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33992694 asian-paints-1221382558044949-9

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    33992694 asian-paints-1221382558044949-9 33992694 asian-paints-1221382558044949-9 Document Transcript

    • ACKNOWLEDGEMENT:A successful project can never be prepared by the singular efforts but I alsodemands the help and guardianship of some conversant person who under pinactively or passively in the completion of a successful project. Our project on “ASIAN PAINTS LTD” would not have taken thepresent form in the absence of the invaluable guidance, inspiration and cooperationfrom many people. We take this opportunity to express our deep gratitude to Prof.N. Rajkumar, Dean, IBAT school of management, Bhubaneswar who have givenus the opportunity to present this project and continuously monitored us to performwell. In this context we would like to express our gratitude andthankfulness to Prof. G.K.Murty for providing us with his advise and supportthrough our project session. We also express our thanks to Sakti Hardware, Damana,Chandrasekharpur, Bhubaneswar for providing us with valuable data. We are deeply indebted to the Director ,faculty members of ourinstitute, IBAT school of management, Bhubaneswar for helping us with theirsupport and guidance that help a lot in successfully completing this project. Finally we express our cordial thanks to our parents, friends for theirunmatched support , guidance and love throughout the project preparation. 1.Daina Sahu (71) 2.Puspanjali Kar (90) 3. Saswato Bhattacharjee (98) 4. Sibasis Mohanty (107) Section B,Group No-3 2
    • CONTENTSSLNO COMPONENTS ITEMS COVERED PAGE NO1 Executive Summary2 Introduction 13 Category analysis 1 Situation analysis-I Sales analysis 2 Share Price analysis 44 Competitor analysis 5 Situation analysis-II Customer analysis 7 Assumptions of planning 95 Corporate objective 11 Divisional objective 12 Marketing objectives Marketing objectives 13 Programme objectives 146 Strategy alternatives 16 Marketing strategy-I Competitor strategy 177 Positioning strategy 20 Customer segmentation Marketing strategy-II and Targeting 22 Core strategy 258 Sales forecasts budgets 40 Financial Documents Profitability forecast budgets 44 Pricing 27 Marketing Product 29 Programme Brand 32 9 Promotion 33 Distribution 36 Service 37 Research 38 10 Control Strategy 46 3
    • 9 46 EXECUTIVE SUMMARYAsian Paints is Indias largest paint company and the third largest paint company in Asiatoday, with a turnover of Rs 30.2 billion (around USD 680 million). The company has anenviable reputation in the corporate world for professionalism, fast track growth, andbuilding shareholder equity. Asian Paints operates in 22 countries and has 30 paintmanufacturing facilities in the world servicing consumers in over 65 countries. BesidesAsian Paints, the group operates around the world through its subsidiaries BergerInternational Limited, Apco Coatings, SCIB Paints. The Companys paint business in India consists of Decorative, Industrial &Automotive coatings. During the fiscal year ended March 31, 2006, paints accounted for79.1% of the Companys sales. Decorative paints include wall finishes for interior andexterior use, enamels, wood finishes and ancillary products, such as primers and putties.Industrial Coatings comprise high performance coatings, powder coatings and autorefinish coatings. The automotive coating segments are catered to by the joint ventureAsian PPG Industries Ltd. The Company also has chemicals businesses consisting ofphthalic anhydride and pentaerythritol manufactured at Ankleshwar, Gujarat andCuddalore, Tamil Nadu, respectively. The Indian paint market is highly saturated with many paint companies withvarieties of product. Kansai Nerolac paints Ltd. Berger paints India Ltd. ICI India Ltd.Shalimar Paint Ltd, Snowcem India Ltd are the main competitors of Asian Paints. Amongthem Nerolac Paints have a very good market share in the Industrial Paint segment. Asian Paints adopted some marketing objectives & strategies. Asian paint isready to achieve its corporate objective by taking care of the Customers, Employees,Brand image, Dealer Vendor relationship & technology.Company’s three divisions arenot equally performing well.So it has different objective & planning to gain the top mostposition in the Indian paint market. Asian Paints has different marketing strategy for theurban as well as the rural market in India. 4
    • The company always maintaining some alternate strategy & keeping in trackwith the strategy maintaining by its competitor. In decorative sector company is strongenough, but it need to take care of the Industrial sector so as to increase the overall sales. Considering the pricing strategy of Asian paints, company has several pricedproducts. It starts from very low end to the premium level. Asian paints Colour Worldconcept helped the consumer to choose the colour combination & other appropriatesaccording to their wish from a very wide range of product. Company’s famous logoGATTU helped it overcome while entering into the rural market, as visualization has itsown effect. Other than this Asian Paints is using its website as a very good medium toreach the high/upper middle class consumers. With these tools company is expecting togenerate much more revenue than the earlier years. Asian paints wonderful promotional strategy helped the company to extend itsbusiness in several other countries with success. A very attractive distribution policies &proper distribution channel with more than 15000 dealers helped Asian paints to spreadits business in more than 3500 big & small cities in India. The company used to maintain a very strong market research cell, which helpsthem to take care of the consumers need & intensify their R&D accordingly. Asian Paintsapproaches the environment issue from the perspective of waste minimization andconservation of resources. Thus, the continued attempt is to reuse, recycle and eliminatewaste, which results in less and less waste being generated. Asian Paints, took a huge stride towards promoting the cause of total watermanagement by giving Mumbai (and neighboring districts like Thane) its first TotalWater Management (TWM) Centre, which is located in the premises of Asian Paintsmanufacturing facility at Bhandup. 5
    • INTRODUCTION : Asian Paints Ltd. has a combined turnover of 630 million US dollars. With itsstrong presence in the Indian subcontinent, south East Asia, Far East, South pacificCaribbean, Africa & Europe. Along with Asian paints the group consists of SCIBchemicals, Berger International & APCO coatings. Together the group has 30manufacturing unit globally. The company was incorporated in the year 1942 in India. Asian paints haveextensively computerized its operations in India using the cutting edge solution providedby SAP & i2. It helped the company drive benefits of faster market analysis for betterdecision making. The product portfolio of the Asian Paints group covers a large spectrum of finishcoasts & ancillary products in decorative paints, wood finishes, automobile OEMs &refinishes, marine & Industrial coatings. SITUATION ANALYSIS-1 CATEGORY ANALYSIS The different categories of Asian paints Ltd. are –PAINT : Company’s paint business in India consists of decorative, Industrial &Automotive coating. In 2005-06, these accounted for 79.1% of the group sales. It isestimated that the local market for all paints including cement paints & other powderproducts manufactured by all companies big & small would have been around Rs.95billion in 2005-06.1) DECORATIVE PAINTS: Decorative paints account covers almost 75% of the overall paint market in India.In this segment Asian paint has been a leader for almost four decades. Decorative paintsinclude wall finishes, for interior & exterior uses, examples, wood finishes & ancillaryproducts such as primers, putties, etc. 6
