Ch-1 Introduction

1.1 Global Scenario

The global demand for paint is estimated at over 21mtpa. At valued at about $60 bn. The industry is expected to grow at 3% over the next few years. The high growth regions are the developing countries of Southeast Asia and Latin America. While the mature markets of North America and Western Europe are likely to witness very low growth. The share of industrial paint is 70% and rest is accounted by decorative segment. Also, almost 60% of the world market. The largest player is ICI of UK with a share of around 10% followed by Akzo-Nobel (Netherlands), PPG (US), NIPPON (JAPAN), BASF (GERMANY), KANSAI (JAPAN). Over the last few years the industry has been consolidating with an objective to strengthen the product lines and distribution chains. This has led to series of mergers and acquisitions. Indias market is only 0.65 mn tones, roughly 2.7% of world demand, but is growing at annual clip of 10%. THE WORLD COATING SCENARIO: The total output of the world paint and manufacturing industry was valued at $54 billion in 1996. The industry supported some 12,250 active firms. This industry is expand to forecast 3.5 percent annually to nearly 26 million tones. By the year 2002 the valued will be $72 billion. Tonnage gains in the industrial coating segment will be constrained by a shift in trend towards higher solid coatings (such as powder coatings), which often weigh less per kilo than solvent brone coatings, and require generally fewer, thinner coats. On the other hand, the architectural segment is seeing a continuous shift towards water-based paints, which weigh more than their solvent-brone counter parts, and will promote stronger tonnage gains. These trends have evident around the world but have had the most impact in more mature markets. Most of developed world has already effected such as switch to water-based formulations for most architectural applications. The developing world is also experiencing this trend- India included. The world paint and coatings industry is becoming increasingly dominated by a small group of highly focused, globally positioned firms. For many of these companies (E.g. Sherwin Williams, Kansai Paints, and Nippon Paints) coating represents the primary line of business.

In other cases (e.g.; AKZO NOBEL, ICI, HOECHST DUPONT and COURTALDS) the firm strong position has arisen from involvement in various upstream petro chemical activities, including production of many of basic raw material used in coating production. The most rapid gain in paints and coatings production will be registered in the developing regions of Latin America and Asia-Pacific. Although the Asia Pacific region hold the long term prospects as a market for paints and coating, regional production has been lower, primarily due to financial crises has hit this region. However, India was not severely affected by this crisis. The wave of currency devaluation and shape rise in interest rate will seriously dram pen spending in key paint sector such as construction and durable in short term, particularly in Indonesia, South Korea and Thailand. India, in a earlier budget have announce a new housing policy, which should result in boom for the construction sector, which will boost demand for architectural coatings. A very interesting trend is emerging in the architectural coatings segment, we are experiencing a shift from solvent based coating to water based coatings. Water based coatings now account for most of house-hold paint demand in developed countries and is gaining ground in developing countries too. During 1990s, the drive has spread to industrial and specialty coatings segment. The higher performance standards for industrial coatings have necessitated intense product reformulation efforts, leading to a number of alternatives technologies. Meeting environmental regulation is another challenge for paint companies in developed world. Even companies in developed regions should be prepared in this area, as paint product as soon adopting global standards, hence all paint companies will have to comply the environmental regulations. Global trend towards free trade will have an impact on product mix, since exported goods must meet the environmental codes of the target market. The formation of trading blocks like NAFTA will involve the establishment of more environmental regulation of member nations. Global production of paint and coatings can be divided in two broad sectors: Architectural Paint and Industrial Coatings. In 1996 Architectural Paint accounted for 58% of the total output with the industrial coatings accounting for the remainder. However, the industrial coating segment is slightly larger in value (Dollar) terms because industrial coating trends to cost significantly more than architectural paint.

In 1998, the worlds top ten Paint and coatings suppliers accounted for nearly 42 percent pf the market. The next ten producers accounted to additional 13 percent of sales, which gives a top 20 firms a collective market share of over 50 percent. The most basic division is between architectural coating and industrial coating. AKZO NOBEL, the worlds top player has a strong presence in both the segments. (60:40 in favor of industrial coating) Sherwin William, ICI, Asian Paints, and Benjamin Moore focus primarily on architectural paint. Whereas PPG, KANSAI Paint, courtyards, NIPPON Paint and RPM focus heavily on the industrial segment. BASF, DUPOINT, LILY industries and DAI NIPPON focus entirely on industrial coatings. Globally Industrial paint are the major segment accounting for around 70% of the market, global trade is overall sparse, due relatively simple technology, and especially to maintain high inventory and the dealer level and high transportation cost. Per capita consumption is 26 kg in the USA, 4 kg in Philippines and 16 kg in Taiwan.

1.2 History of the industry

Paint has been used by mankind since its origin. The evidence can be found in the cave paintings. The Chinese are considered to be the pioneers of manufacturing paints thousands of years ago. In modern times paint is made artificially and is used in many different ways. There are three basic things required to make paint. You need a Pigment to get the exact color you want Binder to hold the paint together Thinner so that it can be applied easily. Types of Paints There are different types of paints available today. Till the 19th century the word paint was used to describe oil-bound types only. The paints bound with glue were called distemper. For farmhouses and cottages an alternative was found and was called lime wash or color wash. Different things need different paints. The interior of the house is painted by different type of paint than the exterior of the house. Automobiles u se different type of paint. The industrial paint is d i f f e r e n t t h a n m a r i n e p a i n t . N o w c o l o r s a r e m a d e b y u s i n g d i f f e r e n t i n g r e d i e n t s f o r s p e c i f i c surfaces. For example enamel paint, when dries it becomes especially hard and usually has glossy finish. The term enamel paint today means hard surfaced paint and usually it is used in reference to paint floor coatings of a gloss finish or spray paints. It can be used for concrete, stairs, porches and patios. Fast dry enamel is ideal for refrigerators, counters and other industrial finishes. High-tempenamel may be used for engines, brakes and exhaust. Enamel is also used on wood to make it water resistant. The Indian Paint Industry in India, Indian Paint industrys total market size is US$1400 million. The organized sector of the industry is 55%. The 45% unorganized sector has about 2500 units. The big players and their market share-value of the organized sector are Asian Paints 37% Goodlass Nerolac 15.9% Berger Paints 13.8% ICI 11% Jenson & Nicholson 5.7% Shalimar 4% Others 12%The market segment is divided into two sectors. Architectural70% Industrial 30%The total volume of the market is 600,000 MT.

