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U.P.Techinical University, Lucknow
Abhishek Srivastav MBA Dewan Institute of Management Studies, Meerut
Acknowledgement Executive Summary Introduction OF THE INDUSTRY Introduction Overview of The Paint Industry Segmentation Foreign Collaboration Demand and Supply Scenario Major Players and Their Shares STATEMENT OF THE PROBLEM Why This Study Questions Unanswered (Some recent Facts about the industry) METHODOLOGY Objectives of the Research Types of Research Data Analysis Method (Porter’s Model) ANALYSIS AND DISCUSSION Company Profile – Good lass Paint Marketing Strategies- Good lass Nerolac Marketing Strategies –Asian Paint Emerging Trend and Opportunities SWOT Analysis Questionnaire Limitations CONCLUSION BIBLIOGRAPHY
I am thankful to Mr. Sudhir Sharma of Dewan Institute of Management Studies, Meerut For having shaped my understanding towards the project thought his rich and varied teaching , professional help and encouragement .It was only with the help of his expert guidance that this project was duly completed.
The Indian paint industry worth Rs. 49bn has consolidated over the past four years with the organized sector taking away share from the unorganized segment .The paint market is expected to grow at 8-10% p.a over the next few years .The growth could be higher of industrial activity picks up as the industrial paint segment is gaining more importance. Asian paints offers the best exposure being the market leader and an innovative marketing company. Paints can broadly be classified as decorative and industrial on the basis of the end use . The Indian market is dominated by the decorative segment , which comprises almost 705 of consumption as compared to developed countries where the industrial segment is more dominant. The ratio in Indian is also likely to shift more towards industrial segment , especially with growth in the auto and white goods industry. The unorganized sector has historically been dominant due to the high excise structure .Over the last five years , the excise rates have come down drastically from40% to 18% resulting in erosion of the unorganized sector’s share. The paint industry is characterized by low fixed asset intensity (as
The outlook for the industry is positive especially given the good prospect for automotive and white goods industry . . The main investment s are in brand building and distribution infrastructure. Indian industry will have to keep pace with global technological changes to maintain their competitiveness. The Key to success will be innovative marketing . New trends are emerging in technology and marketing Introduction of tinting machines at the dealer/ retailer level will bring down working capital costs . which has a proven track . housing is government incentives. we prefer Asian paints within the sector . APL is primarily present in decorative segment . Already .Asian paints followed by is the market leader in the industry Nerolac and ICI respectively Goodlass . a few alliance have been entered into and the number is likely to increase in the future . Thus.However .Also new technology is being used for increasing the utility and life span of paints .essentially it is a mixing process ) but high working capital intensity (as the number of shades is large and there is seasonally in demand) . record in innovation and in indomitable in the decorative segment. The supply situations remain a cause for concern and will keep prices under check . Moreover .
000 yeara ago . Cave dwellers used crude paints to leave behind the graphic representations of their lives that even today decorate the walls of their ancient rock dwellings.know as surface caoatings . paints can be classified on the basis of end use. .”Paint” ranges from the broad group of environmentally sound latex paints that many consumers use to decorate and protect their homes and the translucent coating that line the interior of food homes and the translucent coating that line the interior of food containers. Paint made its earliest appearance about 30. contemporary paints and coating consists of countless of hundred of thousands to fulfill the varied requirements of hundreds of thousands of applications . multi-component finishes that automobile manufacturers apply on the assembly line. Also .INTRODUCTION Paint is defined as the group of emulsions . Today. for use as decorative or protective coatings . consisting of pigments suspended in a liquid medium . to the chemically complex . solvent system and solid content. The utility of paints has evolved from a decorative use to a surface protection use .
decorative paints are mainly used for household and construction purposes while industrial paints are used as coating for industrial productions . This is compared to the developed countries where the share is the reverse with the industrial segments the major one . anti corrosive metal coatings . With increased industrialization segments the major one . Solid content: can be classified as liquid or solid (powder) paints . Water based paints are gaining popularity due to their environment friendliness. paints can be classified as decorative / architectural paints and industrial paints . Main types of decorative paints are enamels . The decorative segment dominates the market in India with a 70% share with the rest accounted for by industrial paints . Solvent based classification :This includes paints .End use classification :Under this heading . which use petro products or water as the main solvent. distempers and exteriors and post a message primary types of industrial paints are marine paints . ect . .As the names suggest. With increased industrialization the ratio in India is also likely to change in the favour of industrials and both segments are likely to be equal partners by the end of five years. acrylic emulsions.Powder coating find application mainly in the white goods industry .
