Documente Academic
Documente Profesional
Documente Cultură
Submitted To:
Dr. Mousumi Padhi
Asst. Professor,
Human Resource
Management,
Xavier Institute of
Management, Bhubaneswar
Submitted To:
Dr. Mousumi Padhi
Asst. Professor,
Human Resource
Management,
Xavier Institute of
Management, Bhubaneswar
Contents
1
Executive Summary............................................................................................................................................................... 4
Industry Overview.................................................................................................................................................................. 5
2.1
2.2
2.3
2.4
2.5
Industry Benchmarks..................................................................................................................................................... 17
2.6
PESTEL Analysis............................................................................................................................................................. 25
2.7
2.8
2.9
Competitive Landscape................................................................................................................................................. 34
Company Overview.............................................................................................................................................................. 40
3.1
Company background.................................................................................................................................................... 40
3.2
3.3
3.4
3.5
3.6
3.7
3rd Generation Balanced Scorecard (Amalgamation of 1st Generation BSC and Activity System Map)........................49
3.8
SWOT Analysis............................................................................................................................................................... 50
3.9
3.9.1
3.9.2
Portfolio Analysis........................................................................................................................................................... 54
4.1.1
4.2
4.3
4.4
Re-imagining the Organization with the transformed business model or Use-case based on SMAC and IOE................62
1 Executive Summary
Guidelines
The executive summary should provide a brief overview of the organization and the industry in which it
operates. It should also illustrate the results of the analysis made in the report. It should provide the
future growth prospects in the industry for the organization. It should also highlight on the strategy for
any organization to gain competitive advantage in this industry.
The Indian Paints industry is booming & consumer behaviour to purchase products with a variety of new players & product
flooding the market is rapidly evolving. The Indian market, which is under transition, is also getting more and more competitive
both in terms of consumption and quality consciousness. A booming paints and varnish industry has resulted in innovative
marketing techniques coming into play. All major players like Asian Paints, Modi Paints, Nerolac Paints, Berger Paints and few
other players are trying to strengthen their retailing operations with different marketing strategies/techniques because the
paints and varnish industries now come under the impulse category where factor like supply chain management, The width of
distribution, advertisement, packing & communication make all the difference.
In the background of the above scenario, we decided to study Asian Paints to carry out our research to determine what market
thinks about Asian Paints and Varnish. Does Asian Paints give value for money, total satisfaction and does it have a competitive
growth strategy for the future.
We delved deep to find out the about the image of the product, purchase behaviour of the consumer, their expectations and
reasons of satisfaction and dissatisfaction, the current market practices and future roadmap of the company.
2 Industry Overview
2.1 Nature and Size of the Industry
Guidelines
History and
Evolution of the
industry
History of Paint
Paint has been used by mankind since its origin. The evidence can be found in the cave
paintings. The Chinese are considered to be the pioneers of manufacturing paints
thousands of years ago. In modern times paint is made artificially and is used in many
different ways. There are three basic things required to make paint. You need a pigment
to get the exact colour you want, a binder to hold the paint together, a thinner so that
it can be applied easily
Ancient Egyptians, Greeks, and Romans made paint by treating lead with wine or
vinegar. Later painters mixed up white-lead paste, then added linseed oil, turpentine, a
drier, and coloured pigments in oil. Such paint yielded a great result but unfortunately,
it also poisoned people. Today, paint with more than .06 per cent lead by volume is
banned in the U.S.
There's also been a shift away from oil as the base for paint. It began during World War
II, when linseed oil and the solvents that cut it were scarce. By the mid-'5Os, synthetic
replacements were outperforming natural ingredients. Today, practically all paints
consist of some form of synthetic resins or polymers
But the most dramatic shift has been away from solvent-thinned paints in favour of
water-thinned ones. Today, latex is the consumer standard, accounting for nearly 80
Key Consumers of
this industry and
their changing
needs
1991: Reduction in excise duty and many controls on the industry removed.
After 1991: Steady growth, slow disappearance of unorganized sector units and
industry fragments.
Automotive OEM
Automotive Refinish
Vehicles
Railways
Aircraft
Marine Coatings
Road Marking
Plastic Coatings
Metal Packaging Coatings
General Industrial Coatings
Commercial
Hotels
Stage in the
Industry Life cycle
Shopping Malls
Offices
Restaurants
Industrial
Warehouses
Manufacturing
Others
Hospitals
Educational Institutes
Government
Recreation
Amenities
increasing share.
Source: PRODUCT MANAGEMENT IN INDIA By RAMANUJ MAJUMDAR
Total Available
Market Size
(National and
Global)
Total Serviceable
Market Size
(National and
Global)
FY15 had its share of both excitement as well as challenges. The arrival of a new
Government at the centre with a decisive majority raised hopes of a quick
turnaround of the Indian economy. However, it has now dawned that although
many macroeconomic indicators are on the mend, it will take time for the growth
potential of the economy to be fully realized.