1.3 Indian Scenario The earliest paint factory in India dates back to 1902, when Shalimar Paints, Colour & VarnishC o m p a n y, A P i n c h i n J o h n s o n u n i t , w a s e s t a b l i s h e d a t C a l c u t t a . G r o w i n g i n d u s t r i a l i z a t i o n , expansion of the railways and introduction of electric power a couple of years earlier had all kept business confidence soaring high. However, this did not provide a ready and expanding market for the nascent paint industry then. Imports from Britain continued to swarm the market and r awmaterials were not easy to come by. The industry still consisting of one lone unit went through a rather prolonged period of infancy, till the World War II brought in dramatic opportunities. Withthe stoppage of imports owing to war conditions, the domesti c market at last became almost theexclusive reserve of the domestic industry. European manufacturers, hitherto exporting to India,readily saw the advantages of setting up manufacturing facilities here. The period between thew a r s t h u s s a w t h e g r e a t e s t e v e r i n f l u x o f f o r e i g n p a i n t companies into India - Goodlass Wall(19 18), Elphant Oil Mil ls (1917) in B o m b a y , a n d B r i t i s h P a i n t s , J e n s o n & N i c h o l s o n a n d Macfarlances in Calcutta. Macfarlanes was brought over by the Poddars and became a completelyIndian company, while the other three: Shalimar Paints (Pinchin Johnson), British Paints and Jenson Nicholson continued as British operated units. While talking about the post independent development of the Paint industry in India,mention must be made of Asian Paints, a comp letely Indian unit which started on a very smallscale, grew so big and so beyond recognition over the years that it is today not only the largest unitin India but way ahead of the second largest, Kansai (Goodlass) Nerolac Paints Ltd., formerly aunit of Goodlass Wall (UK).

Besides Asian Paints, numerous factories, wholly Indian in ownership and with rare exceptions intechnology as well were set up in Calcutta, Kanpur and Bombay. The British units, though a few innumber, were technically strong and financially sound and, with the active support and patronageof the Government, controlled a vastl y higher share of the market. The post independence periodwitnessed a steady growth in the paint industry. From a mere Rs.200 million turnover in 1950, the paint industry crossed the Rs.14000 million mark in 1990-91. But even in this period, paints were considered a luxury item. Only people with high incomes wereexpected to decorate their houses with the use of paints. Paints, as a protective element, weretotally unheard of. The industrial segment, which was traditionally a low user of paints, vis--visi t s c o u n t e r p a r t s i n t h e d e c o r a t i v e s e g m e n t , t o o c o n t r i b u t e d t o

t h i s n o t i o n . I n l i n e w i t h t h i s misconceived notion, the government drastically increased duties on paints in the early ninetieswith an aim to bolster exchequer revenues. The result was obvious. This inevitably brought about ad o w n t u r n i n t h e f o r t u n e s o f t h e i n d u s t r y. T h e p r o d u c t s , w h i c h a r e h i g h l y p r i c e e l a s t i c , s a w a negative growth rate of 20 % in 1991-92. The next year was also not good, registering a growth of only 2%, bringing it back to the 1990-91 level, thus corroborating the fact that the industry neededlower excise levels to grow. The industrial slowdown during that periodalso did not help matters.In line with the liberalized policies and the realization that paints are not necessarily a luxury item,duties were progressively reduced from 1993-94. This squared growth as most companies passed on duty reductions. Further, the entry of worldmajors in the automobile and white goods market in India since 1993 helped the market to expand.D e m a n d f o r a u t o p a i n t s s h o t u p s u d d e n l y. F o r m a m o d e s t 8 % g r o w t h r a t e i n 1 9 9 3 - 9 4 , p a i n t demand touched 12% in 1995-96. Rapid industrialization and improv ements in the infrastructure such as t r a n s p o r t , e n e r g y a n d communication during the last decade gave a further fillip to the growth of the paint industry. Aided by Governments liberal policy of technology import, the automotive and consumer durablesegments expanded phenomenally, with a flurry of foreign collaboration. Increased demand for decorative, protective and functional coatings was a natural fall out, which brought, in its stride, ahost of indigenous developments as well as the injection of new technology.