    • 2) INDUSTRIAL COATINGS : Industrial coatings have a moderate growth rate than decorative coating, led bythe growth in automotive original equipment sector, powder coatings & protectivecoatings. Industrial coatings are classified into automotive & non-automotive coatings areclassified into automotive & non-automotive coatings. While Asian paints Industrialcoating Ltd. (APICL) services the powder coating segment, Asian paints Ltd. caters to beremaining non-auto industrial coatings segments.3) AUTOMOTIVE COATING:The actual look and feel of a vehicle undergoes a sea of change over time. The paint on avehicle loses gloss, is subjected to a lot of wear and tear and hence starts deteriorating.Asian Paints is not having a very good market share in this segment.CHEMICALS :Asian paints have chemical business consisting of Pthalic Axhydride & pentaerythritolmanufactured at Ankleswar, Gujrat & Cuddalore, Tamilnadu. During 2005-06approximately 42% of company’s chemical was sold in-house & rest at open market. SALES ANALYSIS :Sales over the last 6 years (in Rs. crores)Year 12 March March March March March Marchmonths 2001 2002 2003 2004 2005 2006Gross 1526.01 1662.33 1887.7 2111.08 2366.16 2807.05salesPercentage - 8.93 13.55 11.83 12.08 18.63increasingNet sales 1322.38 1450.71 1641.27 1841.92 2037.55 2433.37Parentage - 9.7 13.13 12.22 10.62 19.42increase Graphical representation of net sales over the period – 2001-2006. 7
    • Net sales 3000 2500 2000 1500 1000 500 0 2001 2002 2003 2004 2005 2006Results of operation : Net sales & operating income of stand alone entity increased to Rs.24333.7million from 20375 million showing a growth of 19.42% in the year 2005-2006 (March). This is driven mainly on account of good paint volume sales growth of 13.8% &price revisions effected during the year. For the group, net sales & operating incomeshows an income shows an increase of 17.4% to Rs.30210 million. Asian Paints has a steady growth over the last 6 years, so the financial condition isvery much stable & it is expected to reach at the top position in the Indian paint market. SHARE PRICE ANALYSIS: 8
    • In the following share price analysis of Asian paints we have considered the closing price of share of Friday’s for the month of May, June, July 2006. Table showing the share price (on Fridays of May, June, July 2006)Date 5 May 12 19 26 2 9 16 23 30 7 14 21 28 May May may June June Jun Jun Jun July July July JulyClosing 6487.7 637.5 577.2 553.3 582. 550. 566. 573 597. 581. 571. 581. 585.4share 5 5 0 70 75 65 05 65 85 25 5price (inRs) Graphical representation of share price Closing share price (in Rs) 660 640 620 600 580 560 540 520 500 6/9/06 6/16/06 7/21/06 5/5/06 5/12/06 5/19/06 5/26/06 6/2/06 6/23/06 6/30/06 7/7/06 7/14/06 7/28/06 Discussion : Though there is a downfall in the share price of Asian paints but it is among the most actively traded stocks in India market. In terms of absolute daily returns the best performer in the paint market is godless Nerolac, Where Asian paints comes at 4 th place with a return of 17%. The least risky stock among the paint market was Asian paints with daily volatility of returns of around 1.43%. The investment on the stocks of Asian Paints could be a good investment option from a medium there prospective. It is the largest player in the industry with a vital strangle hold over the decorative segment. 9
    • With its high level of efficiency & developed marketing infrastructure AsianPaints is well placed in the market & have a very high growth prospect. SITUATION ANALYSIS-2 Asian paints limited with its three business units decorative, Industrial &International business is one of the largest paint company in India. It had a sell over 300million litres of paint in 2005-06. Significantly the group has crossed the Rs.3000 croreturnover mark-a preset mile stone for the company. Here we will be analyzing three situations of the company – (i) Competitor analysis (ii) Customer Analysis (iii) Assumption on planning1) COMPETITOR ANALYSIS : The Indian paint market is highly saturated with many paint companies withvarieties of product. Asian paints ltd, Kansai Nerolac paints Ltd. Berger paints India Ltd.ICI India Ltd. Shalimar Paint Ltd, Snowcem India Ltd are the market leaders. Here we are only considering the nearby competitors of Asian Paints which areNerolac paints Ltd, Berger paints Ltd & Indian chemical Imperial (ICI) Ltd.Sales of different companies in the Financial year 2005-2006Name of the Asian paints ltd Nerolac paints Berger paints ICI India ltd.company ltd.Net sales (in 2433.37 1064.22 948.54 971.19Rs. Crore)SWOT analysis of Asian paints & its competitors : 10
    • COMPANY Asian Paints Nerolac paints Berger paints ICI paintsStrengths 1. Market leader 1. Well ahead 1. In the IInd 1. In the in overall paint leader in position in the refinishing market & in Industrial paint industrial paint business it has decorative paint market sector. one of the best market in India 2. Tie-up with 2. Tie up with quality refinish share 40% paint for cars. kansai paints Herbert- 2. Available in provides foreign Germany 2. In decorative urban & rural technology. valspar of US paints it area 3. Main supplier & Teodor NV performance is 3. High Quality in the Indian of Holland good MR & MIS Industrial & 3. recently Pricing automobile purchased 49% 4. policy oriented market main share of Quest to all kinds of client maruty Int. India udyog limited. customerWeakness 1. Industrial 1. Market share in 1. Overall 1. Industrial paint sector decorative paint market position paint market only 15% share market is very is not very existence low. impressive. almost 2-3% 2. No tie up with foreign 2. Market in rural 2. Asian paints 2. Overall manufactures. area is poor. & Nerolac market conduct Through it has 3. Considering paints capturing poor. units in several paint the market overall countries. Asian buyer for market 3.Innovation in paint is well behind developing new ahead of Nerolac. product. 1. Acquiring/ 1. Improve its 1. come up 1. Merger with Increasing position in with new Quest will 11
    • market share in decorative paint innovations to provide to have Industrial paint segment. challenge Asian an experience sector. Capturing paints & Berger in foreign 2. 2. Developing whole industrial paints market,Opportunities particularly in market in paint market UK. automobile industry, which accounts for 50% of Industrial paint market. 1. Domination 1. Asian paints is 1. Asian Paints 1. Berger paint of few foreign coming up rapidly & Nerolac & there are few countries into the industrial paints are well new entrants in is paint market with ahead & ICI the market. 2. NerolacThreats its new plants & paint is advancing in products competing rapidly nearly Industrial market2) CUSTOMER ANALYSIS : Asian paint with its natural competitive advantage of size (Number 1 in India),Strong brand equity & largest distribution Network has acquired the number one positionin Decorative segment in India. There are few reasons due two which the customers in the decorative segment hasbeen choosing Asian Paint as their brand – 1. As we know brand name has its own value & Asian paint is the number one in decorative segment, so a purchaser automatically leans in purchasing it. 12
    • For example, we have two different types of paints, namely Apolite glass Aenamel & Apolite care Emulsion, which are from Asian Paints, Nerolac paints, Berger paints & ICI paints. Again due to the competitive market the price is very closed for all the companies. But due to the Branch awareness of common people they mostly tend to purchase the products from Asian paints. 2. Company have provided with different varieties of product for different income groups. For e.g. “UTSAV” which is a low value paint, is growing at a faster rates & penetrating with high speed at the lower income group. This policy is helping the company to move from metros to small towns for branded products. 3. In India frequency of painting has still not increased, which is once is 5 years only. So consumers are normally changing over to the better quantity & branded paints. 4. In 2001, Asian Paint launched a new product “Tractor Emulson”, which pulled the customer who used distemper to move to emulation paints.Accessibility of Asian paints to the customers :Asian paints have started a 24 hours customer help centre at Hyderabad. It is informationto consumers to answer their needs for any query related, to their products. Through thiscompany is also getting a lot of data related to the customers need & appreciations of theproducts. In order to provide better consumer service, company has connected all colourworld installations with Asian Paint’s main system through software & providingcomputes to dealers. This is speeding up order execution, electronic banking will speedup recovery & money transfer.Market Share Analysis :The market share clearly shows that Asian paint is the leader in Indian paint industry.The nearest competitors of Asian paints are Nerolac & Barger paints. Asian paints has thelargest sells in Decorative paints. 13