On the positive side, softening of international crude and commodity rates has
eased the mounting cost pressures on the industry to some extent. And while
operating margins havent improved much, they can certainly expand in the
forthcoming quarters should things continue to remain the same.
Apart from better than expected economic growth, the boost to demand in FY16
can also come from fall in inflation levels as it will have a positive effect on
The market for paints in India is expected to grow at 1.5 times to 2 times
GDP in the next five years. With GDP growth expected to be between 67% levels, the top three players are likely to clock above industry growth
rates in the future, considering they have a strong brand and good reach.
Volatility of the Indian currency and international oil prices and worries
about a normal monsoon continue to be major challenges facing the paint
industry.
Rationale
Rapid urbanisation, upwardly mobile lifestyles and increase in disposable income are
the key growth drivers of decorative paints, says Sameer Nagpal, Managing Director &
CEO, Shalimar Paints. Robust manufacturing, industrialisation and infrastructure
growth typically drive demand for industrial coatings.
A comprehensive list of growth drivers on the basis of our research is
1. Increasing level of income and education The increasing proportion of young
population along with increasing disposable incomes is leading to a change in
consumer habits. The Indian economy is shifting from a savings economy to a spending
economy. With more income at their disposal, people are now ready to pay for better
20-cagr-in-two-years-on-rapid-urbanization-114090500527_1.html
CSF2
Cost And Price
Drivers:
Rationale
Marketing of decorative paint requires extensive dealer networks, especially in the
urban and the semi-urban markets. An effective and efficient distribution network is a
key requirement for the success of paint manufacturers. Since paints are in high
demand in virtually all areas of the country, it is pertinent that the end product gets to
the final consumer as at when needed. Distribution therefore remains a key success
factor.
The paint industry costs and prices are driven by raw material costs which constitutes
about 57% of the costs of sales, and government levies which constitutes 38% of the
cost of paints. There are more than 300 inputs going into the manufacturing of paints
and about 70% of them are based on petroleum.
The petroleum prices are therefore one of the most important cost drivers. The paint
industry includes the extent of concentration in the paint industry which is very high.
This lead to very low margin at each level with the final retailer as little as 4-5%.
CSF3
Working Capital
management
CSF4
The industry has high raw material content; the number of finished product is also large
with varying pack sizes. Sales in decorative paint are seasonal with more than half of
sales coming in September November festival season. Debtor levels also tend to be
high in this industry
Paint is highly raw material intensive commodity, which have protective functions in
addition to decorative one. An average range of trade sale, industrial, automotive and
Technology
CSF 1
CSF 2
CSF 3
CSF 4
Very High
Moderate
High
Low
North
NA
NA
NA
NA
South
High
High
High
High
East
NA
NA
NA
NA
West
High
High
Moderate
Moderate
North-East
Moderate
Moderate
Low
Low
Global
India
Central
NA
NA
NA
NA
Category
Industry Level
(National)
Indicator
Market Size
(crores)
Size as % of
GDP
Inventory
turnover
Activity Ratios
Receivables
turnover
(Days)
Market Leader
201112
201213
201314
2014-15
201112
2012-13
2013-14
2014-15
13793.3
7
17976.3
4
20549.6
8
23248.26
9,118.9
2
10,462.9
4
12,167.0
2
8,639.47
0.001
0.002
0.002
0.002
6.06
5.98
7.56
6.06
6.26
7.24
30.73
31.11
19.21
15.82
15.48
16.17
5.91
27.44
Payables
turnover
(Days)
53.96
57.29
60.21
51.95
52.82
55.03
57.23
Asset
1.85
1.77
1.77
3.55
3.13
3.11
2.95
Category
Indicator
Market Leader
201112
201213
201314
2014-15
201112
2012-13
2013-14
2014-15
Current ratio
1.6
1.48
1.27
1.33
1.12
1.12
1.18
1.09
Quick ratio
1.03
0.9
0.74
0.69
0.66
0.83
0.49
Cash ratio
1.03
0.9
0.74
0.69
0.66
0.83
1.09
Debt-toassets ratio
0.06
0.04
0.04
0.039
0.019
0.011
0.009
Debt-tocapital ratio
0.11
0.09
0.07
0.076
0.035
0.020
0.015
Debt-toequity ratio
0.13
0.14
0.14
0.07
0.02
0.01
0.01
Interest
coverage
ratio
42.6
28.96
27.84
59.77
45.68
44.53
72.77
Gross profit
margin
13
12.9
12.77
15.61
15.83
15.02
15.34
turnover
Liquidity Ratios
Solvency Ratios
Source:https://
www.eq
Source http://w
ww.mon
Category
Indicator
Profitability Ratios
uitymas
ter.com/
researc
hit/comp
are/com
pare_co
mp.asp
?
