STRATEGIC

MANAGEMENT IN
ASIAN PPG INDUSTRIES
LTD.

TEAM MEMBERS:
Deepika Amesar
Surbhi Tyagi
 INDEX
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ASIAN PPG - HISTORY

The early 1990's saw a drastic change in the Indian automotive market scenario. This mainly
followed the economic liberalization process, leading to an exposure to international standards of
servicing and advancement in technology and skills. Consumer tastes also got upgraded in the
process. There was a need to create a business relationship with global customers.

Being a strong player in the Industrial segment, Asian Paints India Ltd perceived the need to
combine state of art technology with a strong national distribution network. Incidentally, PPG
Industries, Inc. of USA, the largest producer and supplier of automotive coatings to major global
car manufacturers, was also looking for a partner to venture into India. Thus, followed 50:50
joint-venture between these two giants, leading to the creation of Asian PPG Industries Ltd.
The JV was formed in February 1997, with the primary objective of providing solutions to the
paint requirements of Indian Automobile manufacturers. A combination of expertise garnered
from the parent companies and learning created from within has equipped Asian PPG with the
wherewithal to create integrated solutions in addressing global consumer needs.

ABOUT THE PARENT COMPANIES

Asian Paints Limited

Asian Paints is India’s largest paint company and Asia’s third largest
paint company, with a turnover of INR 54.63 billion. Asian Paints
operates in 20 countries and has 28 paint manufacturing facilities in the
world servicing consumers in over 65 countries. Besides Asian Paints,
the group operates around the world through its subsidiaries Berger
International Limited, Apco Coatings, SCIB Paints and Taubmans.

Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in the
World for 2002 and 2003 and presented the 'Best under a Billion' award, to the company. Asian
Paints is the only paint company in the world to receive this recognition. In Nov 2005 and Nov
2007, Forbes ranked Asian Paints among the Best under a Billion companies in Asia. The British
Safety Council for all the paint plants in India awarded the "Sword of Honour" to Asian Paints.
Asian Paints has received the prestigious Web Marketing Association's Web Award 2008 for
Outstanding Achievement in Web Development in the Consumer Goods Standard of Excellence
category. The company has come a long way since its small beginnings in 1942. Four friends
who were willing to take on the world’s biggest paint companies set it up as a partnership firm.
Over the course of 25 years Asian Paints became a corporate force and India's 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 products such as Phthalic Anhydride and Pentaerythritol, which are used in the paint
manufacturing process. A wholly owned subsidiary, Asian Paints Industrial Coatings Limited
has been set up to cater to the powder coatings segment which is one of the fastest growing
segments in the industrial coatings market.

PPG Industries Limited

PPG Industries was founded in 1883 when Capt. John B. Ford and John
Pitcairn started the first commercially successful plate glass factory in
the United States at Creighton, Pa. Known as the Pittsburgh Plate Glass
Co., the enterprise focused on innovation and quality. More than 125
years later, PPG Industries is still dedicated to these priorities. Pittsburgh
Plate Glass Co. grew by venturing into flat glass production, production
of raw material for glass, fiber glass business, coatings business and optical products business.
As a result of its diversification, growth and increasingly global presence, the company changed
its name to PPG Industries in 1968. In the ensuing decades PPG emphasized innovation,
developing specialty products, increasing process efficiency and accelerating its worldwide
expansion. In January 2008, PPG completed its largest acquisition ever – of SigmaKalon Group,
previously based in Uithoorn, Netherlands. SigmaKalon brought strong architectural paint,
protective and marine coatings, and industrial coatings businesses, and it greatly expanded PPG’s
footprint in Western and Eastern Europe, Asia, and Africa. The acquisition made PPG the
second-largest global coatings company.

Today PPG is a global supplier of paints, coatings, optical products, specialty materials,
chemicals, glass and fiber glass. Coatings by PPG protect airplanes, golf balls, circuit boards,
packaging, appliances, flooring, automobiles, bridges and buildings. PPG’s chemicals help
purify water, and its optical and specialty materials go into high-performance lenses as well as
applications ranging from electronic passports to “green” car tires. Windows in houses and office
towers, and windshields in aircraft, use PPG glass. Having celebrated its 125th anniversary in
2008, PPG still holds true to the spirit of Ford and Pitcairn, continuing to offer innovative
solutions.
MISSION

 Creation of a robust HR organization.

 Facilitate better employee engagement.

 Moving from a Transactional to a Transformational HR organization function.