    • Nerolac paints being widely used in Industry it has a greater share price value.Industries like Bajaj auto limited, Maruti Udyog & many other car manufacturingcompanies use Nerolac paints. The Industrial paint are priced with premium in comparison to the decorativepaint which is mainly used in house hold decoration. Berger paints & ICI paints are also providing a shift competition to Asian Paintsin decorative paint, but still there is no sign of threat from them. Again in the Industrial sector Nerolac paint far ahead of all its competitor. Asianpaint presently building up a new manufacturing unit solely to produce Industrial paint. Asian paints annually spends on an average Rs325 Cr on its selling & marketingexpenses. It givers us an idea about the effort the company put on expanding its market inall segments. When customers buy the products of Asian paints – As the customers normallyuses the products of Asian paints on certain occasions like. Marriage ceremony, Dewalior any other special occasions, other than normal paint in houses, customers are verychoosy & brand specific. This appreciation by the customers helped Asian paints tobecome the number one paint company in India.3. ASSUMPTIONS OF PLANNING : i. Though Asian paints is the largest paint company in India but in industrial sector its performance is not satisfactory. A totally new manufacturing unit is coming up & will start production by 2007. This will definitely through new challenges to Nerolac paints, which is the present leader in Industrial coating market. But before that, a proper introduction of positing very important to sustain in market. ii. With the advancement of technology the demand & choice of people changes rapidly. So intensive R & d will need to be continued to continuously enhance the quality of the product. 14
    • iii. Internet purchasing is new becoming one of popular way to purchase. So adequate measure will be taken to satisfy customers regarding designing of website & providing a brief demonstration.iv. In International market also Asian Paints has become a top paint company. But its strategy regarding the international market must be reviewed at a certain internal so as to maximize value. 15
    • MARKETING OBJECTIVESFour Marketing Objectives of Asian Paints are discussed bellow- (i) Corporate objective (ii) Divisional objective (iii) Marketing Objective (iv) Programme ObjectiveCorporative objective : The corporate objective of Asian Paint is as follows -“AsianPaint has become one of the top decorative company world wide by leveraging itsexpertise in the higher growth emerging market. Simultaneously, the company intends tobuild long term value in the Industrial coating business through alliance with establishedglobal partner.” With Economic performance as objective the organization now has to developshort-term goals to reach the overall objective. These Goals are usually functional targetsuch as production, Sales, new market develop, new product development and technologyup gradation, once the goal are determined the strategies can be evolved to meet thegoals. The organization is now on the way to achieve the overall objective of Economicperformance.Steps followed by Asian paints for achieving its objective : Asian paint is following certain steps for achieving its corporate objective. Theyare as follows :(i) Customer Asset : The settings up Asian paints colour world, a chain of state art paintshop, is a major step towards building customer asset. At the same time company isfocusing more in rural areas than urban area and continuing to provide good and qualityservice to the customer.(ii) Technology asset : Asian paint is one of first Indian company to go hi-tech. Asianpaint has always kept its competitor at bay by constantly re-innovating its businessprocess and system. 16
    • (iii) Employee Asset : Asian paint always praise its employee for its success in themarket. Company always considers employee as a biggest factor of its success.(iv) Dealer vendor relationship : Asian paint always maintain a close relationship with itsdealers because company think that they play a major role in Asian paint recent success.(v) Brand Asset : Although it is operating in the commodity market but still Asian paint isinvesting heavily in branding. Gattu- Asian paint official mascot is very popular in India.Divisional objective : Asian paint has following division that are as follows : (i) Decorative segment (ii) Industrial segment (iii) Automotive segmentDecorative segment : Asian paint is the leader in this segment. It is ahead that itscompetitor Nerolac and Berger in Decorative segment company still have certainobjective for this sector that to increase it sales and to acquire maximum position in themarket share in Indian paint market.Objective for decorative segment : • To expanding its range in the economy segment. • To strengthen its position in the emulsion segment in both exterior and interior emulsion. • To continue its strategy of pricing aggression and increase it sales and to gain the market share along with a good operating margin. • To focus on the rural market as company believes as it as been its objective since the beginning. • To focus more on adcampaign for enhancement of their sales in urban as well as rural market.Industrial segment : Asian paint second line of production deals with the industrialcoating. The constraint in these segment is that it is not as successful as the decorative 17
    • segment. In these sector it has to face a stiff competition from its nearest competitorNerolac and Berger Paints.Objective for Industrial segment : • To build new infrastructure in the country for Industrial coating to increase the production capacity. • To develop the quality of the product with a higher technological up gradation. • To increase the sales of the Industrial coating with the help of proper Ad. campaign programme.Automotive segment : Automotive is the third segment of the Asian paint. It is a productwhich company target for the automobile market in India as well as abroad.Objective of automotive segment : • To put emphasis on continuous improvement in quality and productivity. • To put emphasis on detect prevention • To reduce variation and wastage in the supply chain.Marketing Objective : Asian paints the leader in Indian paint Industry has a verystrong marketing division. With more than 35% market share Asian paint is still growingin leaps and bounce to achieve higher targets. It is changing fundamentally with twoobjective in mind a huge ramp in the market share and better growth over the next threeyears. Previously company used to function as undifferentiated organization. But nowthey have divided it into three section each. And each section has its own independentsupport system, targets and performance parameter.Company marketing objective : As follows • Company is using PC, V-sats based line and internal mesh to become most networked corporation in India. • Company is trying to cutdown the inventory and improve the working capital cycle for a continuous production. 18
    • • Asian paint is highly accepted in the urban sector and now the company is trying to access the rural market with low price product like Utsav targeting every customer of all income level. • To enhance their marketing in rural sector a huge amount investment is made in adcampaign and demonstration cum sales technique is going on. • To increase its sales in the urban sector Asian paints today have 30 colour world located in different cities of India where any body can have the real taste of the colour. • Online marketing has become an integrated part of the company and company is trying install a strong integrated for online marketing. • Asian paints international unit, which have a dedicated marketing team is also targeting for a rapid growth in overseal market. • Asian paint is concentrating on the development of technological in their industrial coating so that to make the product more stronger positon in the market. And do it they are following the product with huge ad compaign. • Asian paint is now targeting to provide paint solution with insurance. • Asian paint is following unlque strategy of marketing in the rural areas by using their official mascot. According to the company it feels that picture are more dominant than name. • Asian paint website Asian paints com provides several information regarding the product and various other information that is being required by customer and dealer.Programme Objective : Programme objective is one of the main objective of thecompany. Here the company frames the strategy about the products related issue andvarious other thing relating to the business. Most of the company follows the 4’P’s policynamely price, product peace and promotion.Product : Asian paint details with product that is (i) Decorative (ii) Industrial (iii)Automative. In decorative segment company has a wide range of product from low price 19