symbol
=ASPNBRGR&
value=
ASIANPAINTSBERGER
PAINTS
&utm_s
ource=
compar
ecompan
ypage&u
tm_med
ium=we
bsite&u
tm_cam
201213
201314
2014-15
Market Leader
201112
2012-13
2013-14
2014-15
eycontro
l.com/fin
ancials/a
sianpaint
s/ratios/
AP31
Category
Indicator
Market Leader
201213
201314
2014-15
201112
2012-13
2013-14
2014-15
paign=
compar
e-withbottom
&utm_c
ontent=
change
Operating
profit margin
17%
15%
15%
15%
16.81%
17.24%
17.05%
17.25%
Net profit
margin
9.23
9.99
8.50
11.11
11.38
11.54
11.03
11.39
http://w
ww.mon
eycontro
l.com/fin
ancials/a
sianpaint
s/ratios/
AP31
Return on
assets (ROA)
16.26
15.27
13.69
22.16
20.11
18.97
44.10
Return on
equity (ROE)
31.97
30.68
28.07
38.30
34.74
32.74
31.69
Price to
25.27
33.33
36.43
57.50
32.40
44.89
44.84
61.49
Category
Indicator
Market Leader
201112
201213
201314
2014-15
201112
2012-13
2013-14
2014-15
PEG Ratio =
(P/E Ratio) /
Projected
Annual
Growth in
Earnings per
Share
1.77
2.07
3.24
5.24
1.17
1.78
1.9
4.54
Price to Cash
Flow
19.10
22.77
25.67
25.2
31.3
30.7
29.85
Price to Book
(P/B)
7.15
9.23
8.68
12.32
12.48
15.60
14.56
18.34
0.20
0.17
0.036
0.047
0.045
0.07
Dividend
Yield
1.21
0.91
0.95
0.54
1.24
0.94
0.97
0.66
Dividend
Pay-out Ratio
32.16
29.87
33.35
38.8
39.6
41.7
37.73
Enterprise
value (EV is
market
13.10
20.07
22.04
35.05
30.7
46.69
51.74
76.4
Earnings
(P/E)
Valuation Ratios or
Price Ratios
Category
Indicator
201213
201314
2014-15
Market Leader
201112
2012-13
2013-14
2014-15
2144yrs 5.00%,
4557yrs2.00%
21-44yrs
- 5.00%,
45-57yrs2.00%
21-44yrs
- 5.00%,
4557yrs2.00%
21-44yrs
- 5.00%,
4557yrs2.00%
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_resul
ts/AR1314.pdf - page
70
Source:
https://www.a
sianpaints.co
m/pdfs/compa
nyinfo/investors/
financial_resul
ts/AR
%20201415.pdf page 70
4.8%
5%
5.3%
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_result
s/AR13-14.pdf
- page 112
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_resul
ts/AR1314.pdf - page
112
67%
67%
62%
Source https://www.as
Source https://www.as
https://www.a
sianpaints.co
capitalisation
plus debt
minus cash
( Thousand
crore)
Staff
Turnover or
Industry
Attrition Rate
Competitive Ratios
Source https://www.
asianpaints.
com/pdfs/co
mpanyinfo/investor
s/financial_r
esults/AR1213.pdf pg.79
Staff Cost/
Salary as
percentage
of Sales
7.19%
Operating
Expenses as
79.13%
4.63%
71.01%
4.69%
70.81%
4.48%
66%
Source https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_result
s/AR12-13.pdf
- pg.79
Source:
https://www.a
sianpaints.co
m/pdfs/compa
nyinfo/investors/
financial_resul
ts/Q3FY15%2
0results.pdf
Category
Indicator
201213
201314
2014-15
Market Leader
201112
2012-13
2013-14
2014-15
ianpaints.com/
pdfs/companyinfo/investors/
financial_result
s/AR12-13.pdf
- pg.45
ianpaints.com/
pdfs/companyinfo/investors/
financial_resul
ts/AR1213.pdf - pg.45
m/pdfs/compa
nyinfo/investors/
financial_resul
ts/Q3FY15%2
0results.pdf
1.4
1.9
Source https://www.eq
uitymaster.co
m/researchit/companyinfo/detailedfinancialinformation.as
p?
symbol=ASPN
&name=ASIAN
-PAINTSDetailedFinancial-Data
Source https://www.e
quitymaster.co
m/researchit/companyinfo/detailedfinancialinformation.as
p?
symbol=ASPN
&name=ASIA
N-PAINTSDetailedFinancial-Data
SOURCE https://www.a
sianpaints.co
m/pdfs/compa
nyinfo/investors/
financial_resul
ts/Q3FY15%2
0results.pdf
23%
19%
0.23
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_result
s/AR13-14.pdf
- page32
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_resul
ts/AR1314.pdf page32
https://www.a
sianpaints.co
m/companyinfo/investors/
financialresult.aspx
4%
4%
5%
5.4%
Source https://www.
asianpaints.