Decorative Paints Segment Enamels Wall Finishes Primers Wood Finishes Total Market Size (Rs mn) 8600 4730 2150 430 15910 INDIAN PAIN INDUSTRIES SECTOR REPORT .
Products Industrial Paints Segment Auto CRP Powder Coil Others Total Market Size (Rs mn) 4386 1075 860 94.6 731 7147 OVERVIEW OF PAINT INDUSTRY The Indian paint industry is a Rs 49 Billion sector .
In Indian the industrial paint segment account for 30percent of the paint market while the decorative paint segment accounts for 70 per cent of paints sold in Indian . In Indian the organized sector control 70 percent of the total market with the remaining 30 percent being in the hands of nearly 2000 small – scale units. Most of the paint leaders have technical tie-ups with global paint leaders. The per capita consumption of paints in India is very low at 0. The global average per capita consumption is 15 kg. In most developed countries . binders. Solvents give the paint a liquid . All the industry major have a vast dealership network and are required to maintain high inventory levels.5 kg per annum if compared with 4kg in the South East Asian nations and 22 kgs in developed countries . pigments and additives . Sector comments Paint is a mixture of four element – solvents. the ration of decorative paints vis-à-vis industrial paints is around 50:50. The demand for paints is relatively price – elastic but is linked to the industrial and economical growth.
Decorative paints can future be classified into premium. popular in smaller cities and towns . medium and distemper segments . While the former caters to the housing sector . .flow while the binder binds it to the surface.Premium decorative paints are acrylic emulsions used mostly in the metros . Industrial paints include powder coatings . but the revival in these sectors is cause for cheer for the paint industry as well. Sector trends The recession in the construction and automobile sector had throw in shades of gray across the Industry spectrum . paints can be differentiated into decorative or architectural paints and industrial paints.The medium range consists of enamels .Nearly 20perr cent of all decorative paints sold in India are distempers and it is here that the unorganized sector has dominance. Pigments impart colour and opacity to the paint and the additives give it special resistance properties. Distempers are economy products demanded in the suburban and rural markets . The balance sheets of the industry major are now painted with bright colors. the automotive segment is a major consumer of the latter . high performance coating and automotive and marine paints .But two –thirds of the industrial paints produced in the country are automotive paints. Sector specifics On product lines.
The demand for decorative paints is highly price – sensitive and also cyclical . it is the distribution network that counts while in the industrial segment the deciding factor are technological superiority and tie-up with automobile manufactures for assured business. Berger Paints .In the decorative segment. Asian paint is the industry leader with and overall market share of 33 per cent in the organised paints market . is a high volume-low margin business . Jenson & Nicholson Ltd. The market can be further spilt into decorative paints and industrial paints . Monsoon is a slack season while the peak business period is Diwali festival time. (GNPL). The company has more than 15. on the other hand.Market profile The leaders in the organised paint industry are Asian Paints (India) Ltd.The Berger Group and ICI share the second slot in the industry with market shares of 17 per cent each .000 retail . APIL dominates the decorative segment with a 33 per cent market share.GNPL has a market share of 15 percent in the organised sector. when most people repaint their houses. The industrial paints segment.(J&N) and ICI (India )Ltd.It has the largest distribution network among the players and its aggressive marketing has earned it strong brand equity .(APIL) Goodlass Nerolac Paints Ltd.
besides supply to other customers like . Berger and ICI have 9 per cent and 8per cent shares respectively in this segment followed by J&N and Shalimar with 1 and 6 per cent shares. 40 per cent share of two wheeler OEM market and 20 per cent of commercial vehicle OEM market . But with the decorative segment bottoming out.The future for industrial paints is bring . the ratio of decorative paints vis-à-vis industrial paints is around 50:50. Apcolite. with a 15 per cent market share too. The share of industrial paints in the total paint consumption of the nation is very low compared to global standards . Utsav.In the next few yeas. has now increased its distribution network to 10.It supplies 70 per cent of the paint requirement of Maruti. In most developed countries. India ‘s largest passenger car manufacturer. GNPL the number –two in the decorative segment. Its share would go up to 50 per cent. Apex and Ace are entrenched in the marker. GNPAL dominates the industrial paints segment with 43 per cent market share .outlets and its brands Tractor.It has a lion’s share of 70 per cent in the OEM passenger car segment. in line with the global trend.It accounts for 30 per cent of the paint market with 70 per cent of paints sold in India for decorative purposes. companies are increasingly focusing on industrial paints .700 outlets to compete with APIL effectively.