Asian PPG functions with human capital of 490 employees. With 36 depots all across the
country, the HR activities are centralized and carried out from the Head Office at Kalina,
Mumbai. HR functions related to Sriperumbudur plant are handled by a dedicated team at the
plant. The HR department works in tandem with the businesses to enable smooth functioning of
the various business processes and becoming a preferred employer in the Automotive Coatings
industry.
STRUCTURE OF COMPANY

Figure 4
HIERARCHY

Figure 5

The levels shown in figure (5) have the following grades within them:

Level Grade
Officer IIB , IIA (A being the
higher level)
Sr. officer I
Executive Executive
Manager (Business Heads, A, B, C, D, E (A being
Functional Heads) the higher level)
Chief Executive -
Table 2
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Asian PPG Industries commenced its operations in October 1997. The distribution and selling
activities are carried out with a network of branches across India to its Original Equipments (OE)
and Refinish markets.

ORIGINAL EQUIPMENTS MANUFACTURERS (OEM) BUSINESS:

The OEM division is a supplier to major

automotive consumers as well as two-wheelers
and tractor manufacturers. The motto is to
provide high quality of service and technical
support as per international standards. OEM
division has earned the distinction of being the
first Indian paint manufacturing company to be
certified with the ISO/TS 16949. The objective of this ISO/Technical Specification is the
development of a fundamental quality system that provides continuous improvement, lays
emphasis on defect prevention and reduction of variation and wastage in the supply chain. This,
therefore, has worldwide acceptance and satisfies the requirements of all global automotive
manufacturers.

The OEM customers can be broadly classified into two categories viz;

Automotive Customer - Customers dealing with Cars and Multi-Utility Vehicles (MUVs)

General Industrial Customer - Customers dealing with Commercial Vehicles like two-
wheelers, three-wheelers, tractors etc.

The prime features offered to the automotive market are as follows:

 Global Technology which has world-wide acceptance and customer satisfaction

 Excellent Service Support with the state-of-the-art Colour Centers, International Service
Centers and Local Labs

The OEM division offers customer specific products, designed with an eye to offer highest level
of satisfaction in terms of product and application requirements. Moreover, product enhancement
is carried out in joint programs entailing customer inputs and trouble-shooting techniques.
CUSTOMERS

Asian PPG serves its customers through 36 depots (both Refinish & OEM) spread across the
length and breadth of the country. Asian PPG services various Indian and Global Auto-
manufacturers some of which are listed below:
 Figure 6

REFINISH BUSINESS

Asian PPG is market leader in refinish business in India. The

Refinish Market is catered through a wide dealer network.
Premium products like Deltron & Delfleet and the other
economy brands like Bilux, Aspa, cover all primary
segments of the refinish market. These brands offer excellent
colour match, unrivalled adhesion, high gloss levels and
long life at competitive prices. They are the preferred
automotive refinish coatings in their respective categories.
They are available in a wide range of colours and in varying
pack sizes to suit the style and budget of every customer.

Refinish is present in following Market Segments

 Bodyshops of OE Dealerships (A Class)

 Authorized Service Stations and Independent Garages (B

& C class)

 Commercial Transport Segment

 Bus Body Builders

 Other commercial vehicles like trucks and light commercial vehicles

 Others

 Smaller automotive ancillary units

 Industrial customers
RESEARCH AND DEVELOPMENT AT ASIAN PPG

Asian PPG has a robust R&D lab in Mumbai that specializes in color development and
troubleshooting. The main lab is situated at Bhandup in Mumbai, while a satellite R&D lab has
been developed at the Asian PPG plant in Chennai. The R&D lab in Mumbai presently has an
area of 15,000 square feet.

APPG’s R&D department is well equipped with instruments and equipments for paint testing.
Asian PPG has received recognition from the DST in 2008 and is the first company to get the TS
16949 certificate.

The R & D department aims to assimilate and indigenize the paint and resin technology received
from PPG. The department also recognizes the importance of in-house development and
modification of new and existing products and shades as per the customers’ requirements in
order to ensure quality improvement and cost optimization. It also plays the important role of
keeping track of technology development in the industry and deciding on the new technology
requirements.

One of the missions is to provide technical service on an ongoing basis, be it to customers or to

the manufacturing, supply chain, marketing and site teams. They also conduct technical training
programs for customers, institutional trainees, newcomers and field personnel.