com/pdfs/co
mpanyinfo/investor
s/financial_r
esults/AR1213.pdf -
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_result
s/AR13-14.pdf
- page 113
Source:
https://www.as
ianpaints.com/
pdfs/companyinfo/investors/
financial_resul
ts/AR1314.pdf - page
Source:
https://www.a
sianpaints.co
m/pdfs/compa
nyinfo/investors/
financial_resul
ts/AR
%202014-
percentage
of Sales
Depreciation
as
percentage
of Sales
1.89
Fixed Assets
to Sales
Revenue
12%
Advertising
as
percentage
of Sales
5%
1.53
20%
5%
1.52
21%
5%
1.87
Category
Indicator
201213
201314
2014-15
Market Leader
201112
pg.44
2012-13
2013-14
2014-15
113
15.pdfpage 204
Description
Rationale
Political
The political
scenario will
consider some
key factors as
changes in
political
scenario
affects
industry
immensely
a) Democracy
b) Stability
c) Taxation Policy
d) Attitude
e) Govt. Influence
Economic
Economic
factors could
easily be one
of the most
important
factors. As
70% of the
paint industry
(decorative) is
a luxury item
so the
economic state
of the
environment
will play a
major role.
a) Growth
b) Excise Duties
c) Correlation
with GDP
d) Costs of raw
material
e) Exchange
Rates
f) Inflation rates
a) Over the last ten years, the industry has grown at a compounded
annual growth rate (CAGR) of 12-13% the sector is expected to
post a CAGR of around 16.2% during 2013-14 to 2015-16,
according to a report.
b) The duties for this industry were last impacted in 2012.The Union
Budget, 2012 brought more negative impact than a relief for the
Paint Industry. While the cut in customs duty on Tio2 7.5% will help
in improving margins of the industry, the increase in the excise
duty to 12% on paints will make different paint products dearer. On
the other hand, thrust on infrastructure sector and rural
development will also aid the industry growth
c) There is positive correlation. And this is good thing for the industry
because Indias GDP is on the rise
d) With the current decrease in oil and petroleum prices, the industry
is benefitting substantially. Most of the raw materials are petroleum
f) For the last two years paint majors had been reeling under the
economic slowdown. The past couple of years have not been very
rosy, but we are expecting a 12% volume growth this fiscal, said
Ramakanth V Akula, president (decorative) at Nippon India.
Mainly driven by high vegetable prices (food prices soared by an
annual 14.72%), the retail inflation rate accelerated to an all-time
high of 11.24% in November (from 10.17% the previous month)
According to him, another price hike may not be on the cards as a
couple of them have happened already during the year. Source:
http://www.business-standard.com/article/companies/inflation-woe-paint-firms-may-not-getto-see-rosy-picture-113121300725_1.html
Social
Social factors
represent the
culture of the
society that an
organization
operates
within.
a) Urban-Rural
distribution
b) Modernization
a) It has been found that while demand remained tepid in the Indian
cities, consumption was rising in rural areas. The rural market has
grown at a rate of around 20 per cent a year (in financial year
2013). The market size of the paint industry in India is estimated at
around Rs 29,000 crore. Industry players expect close to 12%
growth in business volume and 10-12% rise in turnover this
financial year. The rural opportunity combined with easing prices of
They may
include
demographics,
level of
education,
distribution
of wealth and
social classes,
and lifestyle
Technological
Technological
factors refer to
the rate of new
inventions and
development
And it is very
important in
the paint
industry due to
the
continuously
changing
consumer
preferences
and high
competition
a) Development
on product
side
b) Development
on Usage side
c) Development
on Aesthetics
d) Development
on
environmental
influence
e) R&D facilities
The Indian paint industry has begun to look more like the FMCG
industry where branding, distribution strength and innovative use of
technology have become decisive aspects of growth against a
backdrop of ever changing customer preferences.
In Feb 2014, Asian Paints launched its Nilaya collection that deals with
customizable paints. This existed out India and its introduction to the
Indian industry will take it ahead in leaps and bounds.
There have been innovations in the paint market both at the product
technology and development level while the usage side has seen
some changes. These have been with a view to create better and safer
products, environment friendly paints, cheaper technology and better
aesthetics
Premium products account for less than 25% of the organized
decorative paints market and has grown at more than 15% annually in
the last few years. India Paint Industry Opportunity Analysis 2018
research report by KuicK Research is an intriguing text that gives
detailed facts and analysis on latest developments in the Indian paint
industry.
Asian Paints has one of Asias largest paint research laboratories,
recognized by the Department of Science & Technology, Government
of India. The R & D group is structured to provide separate focus to
Industrial Paint Technology and Decorative Paint Technology. Our
Environment
al
a) Impact of
volatile
organic
compounds
(VOCs)
b) Lead free
paints
c) Manufacturing
processes
d) Season and
climate
changes
Legal
a) Pollution
Control Law
b) Health and
Safety Law
c) Environmental
Law
Description
Rationale
Buyer Power
Medium
Medium
Existing Competition
Threat to substitutes
Low to Medium
X-axis: Service
Y-axis: Quality
The map clearly shows that Asian Paints has differentiated from its competitors by service has a
feature.
at all these factors, this article will finally conclude what the key challenges are in this market and what companies can
do to succeed in it.