Paints and Their Market Share

Product Share
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Product Share

1.4 Growth of the Industry The Indian paint and coatings industry is riding high on the growth in the Indian automobileindustry, new construction in the housing segment and improving infrastructure throughout thecountry. Thirty percent of the paint business is comprised of new construction projects. GDPgrowth projections of six to 6.5% in the current year mean a growth of nine to ten percent in Indian paint business. The growth will be 12-13% in the industrial segment and eight to nine percent for decorative paint. The Indian automobile industry has been performing remarkably well and will benefit the market leader in the segment, Goodlass Nerolac. As for the future, the industry has predicted a CAGR of eight to nine percent for the next five yearscompared to last years growth levels of 27.4% for cars and 8.9% for two wheelers. The Indianhousing industry is likely to do well in the current year as well, recording a growth rate of 35% lastyear. As a result of the overall health of Indias economy, it is safe to predict a nine to ten percentgrowth rate for the Indian paint industry in the next five years. Consumers can look forward to new product launches, some for application in special areas.Companies will be increasing the value added services available to customers by offering a varietyof finishes through specialized and trained applicators. There will be more options like ranges of colors/finishes for wood applications through the tinting machines. Additionally, the trend towardswater-based coatings is likely to set in both for industrial and decorative applications. While Indiahas not yet embraced the DIY concept as cheap labor is still available, exclusive retail chain storessponsored and run by Indian paint companies will become a reality. The Indian paint industry has progressed well and moving ahead is likely to be influenced byseveral factos including new technologies, new innovative products, new associations,consolidation of industry and poor performers getting out of the market. Ultimately, in the yearsahead there will be only four or five key players operating in the Indian paint market

Drivers to the growth of the Paint Industry Increasing level of income and education: The increasing proportion of young population along with increasing disposable incomes is leading to a change in consumer habits. The Indian economy is shifting from a savings economy to a spending economy. With more income at their disposal, people are now ready to pay for better products and paint is no exception.

Educated consumers are more brands conscious and seek value in what they consume. Thus, paint companies offering value-added features like non-toxicity, weather protection, texture, ecofriendly production, etc. will attract more demand. These value-added products enable the manufacturers to earn a better premium as compared to the regular paints, thus offering higher Margins. Increasing Urbanization: Urbanization is leading to a shift from temporary houses to permanent houses. Urban houses are well-designed in its interior as well as exterior aspect. This calls for more houses being painted using medium and premium paints. For urban houses, interior design is becoming a fashion statement and a lot of paint is used to decorate the interiors. This will lead to an increase in the per capita consumption of paint which will increase the overall demand of paint. Urbanization also brings more nuclear families. More nuclear families mean more number of houses even for the existing population thus further driving the demand. Increasing share of organized sector: Decrease in taxes on key raw materials will improve the position of the organized players. The Organized sector is expanding its distribute on network and adopting the installation of tinting machines at retail outlets. These tinting machines offer a wide variety of color shade options to choose from. The unorganized players are not I n a position to offer such facility as it is comparatively capital intensive. Shift in use, from distemper segment towards premier segment is also shifting market share from the unorganized sector to the organized sector. Development of the Realty, Automobile and Infrastructure sector: The growth of the paint industry is largely dependent on the development of the realty and housing sector, as decorative segment generates about 70% of the total paint demand from this sector. The Automobile segment generates more than two-third of the demand for Industrial paints, and hence is the growth driver for Industrial Paints. The Infrastructure segment creates direct demand for paints as well as creates indirect demand through supporting the growth of the realty, auto mobile, FMCG and other industries where paint is used. The growth potential in the above 3 sectors is immense, the paint industry being dependent on these 3 sectors is expected to grow along with them. Availability of financing options: Easier housing finance and auto finance is expected tofavour more people to buy houses and travel in personal vehicles. This will drive the growth of housing and automobile sector, of which the Paint industry will get its share.

Increasing Penetration in the Rural Markets: Paint usage in rural areas is generally in the distemper segment, hence dominated by the unorganized players. Demand in rural areas independent on agriculture, which is dependent on the monsoons. With the development of irrigation facility, the dependence of agricultural output on monsoons will be on a decreasing trend. Also, with the modernization of agriculture and accompanying development of rural India, consumer preferences are expected to improve. Paint companies are expanding their distribution network in rural parts of India, which is a relatively untapped market for the organized players. These factors supported by the increasing penetration of the paint companies will help drive the demand for paints.

1.5 Top companies in the industry Goodlass Nerolac:-

This companys paint decors every third car in the country. It is the market Leader in the industrial paint segment supplying over 90% of the requirements and has planned to increase its presence in the decorative segment through aggressive new product development and brand building. They are the second largest company in India in the decorative segment with market share of around 20%. They are the leaders in powder coatings. Goodlass Nerolac PaintsLtd is a subsidiary of Kansai Paint Company Limited, which is the largest paint manufacturing company in Japan and among the top ten coating companies of the world, with a human asset of over 1900 professionals and a sales turnover of Rs. 925 cores. This company started in 1920 as Gahagan Paints and Varnish Co. Ltd. at Lower Parel in Bombay. In 1930, three British companies merged to formulate Lead Industries Group Ltd. In 1933, Lead Industries Group Ltd.acquired entire share capital of Gahagan Paints in 1933 and thus, Goodlass Wall (India) Ltd. wasborn. Subsequently, by 1946, Goodlass Wall (India) Ltd. was known as Goodlass Wall Pvt. Ltd.In 1957, Goodlass Wall Pvt. Ltd. grew popular as Goodlass Nerolac Paints (Pvt.) Ltd. Also, itwent public in the same year and established itself as Goodlass Nerolac Paints Ltd. In 1976, Goodlass Nerolac Paints Ltd. became a part of the Tata Forbes Group on acquisition of a part of the foreign shareholdings by Forbes Gokak. In 1983, Goodlass Nerolac Paints Ltd. strengtheneditself by entering in technical collaboration agreements with Kansai Paints Co. Ltd., Japan andNihon Tokushu Toryo Co. Ltd., Japan. In 1986, Goodlass Nerolac Paints Ltd. turned into a jointventure of the Tata Forbes and the Kansai Paints with the latter acquiring 36% of its sharecapital. In 1999, Kansai Paints Company Ltd., Japan took over the entire stake of Tata Forbesgroup. During this journey, Nerolac has entered into technical collaborations with other industryleaders such as E.I. Du-Pont de Nemours & Company Inc., USA and Oshima Kogya CompanyLtd., Japan for different product.