    • to high price low price product like utsav which is basically targeted to the rural customerand high price product Apex cefirma for exterior and interior emulsion. Asian paintinvesting a huge amount of fun in R & D sector for Quality and the technologicaldevelopment of product so that it compets globally.Price : the price range of Asian paint varies according to the product. Asian paint hadalways a stragegy in domination in the rural sector. The product that is supplied to therural area have low price range. Where as in the urban sector some of the high priceproduct circulates.Place : Asian paint is available to all types of customer and the main advantage of theAsian paint is that it is easily accessible to its customer. At present there are 20,000dealer and a large no. of retailer. Asian paints distribution channel extends to the thirtystate of India. Asian paints is also exporting to contrites like Caribbean, Africa, Middleeast Asia and south pacific.Promotion : Asian paint follow good promotional strategy regarding their sales of theproduct. Their promotional strategy are made looking at the different category of theproduct and price associated with it. In urban areas Asian paint established colour worldwhere the customer can enjoy the taste real colour while in rural sector it follow salesdemonstration programme along with van displaying the product of Asian paint in therural market. It also invest a huge amount of funds in the advertising sector for thepromotion of this product. 20
    • MARKETING STRATEGY 1STRATEGY ALTERNATIVES : The prospect of a paint company has many dependence like weather, occasionslike puja, id etc. when we consider the decorative segments. So there is always apossibility of ups & downs in the business. Besides this there is another very importantfactor i.e. the position of the competitor. Through Asian paints is the largest paintcompany still under circumstances it will have to go for some strategy alternatives.Alternatives available : 1. As Asian paints market is mainly the decorative segment so a downfall in that market will lead the company in trouble them it immediate focus will turn to the Industrial segment. 2. Importance on water based paints may recover a poor situation created due to sustain poor weather condition in some region. 3. As there is every possibility that conventional coatings are likely to lose some share – ecofriendly coasting is going to be very good alternatives. 4. With all countries in southeast Asia beginning to adhere to the ASEAN free trade Area (AFTA) that will reduce trade barriers for paints & coatings. A reduce in domestic market share of Asian paints then will not be a constant for growth, became export of paints to the foreign countries will contribute a lot. 5. Increasing the product package & application oriented service will make company different from others. 6. A strong post sales service division will be an important factor in building customer loyalty. 7. Tie up with automobile sector with strong appearance will be effective. 8. Lastly but not the least price of oil is increasing day by day, which results to increase the price of paints. If this can be controlled by stocking oil or directly linking up with foreign cheap refineries so as get oil at least available price. 21
    • COMPETITOR STRATEGY : In the Indian paint industry Asian paints is the leader keeping the othercompetitors far behind. In terms of gross sales we can rank the competitors ofAsian paints as :i) Nerolac paints (ii) Berger Paints (iii) ICI Paints. In industry they are recognized as trailing firms. But with their high growthin the industry the competitors can touch or even overtake Asian paitns, for thatthe three main competitors have different strategies. Initially one common strategymust be their mind – is to increase the market share. Now we are considering individual strategies of the three companies. Nerolac Paints : Nerolac, despite a strong brand name has grossly underutilized its potentialin decorative paints. But in industrial paint sector it is far ahead of othercompetitors. So, its two main targets are : - i) to keep hold of the Industrial paint market ii) increase the market share in Decorative paint sector. All their business strategies mainly rounded this two issues. The differentstrategies they are dealing with : (1) They want to see high growths from decorative segments. In Industrial sector their supply chasing demand strategy accumulated lot of inefficiencies, so there is a scoe for cost reduction. So they want to upgrde the equipments to improve efficiency in manufacturing & secondly they are taking advantage of IT to improve over all efficiencies. 22
    • (2) In decorative segment, they are logging behind the demand. So now set up is needed as well as they are concentrating on enamels. They are installing colour dispensing machine across the country. (3) Concentration on emulsions & distempers, other words interior paints. Distinguishing the high – low end products. (4) They want to concentrate also on the automobile paint industry. Here they are already established but Asian paints is also targeting this sector heavily. (5) Another important strategy they are considering is to involve the vendor in their organizational process. For this they want to have proper vendor management processes.Berger Paints :Berger paints is considered as the dark horse of paint industry. While company’smain strength is in decorative sector, it has been actively pushing its presence inthe industrial paint segment. To improve its business the company have somestrategy : i) Company is mainly spreaded in Eastern & Southern part of the company, now it is looking for a rapid expansion at the western region also. ii) Recognizing the saturation of the urban market, Berger is targeting the rural market. iii) They are looking to export in nearby countries such as Bangladesh, Bhutan, Nepal to boost its revenue. iv) Within the paint industry, Industrial paint segment has a higher growth rate. Keeping this in mind company has targeted a 15% share of Industrial paints in the company’s product mix. 23
    • v) Berger’s performance in Automotive sector over the lst few years has been fairly. Here also they are targeting to build up some tie-up with automobile companies. vi) Berger had ticups with Nippon paints of Japan & orica of Australia. Here they would like to go for the branding of products through proper advertisement compaign & with their new logo. vii) An establishment of new plant in Russia was done in 2005, which is expected to start production by the end of 2006. company is likely to utilize the Russian plant to cater to the markets of CIS countries in the future.ICI Paints : Within 3 years of launch of colour future from ICI it proved to define theInternational interior designing trend. The company has invested a million dollarsin the R&D of the colour futures concept. Which helps to forecast the internationalcolour trends in paints. Though ICI is considered as the 4th paint against in India,but its presence & development can be a threat to the others. As a part of its strategy ICI is taking the measures : - (i) It is not looking at the increasing Investments but focusing on debottenecking the capacity. (ii) Considering the increment of channel partners. (iii) Improving technology & offering better quality at a moderate price will help to capture the rural market easily. (iv) Improved service & solution to the customers.The company is slowing penetrating to both of decorative & Industrial paintsegment. 24