Buyers becoming stronger
For any industry, the key factor affecting the competitive scenario in the market is the end-users or the buyers, and the
paints industry is no exception to that. Paints are sold through direct sales as well through distributors. While
architectural paints mainly follow the retail channels, industrial paints are sold directly to end-use 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.
In recent years, it has also been seen that, due to economic recession, end-users have lower purchasing power and this
is forcing paint companies to reduce prices in order to keep up their sales volumes.
High raw material prices squeezing paint supplier's margins
To aggravate the situation, the cuts in price of product are being accompanied by increase in the raw material prices.
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. Companies have
to be proactive and cannot sit back and wait for other companies to act because these will be the companies which will
surely lose out in the market in the medium run, if not the short.
Large companies becoming larger
Paint markets in Asia are dominated by multinationals and a few large local companies. These companies are now
looking to expand in the region and almost all of them are looking at the golden goose of the region, China.
Multinationals like Akzo Nobel have already done very well in this direction and have made a significance presence in
the Chinese market. Thai paint giant, TOA, is among the top local companies which are also aggressively looking at the
Chinese market.
Besides China, these large companies are also looking into new unexplored markets like Vietnam and Cambodia as
these countries are showing tremendous growth potential for the paints industry. These countries are slowly opening
up and purchasing power of customers is on the rise. This will encourage the growth of industries like construction and
manufacturing and will correspondingly encourage paints. Besides being a growing market for sale of paints, Vietnam
is also being looked at as an important country for production and export for various kinds of coatings. This is due to
the low cost of labour and other resources making it an ideal manufacturing base.
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. Colourful patterned wallpapers and wall panelling are
being preferred by some for architectural use 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.
Paint manufacturers have to be very creative in the way they package and sell their paints. This market, like many
other markets, is moving towards being service-oriented rather than just being product-oriented. Companies need to
sell more than just paint to flourish in this market. Companies have to understand their consumers' needs and
preferences; and package products accordingly. Companies who do so promptly and efficiently are sure to see success
in this market.
Regions
The decorative paints account for approximately 75% of the total sales with Asian
Paints being the market leader. This segment caters to the housing sector. It is
price sensitive and is a higher margin business as compared to industrial segment
as it is used in protecting valuable assets. Urbanization has surged the demand for
decorative paints. Easy availability of housing loan, rise in the level of income and
shift in the perception of paints as having a protective value rather than mere
decorative one, have been a few factors that have impacted the housing and
thereby the paint industry positively. There is also seasonality involved in the
demand for decorative paints with demand at its peak around festive time.
2) Industrial paints
Details
End-user Segments
Consumption Pattern
Credit Policy
Quality
Individual Customers
SMEs
Corporate
Business User
High
Low
Low
High
Low
Retailers
Everyone
Medium
The impact of the buying criteria is graded on the basis of the intensity and duration of their impact on the current market
landscape. The magnitude of the impact has been categorized as described below:
Low - Negligible or no impact on the market landscape
Medium - Medium-level impact on the market
High - Very high impact with radical influence on the growth of the market
The per capita consumption which is at 1.5kg, way below the consumption of the developed countries (20kgs), is expected to
improve with the growing income levels, both in urban as well as rural India on the back of various government initiatives like
NREGS, farm loan waivers, pay commission led salary hikes etc.
Despite the positive figures, the Indian paint makers might see growth slowing in the coming months as a drop in the
demand for homes, offices and cars is seen hurting the industry. A better focus on supply chain or distribution mechanism
backed by aggressive promotion might turn the wheels of fortune and trigger unprecedented growth in the paint industry.
The Indian paint Industry has a wide potential for growth which is demonstrated by the fact that the per capita consumption
of paint in India is merely around 1 kg as compared to about 20 kg in the developed countries or a global average of about
15 kg. So, the absolute consumption of paint in India is definitely expected to rise.
The market share of the organized sector is on an increasing trend. Also, the contribution of industrial segment will increase
with the continuing economic development of the country. With India moving towards becoming a developed economy, the
decorative to industrial paint ratio of 70:50 is expected to move towards the global average of 50:50. Thus the Indian paint
industry is in its growth phase and is expected to grow at a rate faster than that of GDP. The future prospects of the industry
are strong.
3 Company Overview
3.1 Company background
Asian Paints Limited (APL) is involved in the manufacture and sale of industrial and decorative paints. The companys
product portfolio includes ancillaries, automotive and decorative paints. APL owns and operates 23 paint manufacturing
facilities. The company has two operating segments Paints and Other segment. APL, along with its subsidiaries, operates
internationally in 17 countries across South Asia, South East Asia, South Pacific, Middle East and Caribbean region through its
five corporate brands including Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. The company
has five direct subsidiaries, namely, Asian Paints (Nepal) Pvt. Limited, Asian Paints Industrial Coatings Limited, Asian Paints
(International) Limited, Multifaceted Infrastructure (India) Limited and Maxbhumi Developers Limited. The company is
headquartered at Mumbai in Maharashtra, India.