Berger Paints:-

This company started in 1947 as British Paints when it acquired Hadfield's(India) Limited, a paint company that produced 150 tones of ready mixed stiff paints, varnishes and distempers. Sales offices were opened in Delhi and Mumbai and in 1951 a depot was startedin Guwahati. Sales rose to Rs.60 lakhs in 1952. The Company declared its first dividend andshifted the H.O. to 32, Chowringhee Road, Calcutta. By 1959, modernization of the HowrahFactory was completed and the first Resin Plant commissioned. With that, the Company enteredthe Synthetics Paints market. By 1965 British Paints (Holdings) Limited, UK was acquired byCelanese Corporation, U. S.A. As a result, the controlling interest of British Paints (India)Limited passed on to Cel. Euro N.V., Holland. In 1969 Celanese Corporation sold their interestin the Indian Company to Berger Jenson Nicholson Limited, UK. In 1975, the foreign holding of the Company was reduced from 60% to 45% through a Public issue. A year later the foreignholding was diluted to below 40% by sale of a portion of the shares to the UB Group. In 1983, the name of the Company was changed to Berger Paints India Limited (BPIL) and bythis time the Berger's operations were divisionalized into the Retail Business Line (RBL) and theIndustrial Business Line (IBL) in order to better cater to the needs of the customers. During thisperiod many new products were launched like "Luxol Silk" the first premium emulsion in India,Viton Refinish for cars, Bison Acrylic Distemper and Rangoli Acrylic Emulsion. In 1990s, Berger Pro Links, a service aimed at providing paint and application related information to professionals, was introduced marking one of the first steps into painting related services. In 1991, the stake of the UB Group in the Company was purchased, by Mr. K S Dhingra, Mr. G S Dhingra and their associates. The sales of the company touched 276 cores by1995-96. The latter half of the nineties saw Berger attain the ISO - 9000 certification (1996) and establishment of Berger's Quality Management System. Color Bank tinting system was also launched through which the consumer can select from a range of over 5000 colors and which are then made available in minutes. As part of its expansion program, a new paint-manufacturing unit at Pondicherry was commissioned in early 1997. Berger Paints Home Decor a complete

painting solution service was launched making painting a hassle free activity for consumers. An illusion multichrome finishes was also introduced as "designer finishes for walls" allowing consumers to transform their walls into fashion statements. This is a first for the Indian paint industry.

ICI (DULUX) :-

ICI India was the subsidiary of the $15 billion British multinational company ICI Plc.Brunner Mond & Co., one of the four Companies that combined to form ICI in UK in 1926,opened a trading office to sell alkalis and dyes in Calcutta. In 1923, Brunner Mond & Co. (India) was incorporated and the company's name was subsequently changed to Imperial ChemicalIndustries (India) Ltd., in 1929. During its 70 years in India, ICI had created six subsidiarycompanies in businesses such as research, chlorine, caustic soda, paints, rubber chemicals,explosives, polyester fiber, urea, agro-chemicals, seeds, pharmaceuticals, special chemicals, polyurethane, nitrocellulose, and surfactants. In 1984, all ICI companies consolidated in one of the largest mergers in Indian corporate history. By 1997, as a part of a restructuring exercise ICI had exited or was planning to exit from several non-core businesses. The 1996 sales break upwas as follows: Paints 43%, Explosives 28%, Rubber chemicals 17%, Pharmaceuticals 8%, andOther Products 4%. ICI (India) ranked No. 4 in the paint business, after Asian Paints, GoodlassNerolac Paints and Berger Paints. Unlike the other paint companies ICI (India) was a diversified unit and paint constituted 43% of its net sales. ICI (India)s turnover in 1996-97 was $180million and paint amounted to $77.4 million. ICI identified paints as a thrust area and wasaggressively moving to improve their position. They invested $11 million in a new decorativepaints plant near Bombay and were constructing a $16.7 million plant for industrial paints nearChandigarh in North India. ICI (India) intends to go on an offensive with a target of achieving ten-fold growth in 10 years. The 10X Plan, as it was called, envisaged a strategbased on acquisitions, take-over and alliances.

Asian Paints:-

- Asian Paints Limited was established in 1942 as a partnership firm by fourfriends Champaklal H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R.Vakil tomanufacture paints in a garage in Mumbai (Bombay). From its humble beginnings, the companyhas moved on to become the largest paints company in India with a market share of 30 percent.The company with a turnover of US$ 535 million on standalone basis and US$ 640 million onconsolidated basis (including turnover of all its subsidiaries) is one of the top ten decorativepaints companies in the world. Its reach and dominance in the Indian market can be gauged fromthe fact that it is more than twice the size of its neares competitor in India and it has been themarket leader in paints industry in India since 1968.The company operates in 22 countries andhas 29 paint manufacturing plants in the world which service consumers in over 65 countries.The company operates around the world on its own and also through its three subsidiaries BergerInternational Limited,Apco Coatings and SCIB Chemicals.The company aims to become one of the top five decorative paint companies in the world and has embarked on an aggressive strategyof expanding its global operations. The promoters hold the majority stake in the company (46.8per cent of the equity stake).The next largest shareholders are the foreign institutional investors(19.5 per cent stake), followed by Indian public (16.5 per cent stake). Domestic banks, financialInstitutions, mutual funds and insurance companies hold 13.4 per cent stake. Corporate bodiesand non-resident Indians hold the remaining stake.

Ch-2 About Berger Paints companies

2.1 vision and mission

Vision To endure an environmentally safe and secure future with a commitment from the company and all its employee to practice and implement methods that help reduce the harmful effects on our environment.