    • MARKETING STRATEGY 2 POSITIONING STRATEGY OF ASIAN PAINTS LIMITED : Although operating in commodity market. Asian paints have invested heavily inbranding, GATTU, the Asian paints official Mascot is a familiar icon across India. Thecompany recently augmented their web pressure. Their website, Asian paints.com is anexhaustive hub of ‘Painting solutions’. The site use Maximum interactivity to enhanceuser experience. There are painting lips, online shades cards, cost calculation (based onfloor area and number of rooms0 dealer locator and a short of other innovative services. From the perceptual map we can understand that Asian paints, have wider rangeof products for all type of customers consisting of different income levels. It has aproduct range from Royal Emulsion, Priced 250-400 which is targeted for up marketbuyers. Hpcolilen is a product which is targeted for high income and upper middle classpeople. For lowers income group it has UTSAV, TRACTOR EMLSION which pricedvary from 40-100 Rupees. These products are mainly targeted to Rural customers. In Industrial segment companies position is relatively weak here Werolac paintscaptured more than 50% market share. In this segment Asian paints have products likeApcomin synthetic enamel which is used for industrial coating, and Apco syntheticpower which is used in automobile sector. In this segment also Asian paints faced stiffcompetition from Berger and ICI Paints. Bajaj automobiles in the main customer of Asianpaints in automotive sector. 25
    • CUSTOMER SEGMENTATION & TARGETING : Customer segmentation is the most important part of the marketing strategy of any company. Asian paints, the market leader in the Indian paint market segmented their products mainly in three sectors. (i) Decorative (ii) Industrial (iii) Automotive. Their customers are all also segmented based on the usage of these products. CUSTOMER SEGMENTATION : Base Decorative coating Industrial coating Automotive coat Premium Medium Popular High Powder Quality Finished performance coating coating coating coating Buyer Up market High Middle Used by Used by Large & Old cars areccharacteristi buyers income class & fertilizer manufacturer small mainlyc achiever group & rural petrochemicals s of while scale car recoloured quality & Upper market & atomic goods & other industrial fashion middle mostly energy industrial mostly tied Secker class low installations products up Socially income mainly used companies conscious group where to reduce corrosion led losses Key Quality Quality Cost Quality & Quality & cot Quality, Brightness &p purchasing surfaces surfaces utilization surfaced & cost influences shades power conting factor strength 27
    • Search & Brand loyal Brand Cost Utility Variety Brand Cost+ loyal + seeking loyal variety Evaluation Cost + seeking variety seeking Company’s through Packet Company Other Tie up with Old vehicles Authorised dealer or paint approaches & manufactures the anto send to work dealer paint or can points directly paints can company shops orPurchase paints the purchasing sold purchase customer paint com house of 1,2, 5, 10, litre Post A warranty Limited or No High scale Medium or no Service ServiceP Purchase period for no warranty service of warranty provided provided for some warranty warranty for limited 0-2 years. years years Asian paint is the market paint Nerolac is the market leader. Nerolac market leader, leader, with more than 50% market Asian paint have only 12% 50% share Market share. Nerolac, berger, ICI & market share. Other players – Asian paint penetrating Shalimar are there ICI slowly TARGETING : Asian paints have an unique customer targeting strategy. They used to follow V tier customer – Target strategy. Tires 28
    • Tires 1 Tire 2 Tire 4 Tire 3Tire – 1 - In the recipient end there are strategic solution seekers. Company thinks ofcost reductions, performance & productivity improvement for client’s improvingcustomers & share holder profitability.Tier –2 – Here the Customers whom can be considered as the value or brand sensitive.Asian paints target this customers with value added VDS integration customer levelservice.Tier –3 – These part of the consumer are price sensitive. They least bothered about theservice. These are mainly middle or low income group people Asian paints have severalbrand like UTSAV – to serve them.Tier-4 Here the company targets the small manufacturing & local companies, which cangenerate 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 havea good prospect over here.CORE STRATEGY OF ASIAN PAINTS LIMITED : - An origination like Asian paints will always restrict itself for its core strategy on‘innovation’. For an organization like Asian paints to create a strong future, it has to bredinnovation continuously. This strategy of innovative facts will help any organization tofulfill their commitment and integrity in dealing, with internal and external customers. 29
    • For this core strategy of innovation Asian paints encouraged entrepreneurship.They also give grater autonomy to managers in their reasonability. organiation alsodevelop high tolerance for failures and encouraged risk taking. Asian Paints another important core strategy is of managing people andtechnology which are also the two important assets. As it is always a people focused company its employees are the main leaders whobring a difference to the company. Asian paints has stressed on employee development and creating leaders oftomorrow. It always have strong belief in individual ability and creating an environmentin which an entrepreneurial spirit in encouraged. This is why Asian paints have believedto be a best employees for personal and personal growth. Along with Mass customization, Asian paints has created a plat formwhere Talent is shared across the organization as Manager are given in different areas ofoperations. It gives Asian paints on overall good perspectives of business along withchallenges of chandelling new Ares of operations. The second most important core strategy of Asian paints limited is its technology.Technology includes both research and development and information technology. Asianpaints has used technology throughout its year to gain a competitive edge in the marketplace today, the company has formulated the entire range of decorative coatings thoughhome grown technology. It has used IT as a tool to bring efficiencies and stress lineoperations. This applications will continue in future and Asian paints will not hesitate inmaking investment in these areas to gain advantages of the organization. The Third but important core strategy of Asian paints. In Reconfiguration of valuechain activities : It is a key task for Asian paints to retain competitiveness and achieve highestvalue cost leveraging. Here a Question arises that as per this given requirement who werethe Key initiatives taken by Asian paints during the last 5 years in this regard. In last 5 year, reconfiguration of value chain activities to increase competitivenesshas been one of the Major core area of Asian paints. An fact Asian paints has been drain 30
    • stormed as an organization with highest sales and profit figures. But most important hasbeen initiatives under taken in all areas of operations to increase efficiencies some of thekey initiatives undertaken are :- Initiatives in manufacturing to reduce losses at factory.- Sourcing efficiencies- Surat existing assets for better productivity- Introduction of new technology to drive efficiencies and increase productivity.- Implementation of new supply chain solution.- Implementation of an ERP solution. Besides the above Asian paints have focused on continuously improvingenvironmental Management standards at our plants. Today all Asian Paintsmanufacturing facilities are accredited with ISO 1400/ certification for environmentmanagement standards. These systems have enable company to reduce affluent from themanufacturing facilities. The introduction of new supply chain has transformedmanagement of inventory and forecasting has brought significant benefit for thecompany through reduction of working capital. It has completely changed the manner offunctioning of the supply chain division. MARKETING PROGRAMME PRICINGAsian paints limited with its three business units decorative, industrial & Internationalbusiness is one of the largest paint company in India. It has a sell over 300 million liters 31