Asian Paints is the only company in India to have won the prestigious Economic Times - Harvard Business School Association
of India award on two separate occasions, once in the category of Mini-Giants and the other in Private sector Giants. The
company has come a long way since its small beginnings in 1942. Four friends who were willing to take on one of the worlds
biggest, most famous paint companies operating in India at that time set it up as a partnership firm. Over the course of 25
years Asian Paints became a corporate force and Indias leading Paints Company. Driven by its strong consumer-focus and
innovative spirit, the company has been the market leader in paints since 1968. Today it is double the size of any other paint
company in India. Asian Paints manufactures a wide range of paints for Decorative and Industrial use. Vertical integration has
seen it diversify into Specialty products such as Phthalic Anhydride and Pentaerythritol. Not only does Asian Paints offer
customers a wide range of Decorative and industrial paints, it even custom-creates products to meet specific requirements.
To keep abreast of world technology and to protect its competitive edge, Asian Paints has from time to time entered into
technology alliances with world leaders in the paint industry. It has a 50:50 joint venture with Pittsburgh Paints & Glass
Industries (PPG) of USA, the world leader in automotive coatings, to meet the increasing demand of the Indian automotive
industry.
It has also drawn on the worlds latest technology for its manufacturing capabilities in areas like powder coatings and hightech resins - thus ensuring that its product quality lives up to exacting international standards, even in the most sophisticated
product categories. The company places strong emphasis on its own in-house R&D, creating new opportunities by effectively
harnessing indigenous creativity. The Asian Paints Research & Development Centre in Mumbai has acquired the reputation of
being one of the finest in South Asia. With its team of over 125 qualified scientists, it has been responsible for pioneering a
number of new products and creating new categories of paints. The R&D team has developed the entire decorative range of
the company. The company boasts of state-of-the-art manufacturing plants at Bhandup in the state of Maharashtra; at
Ankleshwar in the state of Gujarat; at Patancheru in the state of Andhra Pradesh; and at Kasna in the state of Uttar Pradesh.
All the companys plants have been certified for ISO 9001 -the quality accreditation. All the companys plants have also
received the ISO 14001 certificate for Environment Management Standard. The Phthalic Anhydride plant has been certified
for ISO 9002 and ISO 14001 whereas the Penta plant has been certified for ISO14001.
Asian Paints was one of the first companies in India to extensively computerize its operations. In addition to computerized
manufacturing, computers are used widely in the areas of distribution, inventory control and sophisticated MIS to derive
benefits of faster market analysis for better decision making. It is a continuously evolving company deriving its cutting edge
from the use of innovative IT solutions. All the locations of the company are integrated through the ERP solution.
Champaklal H. Choksi, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil get together to manufacture paint in a
garage on Foras Road, Bombay. They name their company 'The Asian Oil & Paint Company.
1945
Asian Paints touches a turnover of Rs. 3,50,000, with an innovative marketing strategy "to reach consumers in the outmost
corners of the country with small packs."
1954
1957 - 66
1967
Asian Paints emerges as India's leading paint company ahead of any international competition.
1973
2002
Asian Paints was a market leader of Indian Decorative Paints with market share of 44%.
Asian Paints becomes Indias largest and Asias third largest paint company. Asian Paints is more than twice the size of its
nearest competitor. It is one of the most admired companies in India. Present in 22 countries with 27 manufacturing locations.
Asian Paints aims to become the 5th largest decorative paint company in the world.
Mission
To provide paints as per market demand, ensuring desired level and quality of customer (dealer) service. Asian paints aims
to become the largest decorative paint company in the world & to rank among the top five paint manufacturing companies of
the world.
Strategic Theme
The company follows a three-pronged growth strategy - market expansion, acquisition and outsourcing.
By taking the above steps, the industry leader in the decorative paints segment (market share: 35-37 per cent), and number
two in the industrial segment (20 per cent share), plans to emerge frontrunners in the paint sector.
Asian Paints' present focus is on smaller cities and towns, even villages, where walls, interiors and exteriors are mostly limecoated - and in the coming years most of them would be paint-coated, making them a major potential market for paint
companies. The company will be investing around Rs 100 crores to expand its dealer-tinting line called Colour World, by
adding another 2,000 systems as the demand for acrylic paints in smaller towns and cities is increasing and wood polish is
another area where the focus is currently on.
As part of market expansion and brand-building plans, the company has formed a consumer services division. A prospective
customer can call the division's helpline and check out all about paints and even get a quotation to paint his house or shop a novel way to reduce the influence of painters over the customers' choice of brands.
The company intends to augment its production by debottlenecking its plant. This is expected to increase production by
80,000 tonne per annum (TPA) to 2.4 lakh TPA. The company is also on the lookout for acquisitions - both domestic and
overseas.