It has now emerged as a 100 per cent OEM supplier to Daewoo . Of the 300 odd raw materials. Pal Peugeot and Bajaj Auto .Berger and ICI are the other players in the sector with 10 per cent and 9 per cent shares respectively . Ford India.GNPL also controls 20 per cent of the consumer durables segment with client like whirlpool and Godrej Ge.Telco. The company is also venturing into new area like painting of plastic.Shalimar too . coli coating and cans. nearly half of them are imported petroleum products. TVSSuzuki. Mahindra & Mahindra. pathalic anhydride and peutarithrithol constitute 50 per cent of the .Hyundai . But with its joint venture Asian PPG Industries the company is aggressively targeting the automobile sector . The major raw material titanium dioxide. Ashok Leyland. Hindustan Motors. Ford and General Motors and is all set to ride on the automobile boom . any deficit in global oil reserves affects the bottomline of the players. Thus. APIL the leader in decorative paints ranks a poor second after Goodlass Nerolac in the industrial segment with a 15 per cent market share. Hero Honda. Toyota. has an 8 per cent share . Price sensitivity factors Various factors that have influenced the pricing of paints are summarized below: The industry is raw – material intensive.
SEGMENTATION Paints – Products Products . this there are other raw materials such as castor. linseed and soybean oils.total cost.The raw materials cost sums up to a whopping 70 per cent . Besides. Most of the paint major have to import neatly 30 per cent of their raw material requirement thus change in import policies can affect the industry.Any increase in the prices of these raw materials could adversely affect paint prices. turpentine .
emulsions (first quality).The premium category consists of plastic emulsions. cement paints. which consists of premium. where the ratio is skewed towards the industrial segment. the medium – priced category consists of synthetic enamels and the economy category consists of distempers. This is in a sharp contrast to the trend in developed countries. enamels. Consumption of paints is skewed towards decorative paints that account for 70 % of paints sold in India. The products under the decorative finishes can be limestone coating. matt/ luster finishes. and premium emulsions.80% of the decorative paints account for interior paints. Medium and economy categories . Competition is high and margins tend to be low in this segment. distempers. . Products of this segment are relatively price sensitive. Decorative paints: The decorative paints segment can be classified into interior paints and exterior of cement paints .The products of the paint industry can be classified indo two major segments decorative (architectural) paints and industrial paints. primers. This segment is marked by the presence of a large number of players from the organized as well as unorganized sector.
coil coatings . Demand for decorative paints is seasonal with bulk of sales taking place during the festival seasons from September to December.The automotive and general industrial coating occupy top slot in terms of production(See Appendix Illustration 2) .The huge investment required in setting up a vast marketing and dealership network to advertise and develop a brand over a period of time can only be afforded by companies in the organized sector .It is for this reason that smaller companies and small scale sector units are slowly losing market shares to the organized sector. high performance coating . However decorative paints are marketing savvy products and backed by large advertisement campaigns and dealership networks. These server as high cost entry barriers for new companies in this business .The automotive segment is further bifurcated into OEMs and auto refinishes . (See Appendix Illustration 1) Industrial Paints: Industrial pains comprising 30% of the market include automotive paints . Entry barriers in term of technological and funds requirements are relatively lower in the paints sector. Besides sales remains slack during the monsoon months from June to August.
FOREIGN COLLABOTION .
The demand for decorative paints in India mainly arises from tow segments viz. For example.The industrial paints segment due specialized technology and high capital expenditure attracts fewer players. Construction of new .It is for the same reason that Asian Paints (tie –up with PPG Industries. DEMAND AND SUPPLY SCENARIO Paint demand is intrinsically related to economic development . USA) is a major supplier of paints to Opel Astra. Most Indian companies have tied up with of are in the process of tying up with international paint majors to have access to the latest technology. A tie – up with a global paint manufacturer also enables the domestic company to supply to local customers of its partner. its Japanese collaborator and Suzuki rotations . Good lass Nerolac is a major supplier to maruti Suzuki because of Kansi.