    • of paints in 2005-06. Significantly the group has crossed the Rs.3000 crores turnovermark a preset mile stone for the company.Products and its price ranges :The various products and its price ranges are as follows :Product Price rangeExterior:-Asian Paints Apex Price of 20 lts. Range from Rs.3142.00 – 3328.00Asian Paints Ace Price of 20 lts. Ranges from Rs.1761.00 Rs. 2059.00Asian Paints Tractor Emulsion Price of 20 lts. Ranges from Rs.1435.00 – Rs. 2047.00Asian Paints Super Decoplast Plastic Price of 20 Ltd. ranges from Rs.2239.00 –Emulsion Paints Rs.2544.00Asian Paints Interior Wall Finish – Matt Price of 20 lts. Is Rs. 2244.00(White)Asian Paints Interior Wall Finish – Luster Price of 20 lts. Is Rs.2311.00(White)Product Price rangeAsian Paints Tractor Synthetic Distemper Its price ranges from Rs.690 to 757Wall Finishes It range from Rs.4638- Rs,4975Asian Paints Royale The price for 20 lts. Ranges from Rs.4638- Rs.4975.Asian Paints Premium Emulsion Range of 20 lts of this product ranges from Rs.2648-Rs.3118Enamels 32
    • Asian Paints Apcoute Premium Gloss For 20 lts the range varies from Rs.2068 toEnamel Rs.2350.Asian Paints Gattu Synthetic Enamel For 20 lts the range varies from Rs. 1458 to Rs.1836Asian Paints Utsav Enamel For 20 lts the range varies from Rs.1425 to Rs.1652.Stainer, Aluminium Paints & OthersStainersApcolite Universal Stainers For per bottle in plastic bottle of 200ml the price ranges from Rs.41-Rs.77.Utsav Stainer For per boltle in plastic bottle of 20 ml its price is Rs.34.Asian Paints Wood Stains For per bottle in plastic bottle of 5 lts the range varies from Rs.1000-Rs.1250.Aluminium Paints (Asian paints 3 For 20 lts its price is Rs.2593mangoes Aluminium)Effect of price on future:In the present economic situation, the GDP growth is expected at 6% for cude oil priceare soaring. Industrial sector has declined at a low rate with continuous slowdownincrement sector. There is depreciation in rupee.Despite such discouraging macroeconomics it is creditable that Asian paints has postedvery good result.Asian Paints is trying desperately to keep the same price overcoming the constraints. 33
    • PRODUCT Asian paint produces a wide range of products which have more than 1100shades. Their product were targeted to the different segment of the society. The cost ofthe produce of Asian paint varies according different income level of the consumer.Company follows the principle providing the customer different kind of products anddifferent price. In company’s Decorative premium sector company have products likeAsian paint Royals and Asian paint Emulsion. The cost of these product is Rs.275 and thelatter Rs. 201 where the product like GATTU and Utsav-family product are targeted tolower income segment people the cost varies from Rs.15 – Rs. 20.Products of Asian paints in decorative segment : As Asian Paint is the leader in the decorative segment in the Indian paint market ithas wide variety of product. The products are : (i) Asian Paints Royale (ii) Asian Paints Premium Emulsion (iii) Asian Paints Apcolite Premium Enamel (iv) Asian Paints Gattu Synthetic (v) Asian Paints Utsav Enamel (vi) Asian Paints Trator Acylic Distemper (vii) Asian Paint Utsav Acrylic Distemper (viii) Asian Paint Apex (ix) Asian Paint Ace (x) Asian Paints Tractor Synthetic Distemper.Asian Paints Royale : This product of Asian paint is targeted to higher income group andcustomer of urban area. The product contains different shades and price of each shadevery. E.g. Regal white 34
    • Asian Paints Emulsion : it is another product which is targeted to urban area. It is highprice premium product. The shades are white, palm group and base.Asian Paints Gattu synthetic : It is a product which is targeted customer of reral area. Itprice varies Rs.15 to Rs.120 and it has different shades like white, Aquamarine, AzureBlue and etc.Asain Paints Utsav Paint : it is product which is targeted to lower income people as wellas rural customer. The various shades were Adyrey, back, white, super white and etc.Asian Paints Apex : This product is one of the major product of the saian paints as thisproduct is targeted to middle class people and avg income level. These paint have widerrange of shades such as classic white, blue ice, Alliance, Antique white, sweet time andetc. The price varies from Rs.180-Rs. 115.Products of Asian Paints in Industrial sector : it is the second category of the product thatAsian paint produces. In this segment Asian Paints targets to industry where the paint areused for protective coatings of the machinery. Road mapping and various other industrialuses. In these segment the product are normally sold at the premium price. Asian paint inthese sector is behind its competitor Nerolac. Now Asian Paints is trying a lot to improvethe product technology and by bringing new product in this sector to compete with itscompetitor. The products are (i) Apcomin Synthetic Enamel (ii) Apcomin Synthetic Powder (iii) Stainer (iv) Premium surface & fillersThese products are based on high technological products and are used for asset(Machinery, tools, equipments) coloring and upcoming synthetic powder is used aslubricating agent in the machinery. Premium surface and fillers and strainers are used infor road marking and various other tings in the Industrial sector.Product for automotive sector : This is the third category of product which is produced byAsian paint. These segment is slowly being emerging great user of paint in the Indianmarket previously automotive company used to import the product from other country. 35
    • But now some companies like Asian paint, nerolac, Berger have their products in thissegment. This sector is emerging market in India.Products : The products of Asian paint in this segment are (1) Allumium Paint (2) Fibre Paint (3) Apcolite Hammertone finish Basically the product in this segment are new but the product are in the greatdemand automotive vehicles in India. The product are available in different colourbasically they are used for colouring the vehicles and the spare parts.Product life cycle : Product life cycle suggests the different stages that a productundergoes during its life cycle Introduction stage: In these stage the product areintroduced to the market. (i) Growth state – In growth stage the product gens the memeenturn an grows rapidly in these stage. (ii) Maturity : In these stage the product attains the saturation level it reaches its maximum point and from that point it starts downfall. (iii) Decline stage : In these stage product slowly goes downward in to the slope because of low demand and various other things. It end stage of a product. BRANDa brand is a name, term, sign, symbol, design or a combination of all which is buildintended to identify products or services of a company to differentiate it from itscompetitor. Asian paints, the largest paint company in India have established its positionas a great brand. Asian paints promise to deliver consistently a specific set of features,benefits & services to buyers. 36
    • Asian paints as a brand name is very much attached with allits products. What evrmay be the product, like ultima, Emulsion, wall finish lustce, Apcolite premium in theurban area or the UTSAV at the rural area, the brand name is directly attached. The brand name Asian paints brings to the mind of people certain attributes lie –wonderful coloring, royal treatment, 1000’s of colour combinations, pricing not animportant factor of concern as the company provides products for all category ofconsumers. Post purchase service is also an important issue related to brand name. Asian paints Brand extension policies helped them to reduce the effective cost oflaunching new colours products in new form, with new name. Line Extension techniqueof branding helped them to go with new forms like – Asian paints UTSAV Enamel,Asian Paints Tractor Emulsion, Asian paints Royal. Company’s universal logo “GATTU’ which is not going to be a logo anymore,helped Asian paints to promote its products in through out India, particularly in ruralareas it got the most popularity. Asian paints is using its website as a very strong mode for the promotion ofBrand. The wonderful information related to pre-painting & after sales services helpedthe company to build its unique brand. The on-line services, colour world &Advertisements also helped to build the Brand of Asian paints. PROMOTION Asian paints the market leader of the decorative segment in the paint market ofthe India. As it is not for behind in the other tow section that is industrial coating andautomotive coating. In achieve the current position a lot things are being done by theAsian paints. The promotion strategy of Asian paints is bringing a lot of positive outputto the company. Company is using different techniques such ad. Compaign, salespromotion, personal selling, driect marketing and public relation. 37