So far, the industry hasn't seen any mega mergers as there are very few [but large] players and because of low-entry
barriers. So, this will be a major change. Asian Paints, in fact, has a considerable presence abroad, with 10 international joint
ventures to its credit.
Industrial coatings:
Protective coatings
Floor coatings
Road markings
Ancillaries:
Wall primer
Wood Primer
Asian paints made a foray in automotive paints in the year 1997 with a joint venture with PPG Industries. The joint venture is
called PPG Asian paints. The company manufactures body coatings and plastic coatings.
Paint brands owned by the company are:
Interior products:
Utsav
Tractor Emulsion
Premium Emulsion
Appcolite Advance
Royal Shine
Royal Lustre
Royal Sensation
Royal Glitter
Royal Aspira
Royal Play
Stucco
Dune
Safari
Textile
Kids World
Magneeto
Exterior products:
Ace
Apex
Apex Ultima
Ultima Protek
Ultima Metalics
Ultima Vibrants
Asian Paints
Colour Next
Satin Enamil
Touch Wood
Melamine
Pu Aqadur
Pu Polish
Mass Customisation
1. R&D
Research & Development has played a significant role in the growth of the organization. The company has continuously
invested in R&D. The company has a dedicated Group R&D Centre in India. PPG Asian Paints has a robust R&D lab in Mumbai
that specialises in colour development and troubleshooting.
2. Production
Asian Paints have world class production facilities across the world. The company have 23 manufacturing facilities across the
world.
4. Customer Service
Customers - the very core of all the business activities of Asian Paints. From the beginning, Asian Paints has fostered a
customer-centric approach to business. A simple but unbeatable concept of "going where the customer is" drives all our retail
strategies. Asian Paints efforts are continuously on to engage the consumer in the painting process and fulfil all the
requirements related to the world of painting.
Strategic Alliances
The company has technical collaborations with PPG of the US for auto paints and powder coatings.
Asian Paints, via its Singapore-based subsidiary - Berger International - inks a technology and brand licensing
agreement with PT Abadi Coatings Solusi, an Indonesian paint company.
Alliance with Nippon Paints of Japan for auto paints and with Sigma Coating of Holland for marine and anti-corrosion
paints.
The company also have a strategic alliance with Protech Chemicals, Canada.
3.6 3rd Generation Balanced Scorecard (Amalgamation of 1st Generation BSC and Activity System Map)
Strategic Linkage Model (Activity System Map)
Strength
3. Widest product range in terms of products, shades, pack sizes different decorative, some in 150 shades, 20 different pack sizes;
are available
4. The pricing strategy is oriented to middle/lower end consumers.
5. High quality MR and MIS;
Paint Industry is quite strong in production-marketing coordination.
Their policy of offering tailor-made products to suit customer need
has resulted in an ever growing product range.
6. In-house production, no outsourcing, high reliability in suppliers,
superior in quality assurance.
7. Leader in profit and operating margins, ROI of PI is 22%.
8. High calibre human resource employs maximum number of
MBAs, as a proportion to total number of employees.
Weakness
Opportunity
Threats
Berger Paints
Kansai Nerolac
Weightin
g Factor
Rating
Weighted
Value
Rating
Weighted
Value
Rating
Weighted
Value
Distribution Network
0.1
0.8
0.7
0.6
0.2
1.4
1.2
1.6
Technology
0.3
2.4
1.7
1.5
0.4
3.2
2.5
1.6
Overall
31
7.8
23
6.1
21
5.3
Berger
Paints
Ratio
Kansai
Nerolac
Asian
Paints
0.2
14.5
7.6
5.04
2.9
1.52
2.52
Debt-to-equity ratio
0.2
0.01
0.22
0.03
0.02
0.04
0.01
0.1
72.77
12.41
11.39
7.28
1.24
1.14
0.2
11.39
6.98
7.65
2.28
1.40
1.53
0.1
15.34
10.42
10.62
1.53
1.04
1.06
0.2
17.25
12.48
12.53
3.45
2.50
2.51
Overall
17.46
7.74
8.77
Financial Indicators
Weightin
g Factor
Berger
Kansai
Paints
Nerolac
Weighted Value
Decorative paints
Product Width
Interior
Wall
Distemper
Emulsions
Product line
Tractor acrylic
Tractor synthetic
Utsav Acrylic
Utsav synthetic
Royale Play
Tractor Emulsion
Cost Range
Mid-Range
Mid-Range
Economy
Economy
Premium
Economy
Enamels
Wood Surfaces
Apcolite
Premium satin
ApcolitePremium Gloss
Utsav
Apex Ultima
Apex Duracast Rough
Premium
Premium
Economy
Premium
tex
Premium
Premium
Mid-Range
Mid-Range
Economy
Premium
Premium
Premium
Mid-Range
Mid-Range
Economy
Industrial coatings include Road markings, floor coatings and protective coatings.
Decorative paints include metal surface paints, wood surface paints, exterior wall paints and interior wall paints.
Ancillaries include wood primer, exterior wall putty, wall primer and acrylic wall putty.