Mission To conserve natural resouraces and ensure that protection of the environment remains our top priority. To take up the challenge and develop more advanced products which consistently help reduce the harmful effects on our environment and conserve natural resources. We not only take the responsibility for environmental protection but also make our employees aware and committed to the cause We respect the needs and social implications of all communities and cultuares where our business operates.

2.2 History and development The name Berger or Lewis Berger is today synonymous with colour worldwide. But actually theorigin of the name dates back to over two & a half centuries in England in 1760, when a youngcolour chemist named Lewis Berger, started manufacturing in Europe, 'Prussian blue' using asecret process that every designer and householder coveted. Mr. Berger perfected this process &art of the blue colour, which was the colour of most military uniform of that time. Enriched bythe imagination of Lewis Berger, the unending quest for creation and innovation in the world of colour & paints still continues The history of Berger Paints India Limited as a company started in 1923 as Hadfield's (India)Limited which was a small colonial venture producing ready- mixed stiff paints, varnishes anddistempers setup on a 2 acres of land in one of India's first industrial towns close to Kolkata inHowrah, Bengal. Subsequently in 1947, British Paints (Holdings) Limited, an internationalconsortium of paint manufacturing companies bought over Hadfield's (India) Limited and thusthe name changed to British Paints (India) Ltd. The gentleman who took over, as its firstmanaging director was Mr. Alexender Vernon Niblet, an Englishman who was later on followedby Mr. Alfred Godwin in 1962 Further in the year 1965, the share capital of British Paints (Holdings) Limited was acquired byCelanese Corporation, USA and the controlling interest of British Paints (India) Ltd wasacquired by CELEURO NV, Holland, a Celanese subsidiary. Subsequently in 1969, the CelaneseCorporation sold its Indian interests to Berger, Jenson & Nicholson, U.K. Then onwards thecompany British Paints (India) Ltd became a member of the worldwide BERGER group havingits operations across oceans in numerous geographies and this marked the beginning of LewisBerger's legacy in India which the company would later take forward to enviable heights. From 1973 the company entered into one of its dynamic phases of business with introduction of new generation products in the industrial, marine and decorative segments under the ableleadership of it first Indian Managing Director Mr. Dongargaokar Madhukar. Year 1976 was another turning point in the history of the company when the foreign holding inthe company was diluted to below 40% by sale of a portion of the shares to the UB Groupcontrolled by Mr. Vittal Mallya. The reins of the company were taken over by Mr. Biji K Kurienas its Chief Executive & Managing Director in the year 1980. Finally in the year 1983, theBritish Paints (India) Limited, changed its name to Berger Paints India Limited.

The entire 80s & 90s saw the lunch of many new products from company's stable such aspremium emulsions and high quality acrylic distempers. The COLOUR BANK tinting systemwas launched through which the consumer could select from a range of over 5000 shades. Again the fortunes of the company changed hands in 1991 with UB Group's stake in thecompany bought over by the Delhi based Dhingra brothers, Mr. K.S.Dhingra & Mr. G.S.Dhingraand their associates of the UK Paints Group. Presently Dhingras' control a majority stake of almost 73% in Berger Paints India Limited, which is a professionally managed organization,headquartered in Kolkata, with the stewardship resting since 1994 until 2012 with the ManagingDirector Mr. Subir Bose. The current managing director of Berger Paints India Ltd is Mr. AbhijitRoy. Company Background:Established in 17th December, 1923, the company then known as Hadfiled's (India) Limited; wasa small paint company based in Kolkata having its only manufacturing facility at Howrah, WestBengal to produce ready mixed stiff paints, varnishes and distempers. Post independence,towards the end of 1947, British Paints (Holdings) Limited, U.K acquired Hadfield's (India)Limited and thus British Paints (India) Limited was incorporated.

From a production capacity of 150 tonnes and sales turnover of around Rs. 25 lakhs in 1947, thecompany has come a long way to become at one point of time; a part of the worldwide BERGERgroup in 1983 and thereby acquiring its present name Berger Paints India Limited to havingsubsequently gone through further ups & downs as well as ownership changes to gain its presentstatus wherein the majority stake is with Delhi based Dhingra brothers and business Revenue more than Rs 2400 crs

Today Berger Paints India Limited, having solely used and developed the name and trademark BERGER and all its variants in India, is a household name in paint. With Head Office in Kolkatathe company manufactures and markets a range of decorative & industrial paint products undervarious product brands and has it operations spread throughout the length & breath of thecountry; with seven manufacturing facilities in India and more than 85 depots, several regional &area offices, besides four facilities overseas. It has a workforce of over 2500 employees and acountrywide distribution network of 15000 plus dealers.

Berger Paints has clearly demonstrated its commitment to Indian consumers for over 88 years,by offering its varied range of high performing quality products backed by highest level of customer service. Company's high ethical standards in business dealings and its on-going effortsin community welfare make Berger Paints India Limited a responsible corporate citizen. Whilethe company's decorative and Industrial paints continue to gain an increasing market share,Berger as an organization has managed to achieve sustainable competitive advantage throughinnovations in all spear of business, desire to excel and by creating a winning culture & abidingfaith in its values & philosophy among all its stakeholders. With Berger Paints we can now see your imagination of colour unfurl in front of your eyes andwatch your home come alive, telling a thousand tales. Transform our home with the POWER OF IMAGINATION.

1960

In 1760 a visionary German named Louis Berger, founded dye and pigment making business in England. Louis involved his family into the business and formed the company Louis Berger & Sons Limited. The company grew rapidly with a strong reputation for innovation and entrepreneurship culminating in perfecting the process of making Prussian blue, a deep blue dye - a color widely used for the uniforms of many European armies. 1950 Berger commenced the paint business in the Indian sub-continent from 1950. Initially the paints were first imported from Berger UK and later from Berger Pakistan. 1970 In 1970, Berger Paints Bangladesh Limited (BPBL), formerly known as Jenson & Nicholson, had set up its 1st paint factory at Kalurghat, Chittagong. The shareholders were Jenson & Nicholson (J&N), Duncan Macneil & Co. Limited and Dada Group.

