Asian Paints Prepared by Mehul RasadiyaK.K.Parekh Institute of Management of Studies
POSITION OF PAINT INDUSTRY IN INDIA Paint industry in India is estimated to Rs. 135bn. Unorganized sector accounts to 35% of total paint market. Volume growth is estimated at 15%. India’s share in the world paint market is 0.6%. Per capita consumption of paint in India is 1.2kg/annum.
Introduction to Asian Paints • Asian Paints was started in 1942 by four entrepreneurs: Champaklal choksey, Chimanlal choksey, Suryakant Dani, Arvind Vakil • The company was started under the name “ASIAN OIL & PAINTS COMPANY.” • Within three years, their turnover reached 3.5 lacs. • In 1967, Asian paints became the 10th largest paint company in the world.
GROWTH OF THE COMPANYA. 1942-1967: Evolution PhaseB. 1967-1982: Extension and Consolidation PhaseC. 1982-1986: The years of ExcellenceD. 1987-1997: Moving Closer to the ConsumerE. 1997-1999: Changing rules of the gameF. 1999: The new Asian Paints
Asian Paints is India’s largest paint company and Asia’sthird largest paint company, with a turnover of INR 54.63billion.The group has an enviable reputation in the corporateworld for professionalism, fast track growth, andbuilding shareholder equity.Asian Paints operates in 21 countries and has 29 paintmanufacturing facilities in the world servicing consumers inover 65 countries.Besides Asian Paints, the group operates around the worldthrough its subsidiaries Berger International Limited,Apco Coatings, SCIB Paints and Taubmans.
Vision“Asian Paints aims to become one of thetop 5 Decorative Coatings companiesworldwide by leveraging its expertise in thehigher growth emerging markets.Simultaneously, the company intends tobuild long term value inthe Industrial coatings business throughalliances with established global partners.”
OBJECTIVE1. TO BE THE LARGEST DECORATIVE PAINT CORPORATION WORLDWIDE2. IT AIMS TO BE THE 5TH LARGEST PAINT MANUFACTURING COMPANY WORLDWIDE3. TO PROVIDE BUSINESS STRATEGY FOR ASIAN PAINTS.4. TO COMPARE THE SAME WITH OTHER COMPETITORS FOR INDIA CENTRIC BUSINESS.
CURRENT PROGRESSVertical integration has seen it diversify intoproducts such as Phthalic Anhydrideand Pentaerythritol, which are used in the paintmanufacturing process.Asian Paints along with PPG Inc, USA, one of thelargest automotive coatings manufacturer in theworld has begun a 50:50 joint venture, AsianPPG Industries to service the increasingrequirements of the Indian automotive coatingsmarket.Another wholly owned subsidiary, Asian PaintsIndustrial Coatings Limited has been set up tocater to the powder coatings segment which isone of the fastest growing segments in theindustrial coatings market.
Mergers, Acquisitions & JVBuys Taubmans Paints (Fiji) In September2003.Acquires ICI India’s Unit (February 2007).Sells stake in Australian Unit (June 2007).Joint Venture with PPG, USA (1999)
Marketing, Sales & DistributionRural Marketing Initiatives since 1960.Distribution is one of the main strategy of Asian Paints.Advertising & Promotional Expenditure started in 1980sAdvertising Methods- Radio, TVCs, Print, Internet,Advertisements •Promotional Expenditure grew from 15% in 2003 to 21% in 2008
Various plants in India Asian Plants Kasna (Uttar Pradesh) in India Asian Plants (Rohtak, Haryana)
Asian Plants Bhandup (Maharashtra) in IndiaAsian PlantsSriperumbudur in India
Supply ChainAsian Paints has harnessed the powers of state-of-the-art supplychain system using cutting edge technology to integrate all its plants,regional distribution centers, outside processing centers andbranches in India. All the companys paints plants in India, twochemical plants, 18 processing centers, 350 raw material andintermediate goods suppliers, 140 packing material vendors, 6regional distribution centers, 72 depots are integrated.The supply chain runs through a wide spectrum of functions right frommaterials planning to procurement to primary distribution. It hasplayed a pivotal role in improving operational efficiencies and creatingagile procurement, production and delivery systems. It has alsoenhanced the flexibility of operations, lowered output time andreduced delivery costs, while improving customer-servicing levels andprofitability.The Supply Chain Management is backed by IT efforts that help thecompany in demand forecasting, deriving optimal plant, depot andSKU combinations, streamlining vendor relationships, reducingprocurement costs and scheduling production processes for individualfactories
Supply Chain Cycle350 raw material 2 chemical & intermediary plants & 18 good supplier processing centers 140 6 regional packaging & distribution material centers & vendors depots
Human Resources Asian Paints believes that people are its strongest assets A company can go only as high as its people aim. It is people who innovate and invent, and who engineer the efficiencies It is people who drive growth and lead to greater heights. At Asian Paints, human resources systems are designed to create a focused, performance oriented and agile company. A talent pool of over 4700 employees employed across 23 countries bring in a unique blend of mindsets and skills.