The industrial segment will grow faster due to the lower base and fast growth in major user industries like consumer durables and automobiles. shipping engineering.. industry grew at a rapid pace of more than 12% from 1992-1996. Demand for decorative paints will be led by the household construction industry which is expected to grow at almost 8% over the next five years considering the extreme shortage of housing and the government’s thrust on encouraging housing activity. the industry picked up aided by improving economic conditions and rationalization of excise structure.a.building ect. demand has slowed down due to the economic slowdown. The demand for paints has grown at 10% for the last five years. According to Indian Paints Association. After a sluggish growth in late 80s and early 90s. over the last two years. Almost the entire growth can be attributed to volume increase as price realization has increased at less than 5% p. consumer durables. High excise duties and lackluster industrial growth resulted in low growth of 2. The centers of housing activity are also likely to shift more towards rural areas. retails demand for refurbishment like automobiles. demand will rise from the current 0.4 % during 1987-92. After 1992. .6mn tones per annum to almost 1mn tpa by 2003.
fresh capacity is likely to come from existing players only. MAJOR PLAYERS AND THEIR SHARES The major players existing in industry are: .The paint industry is not capital. it has high entry barriers in the form of distribution network and product branding. intensive. In fact. during lean periods. However. low capital costs encourage manufacturers to increase capacity to cater to seasonal peaks (especially in decorative paints) rather than incur inventory-carrying costs. Thus.
ICI paints. 5. Berger paints. Shalimar paints. 4. Jenson and Nicholson paints. 6. The leader in the high volume medium and mass segments of decorative paints. Goodlass Nerolac paints. Asian paints. (See Appendix Illustration 3-4) . 2.1. Asian paints has been consolidating its market leadership over the past few years and now has the biggest slices of 33% of the market of decorative paints where as Goodlass Nerolac paints has the highest market share in the industrial paint segment. 3.
To identify the major players.STATEMENT OF THE PROBLEM WHY THIS STUDY To get a general overview of the Indian paint industry. .
One of the key factors was the lower agricultural output. notably in the fourth quarter. As a result the decorative paint demand also declined. Despite interest rates . To a ascertain the reasons for the industry not picking up. Though Asian Paints. Question Unanswered (Some recent Facts about the industry). The industry received a major setback in the fourth quarter due to the recent earthquake in Gujarat. The construction activity was subdued in the current year due to a less than average monsoon and natural calamities in some of the key Eastern and Southern states. Industrial paint demand in the current year dropped due to a 7% decline in passenger car sales and a fall in commercial vehicle volumes in the current year. Goodlass Nerolac and Berger combined reported a 15% growth in sales in the first half of the current year. notably in the semi-urban and the rural markets. The Gujarat earthquake in the fourth quarter was more pressing for paints companies. growth wanted in the second half. Overall industry growth rate declined to 9%-10% in the current year from 12%. which affected the purchasing power of the consumer.
margins were strained.950 per tonne. Since this account for almost 50% of the raw material costs of paint companies. The segment is estimated to be growing at CAGR of 15% per annum. Exterior paint segment continued to grow at a fast rate compared with other segments. Apart from this. though not commensurate with the rise in input costs. as these companies could not pass on the rise in costs to their customers. an increase of more than 11%.cuts and increase in depreciation rates. automobile demand did not show any sharp uptrend in the fourth quarter also.800 per tonne last year to more than US$ 1. . Rutile titanium dioxide prices moved up from USS 1. New productions from almost all the major paint companies in the exterior segment performed well in the current year. primarily the auto companies (as these companies were also witnessing declining sales). Operating margins declined in the current year due to a rise in both raw materials was sharp for the industrial paint segment. Paint companies resorted to an increase in prices during the current year. prices of other raw material like mineral spind and tarriyl also by 20% and 18% respectively.
METHODOLOGY OBJECTIVES OF THE RESEARCH .