1971 Duncan Macneil subsequently sold their shares to the majority shareholder J&N Group. The Dada Group's share was ultimately vested with the Government of the Peoples Republic of Bangladesh after the independence of the country in 1971.

1980 The name of the company was changed from J&N (Bangladesh) Limited to Berger Paints Bangladesh Limited.

1990 The company has established a subsidiary company named Jenson & Nicholson (Bangladesh) Limited. The core business of the subsidiary was trading and indenting and its 100% share is owned by Berger. 1995 Establishment of Double Tight Can Manufacturing Plant at Nasirabad, Chittagong under the umbrella of subsidiary company Jenson & Nicholson (Bangladesh) Limited. 1999 Establishment of Most Modern State-of-the-Art Paint Production Plant at Savar, Dhaka. 2000 In August 2000, J&N Investment (Asia) Limited UK, the majority shareholder of the company purchased the government shareholdings. 2002 Completion of the construction work of Corporate Office building on own land at Dhaka. 2003 Relocation of Corporate Office from Chittagong to Dhaka. 2004 Establishment of Powder Coating Plant at Savar, Dhaka.

2005 In December 2005, the company got listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). 2006 Establishment of Emulsion Plant at Savar, Dhaka. 2009 Implementation of SAP accross the company.

Development

Berger Paints is one of the oldest names in the paint industry, yet, it is one of the most technologically advanced companies in the country. It is constantly striving for innovating superior quality products and services. With more than 250 years of rich heritage, Berger manufactures world class paints for all kinds of substrates and also provides unparallel services. Bergers inception was laid out in 1760 by a German national named Louis Berger, who started dye and pigment making business in England. Louis involved his family into the business and eventually changed the status of the company to Louis Berger & Sons Limited. The company grew and expanded rapidly with a strong reputation for excellence in innovation and entrepreneurship. In the initial years, Louis successfully refined the process of manufacturing Prussian blue, a deep blue dye. This dye was widely used for the uniforms of many European armies of that time. Production of dyes and pigments evolved into production of paints and coatings, which till today, remains the core business of Berger. The company grew rapidly, by establishing branches all over the world and through mergers and acquisitions with other leading paint and coating manufacturing companies. Berger Paints started painting Bangladesh since independence. Over the past few decades, Berger has evolved and transformed itself in becoming the leading paint solution provider in the country with a diversified product range that caters to all your painting needs. Berger has heavily invested in technology and Research & Development (R&D) compared to any other manufacturer in this market. Investment in technology and plant capacity is even more evident from the establishment of Powder Coating and Emulsion plants at the Dhaka factory. The state-of-the-art Dhaka factory is an addition to Berger's capacity, making it the paint giant in Bangladesh. It sources raw materials from some of the best known names in the world. The

superior quality of Berger's products has been possible because of its advanced plants and strict quality controls that match international standards. With its strong distribution network, Berger has reached almost every corner of Bangladesh. Nationwide Dealer Network, supported by 8 Sales Depots strategically located at Dhaka, Chittagong, Rajshahi, Khulna, Bogra, Sylhet ,Comilla and Mymensingh has an unmatched capability to answer to paint needs at almost anywhere in Bangladesh. Berger's one of the prime objectives is to provide best customer support-connecting consumers to technology through specialized services like free technical advice on surface preparation, color consultancy, special color schemes etc. To bolster customer satisfaction, Berger offers Home Decor Service from where one can get an array of services pertaining to painting. The product range includes specialized outdoor paints to protect against adverse weather conditions, ColorBank, Superior Marine Paints, Textured Coatings, Heat Resistant Paints, Roofing Compounds, Epoxies and Powder Coatings. In each of these product categories, Berger has been the pioneer. Besides, Berger offers illusions-the first designer paint solution in Bangladesh. The company also launched Power Bond adhesive, lnnova Wood Coating in collaboration with Sherwin-Williams, Vehicle Refinish in collaboration with world renowned PPG-USA, Texbond binder to cater to the growing needs of the customers. Apart from business, Berger Paints has added another dimension to its social responsibilities by contributing to the well being of the autistic children in Bangladesh from 2009. Berger Paints Bangladesh Limited has been promoting the young and creative talents of the country through Berger Young Painters Art Competition (BYPAC), Berger Award for Excellence in Architecture (BAEA), Berger Award Programme for the Students of Architecture of BUET (BASAB), Scholarship Programme for the students of Architecture Discipline, Khulna University.

2.3 Size of the unit:Berger Paints India Ltd is setting up two new manufacturing units, one near Pune and the other in Andhra Pradesh. The company is investing Rs 40 crore to set up a unit for automotive and industrial paints at Jejuri, near Pune, Maharashtra, in the current financial year. Berger is also in the process of establishing its largest unit at Hindupur in Andhra Pradesh, with an initial capacity of 8,000 tonne per month, which can later be increased upto 16,000 tonne per month. This project is estimated to cost Rs 140 crore. The investment is being funded from internal accruals.

Last year, the company had invested about Rs 80 crore in the Hindupur unit which is expected to be operational by December 2013. Once, both the projects are operationalised, the capacity of the company is expected to increase from the existing 24,000 tonne per month to 40,000 per month. The company expects to cater to the automotive units in the West and South through the Jejuri unit. Berger Paints acquired the India operations of Sherwin Williams for an undisclosed sum in March 2013. The acquisition will strengthen the Berger portfolio of exterior paints and will also enhance its manufacturing capacity by around 2,000 tonne per month.