Human Resources Hunt for talent Employ people who are best suited to the job and whose personal goals are in alignment with our corporate purpose. Besides encouraging achievers from within the organization, they absorb the best talent from some of the best management and technology institutes in the country. Cut out task for every individual within the framework of result-orientation, market insight, customer perspective, trust, respect and problem solving.
Human Resources An open and interactive work culture brings out the best in the people. A sense of ownership and freedom to experiment at their workplace brings out creativity and innovation in every individual. Excellent training is provided to develop leaders and re- strengthen competencies from within the organization.
Industry Analysis: Porters 5 force Model Substitutes 1.White cement 2.White wash 3. Brick & stone Structure BUYERS Suppliers1. Decorative: Fragmented Existing Rivals 1.Tio2 Imported,Market. LOW POWER 1. Berger 2.Few suppliers,2. Industrial: Low 2. GNswitching costs. Corporate 3.Availability of 3. ICI Substitutes of RM Lowhave HIGH POWER 4. JNPL HIGH BARGAINING POWER Threat Of New Entrant 1.Growth rate much higher than global so global player may be interested 2. Huge potential to increase per capita consumption. Thus Latent need exists. 3. Companies can erode into APIL’s industrial market by forming JV’s.
Market Share Of The Competitors Company Industrial Market Decorative Market APIL 14.50% 37.50% GNPL 42.50% 10% Berger Paints 14.20% 11.20% ICI 7.80% 7.80% Jenson & Nicholson 8.10% 5.50% Others 12.90% 38% Identification Of Focus Area of CompetitorAPIL GNPL BPIL ICI JNIL SPIL SNIL Focus on Provide Increase Increase Leveragedecorative paint shop focus on capacities to on JV for Consolidate ConsolidatePaints and management southern strengthen growth in position in position incomplete services to markets in presence in Industrial architectural Repaintingvacant slots sell solutions India fast growing segments paints exteriorin product rather than architectural paintrange product segments market GainMarket sharein auto OEMthrough JV
Overall Corporate Strategy Of Asian Paints DISCOVER Exploit new markets by DEVELOP NEW creating products /services Build new competency to Create by leveraging the Future existing competencies differently MARKET OPPORTUNITIES DEFEND DEEPEN Defend existing market by strengthening existing Build Complementary/newEXISTING competencies competency to fortify position in Existing Market Distinctive Competencies EXISTING NEW
`DISCOVER:This forms the basis of fast growth.AP has identified opportunities abroad in developing countriessimilar to India.To enter into these countries they adopted the process ofacquisition. DEVELOP:Paint industry is primarily a product-oriented industry up till now.Huge potential exists in the service side also.Introduction of color-world, providing service in painting and interiordecoration etc are steps taken to acquire the whole chain and becoming fullservice provider. Need to Ensure value-adding services are possible. These can be integratedto provide an umbrella service.Constant reminders to the customers to repaint, or upgrade.