    • Promotion strategy :Direct response marketing : Asian paints is using V-sts based in the and 24 hours onlinecustomer help line service open. In enable the customer to interact with the companyand know the details about the product, pricing and many things related to the company. Asian paints is dominating the television advertisemnt by increasing other adcampaign cost over 50% from next year. A total amount of 85 crores is spent ont eh adcampaign by asian paint. With huge ad campaign support behind the product thecompany is able to making a brand name in the mind of customer. Their particular adcampaign ‘Mera Walla Blue” “har ghar kuch kehta hia” are being liked by the customer.Online marketing for urban customer : Asian paint online marketing system is helpingcompany in lot of ways many customer all the necessary information to the customer. Itis an unique way of promotion.Colour world : Asian paint had established 30 colur world thorugh out the country givingthe people real taste of colur. The punchline for the colour world is “Jjahan Milen worldke saare colour”Promoting in different cities : Asian paint have large area of Network of distribution. Ithas almost retail outlets through out the country situated in the different city of India. Allthe customer could easily access the product of Asian paint anywhere and any time. Promotional strategy followed by Asian paints in rural market On of thing which is contributing to the profit of Asian paint is that its entry to therural market. As Asian paint gets an competitive advantage from its competitor in thissector. As Nerolac and Berger were only targeting the urban customer. • First of al Asian paint is bring different low cost product like Utsav group in the rural market. • There packaging very from 200gm to 1 kg and prices are also relatively low. • To enhance their sales in the rural market they are spending a huge amount of money in ad campaigns. 38
    • • In rural areas they follow sales demonstration programme where they demonstrate their different product where a large no. of discount is given on the product, lucky coupons, free gifts are given to the customer. • Moving vans are being employed to sell their product in different village.Promotion in international arenaAsian paint is taking we from the domestic market and promoting its product in theinternational market with establishing colour world in those place particularly Caribbean,Africa Middle east Asia and south pacific. A huge amount fund is invested adcapaign forthese product in the international market.Promotion through Ad campaign : Asian paint has different brands over 1100 shadestargeting different segments. The company decide to promote all the brand under onename of “Asian paint’ This was a advantage for Asian paint in the Low involvementsegment as the people asked the paint by brand.Target Audience : The primary target audience for all of the brands marketing andcommunication activities has been the adult male who is the primary decision maker.However female members of the house play an important role in selecting a shade so alarge number of ad are done keeping in mind that thing.. • The non-sue of caps in the headline as in the original ad “Asian Paint” logo which is sin similar font, the design is meant for better readability and structure of colour used. • The company mascot “Gattu” an impish boy with the paint tin and the brush, is most popular and easily reconciled and is one of the ideal mascot.Sates promotion : Asian paint uses it sale promotion as key ingredient in its marketingcampaign. It consist of various incentive designed to stimulate faster or greater purchaseof their products.Giving discount to the dealer ; Asian paint gives certain amount of discount to the dealerif he increases the sales of the company product.Specialty advertising : Giving Asian paint T-shirt, Caps and other small things to painterfor their advertisement. 39
    • Trade show : Asian paint always open its stall in the Industry trade so that it productswould be promoted globally.Consumer preference : The customer of Asian vary from a period to a big industry inorder to enhance it sales it gives price discount on bulk amount of purchase. Thecompany give coupons inside the paint pack so that could be taken by the customer as agift from the company. Asian paint always try to improve the packaging of the product. Ifthe product would be fancy and stylish then it would increase the sales of the products.As industrial coating is one of tis major product the company uses the name of thecompany it supply the paint for its promotion. The promotional strategy adopted by Asian is quite unique apart from having suchgood strategy the company is using high profile brand ambassador like Akshay Khanna,Saif Alikhan” to promote their product in the paint market. Promotional strategy of Asianpaint is always aimed looking at customer and this needs and for this strategy company isenjoying the No 1 Position in the Indian paint market. DISTRIBUTION Asian paints have an extensive distribution channel through out the country. Itused to maintain unique channel from the manufacturer to the customer. Distributionsystem at Asian paints : - 1. Multiplant Distribution setup.  Neither geographic nor product specific.  Offers flexibility & variable cost advantages 2. Servicing has been key competitive advantage. 3. Around 15000 dealers serviced from around 85 sales location. 4. Role of distribution department is to ensure timely product availability at these locations at minimum cost. 40
    • The company ahs 4 manufacturing facilities & more than 2800 stock keeping units(SKUs) These are supported by 6 regional distribution centers, which cater 55 deposits.Each depot is having branch manager for supervision over more than 15000 dealers inmore than 3500 small & big cities in India. Asian paint implemented & concisely improving its IT systems over the years. Ithas already linked all sites & Depots through V-SAT technology, which helps them tomonitor constantly & has given benefits in streamlining the distribution channel. Asian paints also implemented 12 solutions to increase its networkings &solutions, which is a very good replacement of ERP. SERVICE Asian paints is India’s largest paint company & the third largest paint company ofAsia today , has an enviable reputtion in corporate & society level for its wonderfulserving. Asian paints have three different segments : (i) Decorative paints (ii) Industrial &(iii) Automotive paints.Its service strategy is also different according to these segments.(i) Decorative paints : Asian paints some solutions – which actually offer a hastle free paintingexperiences to the consumer is presently available in 11 different cities in India. It isparticularly meant for premium consumers. In this case painting is done by experienced, 41
    • trained applicators & according to the wish & choice of customer in presence of him.Here time bound completions of the job is assured. In the website of Asian paints (www.asianpaint.com) all the details related to theavailability of the above facility & the help desk is designed to provide the customerample choices. Asian paints clour world is the unique paint shop of Asian paint available throughout the India, where consumer can directly see the different paint combinations throughsoftware & chose accordingly. In all t here cases Asian paints also provide warranty for their products & forhome solutions free after paint services to the consumer, if anything wrong happens withthe paint. For the rural areas, where the most popular product UTSAV, dominate themarket, Asian paint used to organize rallys, car or van advertisement of their product &make aware the people about their services.ii) Industrial paint : here the products are tested under extreme conditions to ensure their durability &how they can withstand different climatic changes. As corporate level the main consumerhere Asian paint used to provide importance in servicing this sector too. Its website givesall the product details. It provides technical details regarding the uses of the paint.Coating specification, health & safety are also given importance as a part of services.iii) Automotive coatings : In this segment Asian paints is improving its market share with high speed. Herethe vehicles ultimately goes to the consumer, so Asian paints used to provide directconsumer service, private cars, motor bikes & MUV (Multi usage vehicles) vehiclemanufactures are directly provided with the post paint service. Asian paint have implemented is solutions. Which helped them to overcome thehomegrown supply chain, which had certain drawbacks, in terms of customer service.The is solution helped them to continuously monitor the changing needs of the marketplace & serve the customers accordingly. 42