SRIPERUMBUDUR PLANT

Since inception Asian PPG has been using manufacturing facilities of Asian Paints and
Outsourced Processing Centers (OPCs) to cater to the production requirements. In the year 2007,
Asian PPG started its own manufacturing unit at Sriperumbudur Chennai. This initiative aimed
at:

 Improved services to the Automotive (Passenger car) segment

 Gaining strategic advantage over competition

QUALITY POLICY OF ASIAN PPG INDUSTRIES

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Asian PPG Industries Limited is committed to provide products and
services that fully meet customer expectations

be driven by the needs and aspirations of our customers.

accept zero defects as a quality absolute and design and operate our systems
accordingly.
bring about continual improvement in all our business processes.
be an ethical organization.
respect the dignity, rights and contribution of our employees and business
partners.

Key Enablers for Automotive Business Excellence

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MARKET
MARKET REVIEW - COATINGS – 2009-10
COMPETITION
MAJOR PLAYERS IN AUTOMOTIVE BUSINESS
1. Kansai Nerolac Paints (KNP) –

KNP has control over the company management with 70% equity. With 4 plants it has
secured a good distribution network across the country. KNP caters to Japanese carmakers
like Suzuki and Toyota.

KNP gains strategic advantage through:

• High level of localization

• Aggressive pricing to gain market share

• Capability to provide Japanese experts

• Tata Director on Kansai Board

KNP is currently delivering only DBTO free ED technology (DOTO). It is also the owner of
unique 3C1B technology in India.

2. BASF –

BASF has a state of art modern plant at Mangalore, laboratories at all the geographic
locations and application platform facility at Mangalore.

BASF adopts an aggressive pricing strategy to gain market share. It also has strong Japanese
connections (Nihon oil & fat) and a strong global reference.

3. Nippon -

Nippon has recently entered the automotive market with 2 plants. Nippon poses a major
threat to Kansai Nerolac Paints. Nippon Bee JV for Plastics. Nippon is a huge barrier for
Asian PPG to penetrate Japanese market.

4. KCC –

KCC Gained Hyundai plant II. It has also started a new plant in Chennai. KCC is a threat for
Asian PPG at Hyundai plant I and its vendors.

5. DuPont –
DuPont has 1 Blending plant in Gujarat. Currently focusing on E-Coat (Lead and Tin Free)
and APA business.

COMPETITORS PRESENCE VIS-À-VIS ASIAN PPG

COMPETITIVE ASSESSMENT
SWOT ANALYSIS
 STRATEGIES:
REFINISH BUSINESS

CURRENT DISTRIBUTION MODEL

 C class Garages

Asian PPG has a strong dealer network all over India, supported by the widespread footprint of
Asian Paints in India. The Dealers deal directly with the company and at times procure material
from the authorized Carry and Forward (C&F) Agents. Today, the customers of industrial paints
count distribution network in the most important factors considered at the time of making the
choice of the paints; the reason being the remote location of the companies’ facilities and
operations, which would require them to spare their vehicles/machineries to get refinished.

In the organized segment which comprises OEM’s and a part of refinish segment, the customers
procure the paints from the dealers to quite a large extent. Even if the customer wants to deal
directly with the paint company, the former might be directed to a dealer for the procurement of
the paints in case of difficulty in delivery of the ordered material.

The dealers play a major role as the refinish market in India is largely unorganized. Except for
the A and B+ class bodyshops, which use the paints that have been approved by the company
which they are authorized to, the B and C class garages use paints as per their own preference.
Hence the Dealers act as salespeople for the company and help in pushing the product into the
unorganized markets.

POSSIBLE NEW MARKETS

Airlines (Ground fleet)
The possible targets in the airlines industry are the local players in the aviation which are
expected to be having their own operations when it comes to ground support and ground
handling. As the branding plays an important role, all the equipments have to be maintained so as
to present a strong image in front of the passengers commuting by air. Various players in the
commercial airlines are as follows:

 Kingfisher airlines

 Indigo

 Jet Airways

 Air India

 Jetlite

 Go Air

 Spice Jet

 Paramount

 MDLR

Based on the market share (as evident from fig), Paramount, MDLR and Jetlite were struck out.

Figure: Share
of players in
Commercial
Aviation
Industry

Out of the
remaining
options, the fleet size, standardized maintenance and organization of the operation (of ground
support equipments) are important factors while considering a player as a potential customer for
Asian PPG.

The other players like Indigo Airlines, Go Air and Spice Jet have a comparatively smaller size of
ground support fleet as compared to the other big players in the industry. Moreover, the refinish
of these equipments is not done on a periodic basis. It is more of an as-and-when-required
scenario when it comes to refinish. Mostly touch-ups are done, which do not require considerable
amount of refinish paints.