Asian paints Royale An interesting offering by Asian paints where they decorate your house with colors and Asian
paints direct painters are involved in the process.
Along with the above paints, Asian Paints has been in the market of automotive paints. It is a joint venture with another
company called PPG industries under the name PPG Asian Paints. The products include the manufacturing of plastic coatings
and body coatings
Additionally, Asian Paints has acquired a 51% stake in Sleek Group, a leading player in modular kitchen space, for an
undisclosed amount. The acquisition is in line with the companys goal of becoming a complete home solutions provider in
the next few years. Asian Paints is looking at more acquisitions in allied areas such as home furnishings and sanitary ware.
The company is weighing several such opportunities which allow them to get inside a consumers home and sell more
products. Sleek acquisition makes sense as modern kitchen space is at an inflection point with very few organized pan-India
players and rapid growth.
Paint Demand
All the research and development centers of the company is in India. Asian Paints have a Research & Technology center
at Turbhe on the outskirts of Mumbai. PPG Asian Paints, the subsidiary of Asian Paints Ltd have a R&D center in Mumbai
and Chennai.
Asian Paints have 23 manufacturing facilities around the world. All of these facilities are managed by the corporate
office in India.
Asian Paints in South Asia (India, Bangladesh, Nepal and Sri Lanka)
Berger in South East Asia (Singapore), Middle East (UAE, Bahrain and Oman), Caribbean (Jamaica, Barbados, Trinidad &
Tobago)
Apco Coatings in South Pacific (Fiji, Tonga, Solomon Islands and Vanuatu)
Each of these subsidiaries have their own customized product for the need of that market. Branding and positioning is also
done in different way for different markets.
There are 23 manufacturing facilities for Asian Paint, of which most of them are outside India. Each of these use locally
available raw materials to manufacture the final product.
Future IT Developments:
Equip territory sales- in charge with mobile communication devices such as PDAs.
To automate and web enable product requests and invoices for better supply chain management.
Category of
Investment
Industry
Reward to
Risk Ratio (A)
Country
Reward to Risk
Ratio (B)
Risk Adjusted
Rewards
( 0.65A +
0.35B)
Product Market
Investment Strategy
Investment
Rationale
Singapore
Overseas Subsidiary
Investments
1.5/1
1.2/1
1.395
Strategic Alliance
1.2/1
1.395
Acquisitions and
strategic tie ups
Asian Paints
(Internationa
l) Ltd. (APIL),
Mauritius
has
transferred
its entire
holding held
in the
subsidiary
company,
Asian Paints
(Vanuatu)
Ltd. to
Berger
International
Pvt Ltd.
Singapore
Low
operation
costs, lesser
freight
Source:
http://www.eqsis.c
om/asian-paintbullish-target-800/
Ethiopia
Mergers &
Acquisitions
1.5/1
Source:
http://www.eqsis.c
om/asian-paint-
bullish-target-800/
charges and
favourable
policies
Ratio calculations based on reward and risk ratings from Business Monitor International Report March 2015
4.4 Re-imagining the Organization with the transformed business model or Use-case based on SMAC and
IOE
Reimagining Business Models (Digital Disruption)
Asian Paints is reimagining its business with SAP HANA and SAP Simple Finance. CEO of Asian paints is on stage to
share his companys cloud journey. Serving thousands of customers across 60 countries, Asian Paints is using SAP
S/4HANA and SAP Simple Finance to transform its fast-growing business.
Source: http://news.sap.com/bernd-leukert-explains-sap-s4hana-road-map-to-digital-transformation/
Reduction in manufacturing process cycle time and advancement in productivity by different practices.
Minimization of waste at the development time and recycling.
Assistance in marketing in USPs for demonstration and pushing of the new products.
Assistance to the Materials department by provision of alternate raw material to the current on. Also, increasing
the negotiation power and elasticity in the supply chain.
Tier - 1 - On the recipient end there are strategic solution seekers. Company thinks of cost reductions,
performance & productivity improvement for clients, improving customers' & shareholders' profitability.
Tier -2 - Here the customers can be considered as value or brand sensitive. Asian paints targets these
customers with value added VDS integration customer level service.
Tier -3 - These consumers are price sensitive. They are least bothered about the service. These are mainly
middle or low income group people Asian paints have several brand like UTSAV - to serve them.
Tier-4 - Here the company targets the small manufacturing & local companies, which can generate revenue.
Company utilizes its business & telesales technology to address & satisfy their needs.
Tier-5 - This tier is composed of specific targeted companies that although small in size, deserve special
attention because they are highly innovative in nature. Asian paints have a good prospect over here.
Reimagining Workplaces
Paint companies like Asian Paints are quickly shifting from a reactive approach to maintenance, to a preventive one, in
the face of a volatile economic landscape, mounting costs of unplanned maintenance and the risk of environmental
damage caused by operations in increasingly hostile environments
Reimagining Channels
Acquire the assets of or merge with smaller players that have interests in unconventional sources and upstream assets.