DEFEND:Consists of rural and the urban market in which AP is playing. They are a target to many global companies, which are playing inIndian market via Indian arm of their operations like ICI has Berger,Kansai has JN DEEPEN: Industrial segment of Indian paint industry where AP has a weakpresence. It has a presence in automotive segment but ranks a poor second.It needs to form alliances with foreign players to enter into this segment.It can also look for tie-ups with the company, which have tie-ups withthose companies whose daughter arm is operating in India, to lock theaccount. Its move of taking over Haucoplast is one step in this direction. Their tie-up with PPG has given them a good presence in automotive segment,capturing clients like Santro, GM, Ford etc
Business Strategy: AsianPaintsAsian Paints has acquired short-term competitiveadvantages by using its distribution strength andlogistical efficiency in order to raise the Cost ofdoing business for all its competitors to attain thisadvantage.The advantage is short-lived and ultimately imitable.Moreover, AP has established such an extensivenetwork that getting incremental advantage wouldbe very difficult.Futuristic approach should be gaining competitiveadvantage through channel control or occupyingmind space.
BusinessStrategy: Urban Intermediaries have influencing power on theMarket purchase decisions in the urban areas. For this, there is a three pronged strategy for increasing demand 1. Use these intermediaries for initiating demand: • Painters ,Contractors ,Designers & Decorators 2. Occupy part of the intermediary space and try to sideline other intermediaries: • Creating a service arm that can cater to a large market • Creation of a well-qualified service arm which is capable of providing value-added services. 3. Try to reduce the power of the intermediary by increasing the Pull for the product • By increasing the power of the end-consumer. • Establishing a strong brand name for its brands. GATTU: THE MASCOT
Business Strategy: Rural Market Rural segment is not mature enough to appreciate service related offerings Strategy should be product related. Customer up-gradation strategy should be adopted. It should be implemented in two parts: 1. The penetration of the rural segment have to be achieved by offering a basic product well tailored to match the low willingness to pay of the rural consumer. 2. After basic penetration levels have been achieved the rural consumer can be offered a “higher ” range of products with a view to up grading the consumers.
Business Strategy: International Markets For the newly Acquired Global Companies Utilization of the learning curve effect and the knowledge base from having functioned in a developing country would be the most crucial factor for growth. AP can hasten the process of market growth and maturity in these regions by leveraging on its experience and launching newer products at a faster rate.
INTERNATIONAL PRESENCEToday the Asian Paints group operates in 21 countries acrossthe world.It has manufacturing facilities in each of these countries and isthe largest paint company in eleven countries.The group operates in five regions across the world viz. SouthAsia, South East Asia, South Pacific, Middle East and Caribbeanregion through the five corporate brands viz. Asian Paints,Berger International, SCIB Paints, Apco Coatingsand Taubmans. In ten markets, it operates through its subsidiary, BergerInternational Limited; in Egypt through SCIB Paints; in fivemarkets in the South Pacific it operates through Apco Coatingsand in Fiji and Samoa it also operates through Taubmans.
International OperationsCaribbean Islands Middle EastBarbados, Jamaica, Bahrain,Egypt,Trinidad & Tobago Oman & UAE South Pacific South East Asia Fiji, Tonga, China, Malaysia, Vanuatu, Solomon & South Asia Singapore & Samoa Islands. Bangladesh, Thailand Nepal & Sri Lanka.
Overseas plants Berger International Plants Barbados Berger International Plants Jamaica
Berger International PlantsSingapore Berger International Plants Trinidad
ACCOLADES EARNED BY ASIANPAINTS ON INTERNATIONAL LEVELForbes Global magazine USA ranked AsianPaints among the 200 Best Small Companiesin the World for 2002 and 2003.It presented the Best under a Billion award,to the company.Asian Paints is the only paint company in theworld to receive this recognition.In Nov 2005 and Nov 2007, Forbes rankedAsian Paints among the Best under aBillion companies in Asia.
Future of the Company Asian Paints is planning to increase the capacity by setting up a plantat Rohtak, Haryana. other company is planning to increase its capacity in the near Nofuture, this will give Asian Paints a competitive advantage in terms ofpricing. GDP growth slowdown in the growth rate of two important activitiesi.e. repaint activity and construction activity will have direct impact onthe volume of APL, thus effecting its profitability and margins. Rural markets have considerable potential. Companies that canestablish a dealer network, in these markets are likely to get the edge inpositing above par growth rates over the next few years. setting up distribution infrastructure is expensive, it would mean Asthat the competition is limited to the top players. Due to substantial hike in raw material prices, Asian Paints has raisedthe prices of solvent based paints, thus demand would be affected tosome extent