The international airlines and the other smaller players on the airport which do not have their
own equipments, hire these equipments from aviation companies such as Cambata Aviation,
Celebi NAS, GGI, Airworks and NACIL. These companies are authorized by the Airport
Authority of India and have an obligation to bear the logo of the airport, where the equipments
operate. Other than that, the equipments are branded with the branding of the aviation company
itself.

Hence the following players can be chosen for the final strategy:

 Jet Airways

 Kingfisher Airlines

 Cambata Aviation

 Celebi NAS

 GGI Bangalore

 Bluedart Aviation

 Deccan 360

Railway Coaches

Indian Railways has a market size of US$ 18 billion. It is the largest rail network in Asia and the
world’s second largest under single management. This kind of centralization makes it an
attractive institutional customer as the maintenance is highly organized, being under a single
management. Similarly, the procurement is also done for various zones from the Headquarters
itself. Moreover, there are only two organizations (RDSO Lucknow and ICF Chennai) which
look after the approvals of the material and the vendors, making the channel highly specific.

Furthermore, the Indian Railways has a network of 63,140 route km on which 20 million
passengers travel daily in 18,000 trains. Considering an average of 15 coaches per train, there are
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a total of 2.7 lakh coaches. This gives a clear hint of the amount of refinish paint that would be
required for the refinish of the coaches.

Another factor that makes this industry more lucrative is the growth statistics. For Q3, 2009-10
growth rates were as follows:

 12.5% for net tonne km

 6.7% for passenger km

Considering the size of the industry and the growth prospects, as evident from the above
statistics, the Indian Railways shows good prospects in terms of being a customer to APPG.

Other Industries


Courier services

Taxis/Cabs

Construction Equipments (Cranes, Dozers, Tippers etc)

Government buses

Delivery vehicles

Ambulances

2.4 Industries Chosen:

APPROACH (STANDARDIZATION OF THE TOUCH POINTS)
There could be two types of companies in APPG’s target group: Those who have approved any
automotive paint manufacturer and those who have not.

The companies which have approved any automotive paint manufacturer have to be approached.
These firms usually do not send a query for paint requirements until and unless there is a
dissatisfactory operation from the side of the approved source. Hence for such companies, the
following approach should be employed:

Such companies usually prefer to consider the case if a substantial benefit is seen. The benefits
could be in monetary terms or quality of pre and post delivery service.

Figuring out the characteristics of the paint being used currently:

The characteristics of the paint being used can be figured out from the purchase department and
stores. The purchase manager being responsible for the procurement usually has the
specifications of the materials being procured.
Tracing the right channel for getting approval:
For most of the companies, the first point of contact is the purchase department which handles
the procurement. The marketing department takes care of the branding aspects and hence the
shade matching is handled by the same. The technicalities, such as Gloss level and Longevity are
studied by the maintenance department. The authority which takes the final call varies from
company to company.

Deciding the type of product to be offered:

As per the requirements of the client, the base product should be decided which can cater to
various factors such as price, gloss, longevity etc.

Preparing the shade:

The shades have to be prepared as per the specifications and a code has to be specified. It should
be categorically mentioned that the shade has been prepared exclusively to meet the company’s
requirements.

Deciding the Price Range to be offered:

A competitive price range should be set for the product to be offered; favorably 10-15% lower
than the price range of the products being used.

Getting final approval:

Final stage is the presentation of the case to the purchase department, which is then forwarded to
the operations/GSD/maintenance department and finally to the marketing department. After
getting approvals from all the stages, the case is presented to the authority which takes the final
call.
PROPOSED VALUE CHAIN
The Query handling procedure can be made more structured and organized. A Management
Information System needs to be implemented, which would entail registration of every enquiry,
the stage of processing and the delivery status.

As soon as the enquiry for a product comes to the marketing department from either the end
customer or the dealer (in case there is shortage of stock with the dealer), the query details are
entered into the central information system, through a log-in account system, which is present on
the central ERP system so as to integrate all the emails and data on one platform. The details
such as the customer profile (including the name of the company and the contact person, phone
number and address), date of receipt, name of the APPG’s employee who received it, the type of
material required (PU, alkyd or NC paints, putty or thinner), quantity required, location of
delivery and comments (if any).

Manufacturing Facility

Value chain for APPG

Moreover a classification of whether the product is new or not is also included. This means that
the product has to directly go the the supply chain department, which will procure it from the
warehouse, or will get it manufactured from the manufacturing facility and deliver the product.
In either case, the R&D department moves out of the value chain. Hence the analysis to be made
would be clear cut.
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Proposed Balance Score Card Approach

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Such a format will be followed by all the business units including the support staff. This way of
meeting and measuring targets would ensure that the company’s overall goals are in alignment
with the business goals.