2.4 Form of organisation:Like all other manufacturing organizations, BPBL has a conventional organization structure. Generally six board meeting are called in BPBL during a year where chairman of the board of Directors presided over the meeting .In BPBL several committees like the Audit committee, Risk committee, Remuneration committee, Executive committee and the Purchase committee are formed along with Managing Director (MD) and other Executive & non-Executive Directors. These committees sit at least once a month to approve various proposals brought by the management prior to implementation. All the proposals are initiated by the mid level managers and then forwarded to the Managing Director (MD) through the head of the divisions or departments. The company has also a legal problems faced by the company and external auditors to conduct audit activities of BPBL. There are four Non-Executive Directors, two Executive Director and ten Managers work under the Managing Director (MD) of the company. Among the ten managers three directly report to the Executive directors and other report to the Managing Director. The Managers of each department monitor the work activities of subordinates, convey top management decisions and provide necessary feed back to reach organizational goals and objectives. In response the bottom level managers perform their responsibilities sincerely and report regularly to their immediate superiors.

2.5 Profiling of all department in company

Human Resources & Administration Human Resources & Administration Department of Berger Paints Bangladesh Limited acts as the center of excellence to provide overall policy direction on Human Resources & Administration management issues and administrative functions related to management of employees. Our functions comprises of Recruitment, Compensation & Benefits, Learning and Development and overall Human Capital Management. We believe, it is people, not technology who create the company. Thus Human Resources & Administration Department emphatically values to hire, engage and retain talented employees. As a department, we provide a role that strives to achieve a balance between the corporate goals and objectives with the satisfaction and welfare of our employees. We serve to foster a positive working relationship for all the employees in Berger. We do safeguard the code of conduct and discipline in the organization. In addition, by ensuring people development and equity we maintain motivation in employees to meet job satisfaction. We ensure a strong collective commitment to teamwork and a strong personal commitment to the Department's mission and goals. Information Technology

At Berger Paints Bangladesh Limited, we employed a number of highly technically skilled professional to keep up with the rapidly growing need for Information Technology. Berger is an IT driven company. In today's world, companies with effective 'information technology' are achieving their business goals with ease. We adamantly believe that information technology is of no use if it is not informative. Developing innovative 'info tech' not only helps us to attain our business goals but also give us a cutting edge in serving our customers better. Through our strong nationwide infrastructure for communication and data transfer, world renowned ERP system (SAP), own Data Center with world class hardware, in house experienced Development Team and System Administrators we are able to remit and process information with a click of a button.

Research & Development

The Research and Development wing at Berger Paints boasts of housing the best chemists in the country. The highly professionally trained scientists receive the best training from famous paint making houses, use of modern laboratories with latest and precision equipment, work jointly with researchers of other organizations, and play significant role in developing cost effective formula. The R&D unit works relentless with the objective of improving product quality, redefining/ re-engineering processes for ensuring higher productivity, minimizing wastes and complying with environmental regulations. Development of new products and selection of new sources of materials tie up the R&D efforts with Marketing and Supply Chain activities in the organization. Berger R&D can be proud of making quality paints and adhesives available to every house in Bangladesh at the most affordable price. Sales & Marketing

To communicate the message of delivering the high standard of products for diversified executions, marketing department formulates strategies that competitors often describe as fierce, but to us, that's how we work. Achievement in being the best did not come overnight, but rather, it was the persistent dedication on consistent effort to deliver our promises to the customers. If we term our marketing department as the brain, then our sales department would be the muscle. Neither one can flourish without helping each other. At Berger Paints, it is the team effort between marketing department and the sales department that makes it possible to bring you the best painting solutions at affordable prices. Maintaining liaison with nationwide dealers and also ensuring that Berger products are available everywhere, our sales department is a big asset for Berger Paints. Marketing Department communicates internally on how to bring innovative painting solutions to meet the needs of various wants. Linking consumers' needs with the capacity of fulfilling them, the marketing department supervises Home Dcor centers throughout the country. Marketing department also co-ordinates various events and activities as part of Bergers Corporate Social Responsibilities. For the last two years, Berger has been contributing to the welfare of autistic and differently challenged children of Bangladesh. In addition to that, the department is also involved in organizing BAEA (Berger Award for Excellence in Architecture), BASAB (Berger

Award for the Students of Architecture, BUET), BYPAC (Berger Young Painters Art Competition), Scholarship Program for the students of Architecture, Khulna University etc. Internal Audit

Berger Paints Bangladesh Limited regularly conducts internal audit for all of its business units (including functional departments and offices). These audits cover production facilities, research and development activities, selling and marketing activities, supply chain functions, human resources and administration, financial management systems, information systems, sales centers and dcor service activities. A team of auditors conduct the internal audit in two phases. The first phase comprises of a periodic review of all the business units. The second phase involves the assessment of business units that require immediate attention to measure effectiveness, efficiency and economy. The mission of the internal audit department is to ensure that the BPBL's operations are conducted according to the highest standards by providing an independent, objective assurance function and by advising on the best business practices. Through a systematic and disciplined approach, the internal audit department helps the company to accomplish its objectives by evaluating and improving the effectiveness of risk management, control and governance processes. The prime objective of internal audit department is to examine and evaluate whether the BPBL's frame work of risk management, control, and governance processes, is adequate and functioning properly. In addition, the objectives of internal audit department include advising and recommending senior management for improvements in internal control and risk management systems. To maintain the independence of audit department from other BPBL departments and offices, the department reports administratively to the Managing Director and functionally to the Audit Committee. To permit the rendering of impartial and unbiased judgment essential to the proper conduct of audits, internal auditors will be independent of the activities they audit. To maintain objectivity, internal audit is not involved in day-to-day control procedures. Instead, each business unit is responsible for its own internal control and efficiency.

