban Market

Intermediaries have influencing power on the purchase decisions in the urban areas. For this, there is a three pronged strategy for
increasing demand 1. Use these intermediaries for initiating demand:

Painters ,Contractors ,Designers & Decorators

2. Occupy part of the intermediary space and try

to sideline other intermediaries:

Creating a service arm that can cater to a large market Creation of a well-qualified service arm which is capable of providing value-added services.

3. Try to reduce the power of the intermediary by

increasing the Pull for the product

By increasing the power of the end-consumer. Establishing a strong brand name for its brands.

GATTU: THE MASCOT

Business Strategy: Rural Market

Rural segment is not mature enough to appreciate service related offerings Strategy should be product related. Customer up-gradation strategy should be adopted. It should be implemented in two parts:
1. The penetration of the rural segment have to be achieved by offering a basic product well tailored to match the low willingness to pay of the rural consumer. After basic penetration levels have been achieved the rural consumer can be offered a higher range of products with a view to up grading the consumers.

2.

Business Strategy: International Markets

For the newly Acquired Global Companies Utilization of the learning curve effect and the knowledge base from having functioned in a developing country would be the most crucial factor for growth. AP can hasten the process of market growth and maturity in these regions by leveraging on its experience and launching newer products at a faster rate.

INTERNATIONAL PRESENCE
Today the Asian Paints group operates in 21 countries across the world. It has manufacturing facilities in each of these countries and is the largest paint company in eleven countries. The group operates in five regions across the world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. In ten markets, it operates through its subsidiary, Berger International Limited; in Egypt through SCIB Paints; in five markets in the South Pacific it operates through Apco Coatings and in Fiji and Samoa it also operates through Taubmans.

International Operations
Caribbean Islands Barbados, Jamaica, Trinidad & Tobago

Middle East Bahrain,Egypt, Oman & UAE

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

South Asia Bangladesh, Nepal & Sri Lanka.

South East Asia China, Malaysia, Singapore & Thailand

Overseas plants
Berger International Plants Barbados

Berger International Plants Jamaica

Berger International Plants Singapore

Berger International Plants Trinidad

ACCOLADES EARNED BY ASIAN PAINTS ON INTERNATIONAL LEVEL

Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in the World for 2002 and 2003. It presented the 'Best under a Billion' award, to the company. Asian Paints is the only paint company in the world to receive this recognition. In Nov 2005 and Nov 2007, Forbes ranked Asian Paints among the Best under a Billion companies in Asia.

Future of the Company

Asian Paints is planning to increase the capacity by setting up a plant at Rohtak, Haryana. No other company is planning to increase its capacity in the near future, this will give Asian Paints a competitive advantage in terms of pricing. GDP growth slowdown in the growth rate of two important activities i.e. repaint activity and construction activity will have direct impact on the volume of APL, thus effecting its profitability and margins. Rural markets have considerable potential. Companies that can establish a dealer network, in these markets are likely to get the edge in positing above par growth rates over the next few years. As setting up distribution infrastructure is expensive, it would mean that the competition is limited to the top players. Due to substantial hike in raw material prices, Asian Paints has raised the prices of solvent based paints, thus demand would be affected to some extent