    • In future so as to become open of largest paint company in the world Asian paintsis also taking care of the services they provide. They want to have more feedback fromthe customers through their website & colour world. It is now turning its helpline into anintegral part of its operations. Roughly 75 lakh rupees is considered as the annual servicecost. Quality service is the future mothe of the company. RESEARCH Asian paints, the largest paint company of India have a very strong researchmethodology. There are two ways they follow : - (i) Market Research (ii) Research &Development of the products according to customers need & choices.(i) Market Research : Asian paints used to hold a very strong market research team. The colour worldsavailable throughout India is also keeping the consumer databases & their feed backs.There are three important respect which came out.(i) Consumer presences(ii) Increasing global competition(iii) Rapidly disappearing completive advantages. The market research suggests company need to improve its presence in Industrialsector. Products related to surface coatings & Intermediates need to be modified. UTSAVrange of products achieved a great success in rural market in this area Asian paint need totake the competitive advantage.(ii) Research & Developments : Asian paints have invested 140.54 million Rs. In 2005-06 in the R & D sector,Which gives an idea about the company’s paid interest in R & D. The various sector where company is taking care of are –(i) Development of analytical test methods, characterization technique & applicationtechniques essential for product development, bench marketing & customer servicing.(ii) Up gradation of products & processes to reduce environmental & safety concerns. 43
    • (iii) As the price of crude oil is increasing day by day. Asian paints is looking foridentification of alternate & new raw materials for the products.(iv) Quality improvement, cost benefits, supply chain flexibility & crisis management arealso the matter of concern.Future planning :Asian paints is growing rapidly throughout the world. In international market company isplanning to introduce new & attractive products though its subsidiaries, like Berger, Apcocoating etc. In Jamaica & Fuji company’s market is yet not satisfactory, which is also amatter of concern. In domestic market company will concentrate on development ofnew products/ product systems. With improved supply chain management. Asian paints is looking to invest approximately Rs.160 million in R & D in2006-2007 financial years. Quality control system will be upgraded & implementation ofin solution will be helpful to grow. FINANCIAL DOCUMENTS Asian paints, one of the leading paint company in Indian market, consists of threedifferent segment. Decorative, industrial & automotive company presently standing in avery good position as per as the competitors are concern with more than 50% marketshare. Company has some planning to increase its overall sales for the financial year2006-07.SALES FORECASTS BUDGET OF ASIAN PAINTS : - Paints is a product which is not used in daily life FMCG. Its purchase is mainlybased on the requirement of the consumer. Natural factors, festivals are some factorwhich effect the sales. To increase the sales company is looking at the following factors : - 44
    • (i) Product Style (ii) Quality (iii) Pricing (iv) Raw material supply (v)Distribution system (vi) Promotional activity.Table showing the previous 6 years data : -Rs. – CroreYear Advertising & Gross sales Net profit (PAT) marketing Exp.March 2001 176.26 1526.01 105.582002 192.49 1662.33 114.312003 216.58 1887.7 142.012004 249.29 211.08 147.792005 269.15 2366.16 173.432006 323.58 2807.85 186.78Now, to forecast the sales for the year 2006-07 we can use the regression analysismethod. The sales for the previous years are increasing in manner & the growth ratefollows a certain trend. So we are using last sqnare method.Years X Sales (Y) XY X22001 1 1526 1526 12002 2 1662 3324 42003 3 1888 5664 92004 4 2111 8444 16205 5 2366 11830 252006 6 2807 16842 36 ∑x =21 ∑y=12360 ∑xy=47630 ∑x2=91Formula = ∑y = xa + b∑x ∑xy = a∑x + b∑x2putting the values – (12360 = 6a + 21b) x 21 ==> 259560 = 126 a + 441b 45
    • (47630 = 21a + 91b) x 6 ==> 285780 = 126a+546 bsolving we get a = 1186.05 b = 249.7y = 1186.05 + 249.7 xfor the year 2007; x = 7. Y = 2934Now, Gross sales (estimated / forecasted) of Asian paints for FY 2006-07 in 2934 Cr.(approx).Relation – Gross sales & Advertisement & marketing cost : Gross sales of a company is strongly effected by the advertisement expansesincurred. The advertisement & marketing expanses a percentage of the Gross sales for 2001- 2006 in as follows :Rs. In crores :Year Gross sales AD & Mar. Ex. %2001 1526 176.26 11.552002 1662 192.5 11.582003 1888 216.5 11.462004 2111 249.29 11.802005 2366 269.15 11.372006 2807 323.6 11.52 46
    • The above table shows that Gross sales & Ad & marketing expenses of Asian paints havea certain trend. Ad. & Marketing expenses is almost 11.5% of the gross sales. For the year – 2006-07 – Gross sales = 2934 Cr. (Approx)Advertisement expenses = 2934 x 1158 = 340 Cr (approx)Graph showing the % relation of Gross sales & Ad ex. 11.9 11.8 11.7 11.6 11.5 11.4 11.3 11.2 11.1 1 2 3 4 5 6Effect of union Budget 2006-07 of sales : For the paint sector the union Budget 2006-07 have two import ant implications. 47
    • (i) Reduction in Peak customs duty, lead to reduction in customs duty on most of the inputs from 15% to 12.5%. (ii) CVD of 4% has been imposed accorss the board of tall the imports to compensate for the sales Tax/ VAT in the domestic market. Full credit of this duty will be allowed to manufactures of excisable goods. The budget has a positive outlook & Asian paints is expected to be benefited from it in terms of sales. Though it has a force casted sales of 2935 core company is expected to increase it. Certain unidable impacts like increase of price of crude oil, non- availability of raw material, are certain barriers. Asian paints have achieved a gross sale of Rs.603.33 in Q1 of Ry06-07. The Q2 is the prime season of the company as it is the occasion period. Here company is expected to increase its sales volume tremendously. PROFITABILITY FORECAST BUDGET OF ASIAN PAINTS :- Profitability of a company for any particular financial year is mainly calculatedbased on the two factors – (i) Total Income (ii) PBDIT Where total income is the addition of gross sales & other source of income &PBDIT is profit before depreciation & Income Tax.Table showing – Total income & DBDIT for 2001-2006Rs. In crore .Year Total income PBDIT Profitability2001 1543.85 208.55 0.142002 1635.5 236.15 0.142003 1928.31 287.98 0.152004 2131.04 292.33 0.142005 2462.1 325.66 0.132006 2830.11 390.61 0.14 48
    • WHERE PROFITABILITY = PBDIT Total IncomeNow, to forecast the profitability of FY 2006-07 we need to forecast the Total income &the PBDIT of the year. For this we use the regression analysis method by regression analysis of the totalIncome & forecasting it for FY2006-07 we get the amount o be Rs.2999 crore (approx). Now, PBDIT is measure of profit made by a company for any financial year.Though actual profit or PAT is different, but PBDIT gives us a measure of theprofitability. Now, PBDIT of Asian paints for the last 5 years is shown in the above diagram,as it is to some extent linear increment, we can consider regression analysis method toforecast the PBDIT for Fy 2006-07.By forecasting we get – PBDIT for Fy – 2006-07 = 408.48 croreNow, we have profitability = PBDIT/ Total incomeFor Fy-2006 –07 as per our forecastingIs concerned profitability = 408.48/2999 = 01362Now in percentage term for forecasted profitability of Asian paints for fy-2006-07 is13.62% 49
    • 0.155 0.150.145 0.140.135 0.130.125 0.12 1 2 3 4 5 6 YEAR WISE PROFITABILITY GRAPH 50