Budget and Cost Control

BPBL has its Budget and Cost Control (BNCC) function to undertake the financial planning and operational monitoring across the company. A complete set of MIS providing insightful analysis on operations in both a planning environment as well as actual transactions is generated to support management .Control and monitoring extends to the co ordination of the actions planned on the basis of the review of the MIS in order to support the functional departments to bring the desired results. Planning function is operated for annual and quarterly timeframe and also at each business change scenario to reflect the change in financial performance compared to the annual projection. The planning function includes feasibility study of the new projects under the company business diversification program. A full fledged monitoring on the operation on a monthly time frame is operated under the BNCC function. Monitoring function is sometimes exercised as and when required basis in addition to the monthly routine. The business operations in the following dimensions is monitored under the Budget and cost control domain: a. Volume management ( Sales, Production and capacity utilization). b. Contribution Management( Profitability of the products resulting from actions related to Product Pricing , RM sourcing , RM usage parameters etc). c. Expense Management. d. Working capital Management. e. Fixed asset Management.

BNCC team is formed keeping the above dimensions in mind and has highly skilled professionals at different managerial level. BNCC extensively uses the company information system (SAP) and plays a significant role in maintenance and development of the system. BNCC is basically the central point in company MIS management.

BPBL has thus set up a BNCC department which plays an active role in management to take care of its control and monitoring objective with the close monitoring of the operations using financial management techniques and information system (SAP) and by maintaining a planning process which is capable to response in a dynamic business situation. Supply Chain

Supply chain as a competitive edge to the business growth by ensuring effective service and support to technical, sales and marketing by focusing on systems, process and people which add value in the long term to top and bottom line growth of the company. Supply chain management (SCM) at BERGER is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. In essence, Supply Chain Management integrates supply and demand management within and across companies. Berger defines SCM as the two-way management of the flow of goods, services and information from suppliers to manufacturers, wholesalers, distributors/dealers, stores to the end user. SCM is especially critical for the paint & coating industry because of the ease of spoilage. A consumer products company remains profitable only if it has the right product at the right price in the right place at the right time. However, getting these stars to line up only happens when "the entire supply chain works as one." Seen that way, SCM becomes a branding issue. When BERGER places its logo on a product, the logo represents "a seal of quality." Protecting that quality makes BERGER responsible for its entire supply chain. Consumers don't care if a supplier or distributor had a problem. "If something goes wrong in the supply chain, it ruins things for the consumer/end user,". Our mission is to:

Optimize and consolidate resources and processes for a low-cost but efficient Develop and manage simplified and effective supply network to achieve a high level of service Create a continuous improvement culture driven by performance measures and reward

Now a days, Supply Chain management is considered as the Company's "Growth Enabler" and "Cost Optimizer" for which BERGER has restructured the Supply Chain of Berger Paints Bangladesh Limited as per followings to enhance the overall effectiveness as well as efficiency at both functional and operational level. 1. 2. 3. 4. 5. Demand & Supply Planning Unit Customer Service & Distribution Unit Logistics Unit Purchasing Unit and Vendor Development Unit

Financial Accounting and Treasury

BPBL reports certain amount of money as earnings on its invested capital". This statement, naturally a question, comes as obvious, how BPBL did so? The answer of this question lies in a series of accounting transactions, followed by the principles that form the basis of a true and fair statement of Financial Statements. Our team is responsible to deal with all the financial transactions complying all policies and practices of the Company and generate required number of external and internal reports for all stakeholders. Zero tolerance of treasury management, efficient receivable and payable management, minimize the corporate risk is our core area of work. The responsibility of treasury department is the management and control of future cash flows, optimal use of all available resources and the management of the risk related to those cash flows / resources. Correct accounting transaction is important for the treasury department because of the potential effect on organization's financial results. If all the cash flows are known, the risks related to these expected cash flows need to be assessed. An efficient and effective treasury management can manage and control various risks i.e. market risk, credit risk and liquidity risk. Handling all these areas, ensure us a better Working capital management and efficient financial management on day to day basis. Minimizing risk and maximizing net return of all stakeholders are the key focus of BPBL Finance and Treasury team by ensuring good corporate governance and practice.

2.6 Contribution of the unit to the industry

Bergers Presence IN India

Bergers Presence All Over The World

Apart from operations in Russia, with a production facility at the Berger manufacturing unit atKrasnodar, Berger has also expanded its footprint in Nepal by setting up a second unit. Today Bergers sister company in Bangladesh is the dominant leader with 65% market share. Inkeeping with the companys dynamic growth plan, Berger has also acquired Bolix SA of Poland,a leading provider of External Insulation Finishing System (EIFS) in Eastern Europe. As Bergercontinues to grow internationally, it also continues to be the second largest paint company inIndia. Berger is the lone supplier of Nuclear Power Plants with its Protective Coatings. The automotive sectors, be it cars or bikes, is primarily ruled by Bergers automotive coatings.Luxury cars including Mercedes make use of Berger products. Companies like Nokia uses Bergers services as well. Berger has tied up with Becker of Sweden to manufacture coil coatingsfor steel surfaces

Market Share of Industrial Paints

5% 10%

0% 5% 50% Types of industrai paints AutomotivePaints HighPerformanceCoating Powder Coating Coil Coating Marine Paints

30%

Market Share of Decorative Paints

5% 10%

0% 5% 50% Types of industrai paints AutomotivePaints HighPerformanceCoating Powder Coating Coil Coating Marine Paints

30%

Industrial Sector Composition

Market share (%)

60% 50% 40% 30% 20% 10% 0%

Market share (%)