To get the general overview of the Indian paint industry. To carry on the SWOT Analysis of industry after studying the companies strategies. To study the demand. To ascertain the marketing segmentation criteria. To identify the major players in the Indian paint industry. To study the foreign / technical collaborations (if any) of major players. To study the market shares and major players in the industry. To study emerging rends and opportunities in the paint industry. TYPES OF RESEARCH . To study the marketing strategies of Asian paints and Goodlass Nerolac paints.supply scenario the industry.
It should be noted. conclusive designs are needed. Conclusive research: It is design to help executive choose among various possible courses of action. As we proceed with the investigation must be on the alert to recognize new ideas. Exploratory research may define hypotheses. that the research process tends to become circular over a period of time. there are two broad kinds of researches. when hypotheses have been established and are to be tested. As research design applicable to exploratory studies are different from objectives firmly in mind while designing the research. Which searching for hypotheses. which are then tested by conclusive research. Exploratory research: This seeks to discover new relationship. exploratory designs are appropriate. but a by-product of the conclusive research may be a suggestion of a new opportunity or a new difficulty. Other characteristics of exploratory research are flexibility and ingenuity which characterize the investigation. The reason for selecting this type of research is the underlying definition of exploratory research.The research study under consideration is exploratory type. Basically. however. As they can then swing the research in .
Most large companies that have maintained marketing research programs over a number of years have accumulated signification libraries of research organizations furnishing continuing data . they may be constantly changing the focus of investigation as new possibilities come to attention. (2) survey of individuals who are apt to have ideas on the general subject . There is now a large volume of basic research reported in professional and trade journals and in government documents that may stimulate hypotheses . and they are otherwise available in public libraries . Thus. Trade association and sales analysis . newspapers and government documents . The reason for selecting this mode of research for the topic is that its is probably the quickest and most economical way for research to find possible hypothesis and to take advantage of the work of to others and utilize their own earlier efforts .In a relatively short time researcher can scan a large volume of published and unpublished ideas and data. are other fruitful sources . as are more general books .the new direction until they have exhausted it or have found a better idea. It should be added here that formal design is the researcher is the key factor. These sources are often maintained in company libraries . three lines of attack may aid in finding hypotheses of value(1) study of secondary sources of information . . However. and (3) analysis of selected cases.
reasons for these happenings.e. Sources of information/ Data The various steps I took in colleting the elevate data on the marketing strategies of the Two paint companies:- Asian Paints Limited . and other significant thing in the paints industry and their interrationships with each other. Asian Paints and Goodlass Nerolac as Asian Paints is the market leader in decorative paint segment and Goodlass Nerolac paint is the market leader in the industrial paint segment. Sample Size Inspite of many players existing in this industry I have taken a sample of two i.And this study aims to collect and present the happening..
Officials were kind enough to help me out search the data and get hold of the relevant data pertaining to the marketing strategies of the two paint industries.google.indiainfoline.Goodlass Nerolac Paints Limited The data that I have collected is strictly secondary data hunted on the internet . Still interviews were in depth and unstructured and aimed to grab out as much from the interviewer as possible about the strategic plans of their long-term strategies.com www. In order to understand it in greater depth . I searched www. Information / Data Analysis method The above discussion gives a brief introduction to the paints industry. The inability to collect data relevant to the marketing strategies prompted me to interview some senior officers in the different companies who personally wanted that they should not be named because of some strategic reasons.com and various sites . use is made of Porter’s Industry structure Model . These sites could only give me an overview of the paint industry and the company profiles.The model has been reproduced on the next page: PROTER’S MODEL .
.For instance. The reasons for this are manifold .Environmenta l factors Threat of Substitutes Supplier’s Power Threat of Substituter Customer’s Power Barriers to Entry SUPPLIER’S POWER The bargaining power of each of the players in the industry relative to the suppliers is low. the most important raw material.
titanium dioxide. inventory holding involves a lot of cost for the industry. the bargaining power of the customer is high .In decorative paints the customers are widely spread geographically. the consumer’s choice depends on several other factors such as the range of shade. In the case of decorative paints. as already mentioned. the customers are generally captive. the customers arte quit demanding . is always in short supply both locally and globally. In both the cases. technology is an important factor . the players are forced to import in bulk due to local shortages. in addition to availability. the intensity of the marketing efforts etc. Reach and distribution strength are of paramount importance. where the industry players can only be price takes.These are the factors that result in the erosion of the industry’s bargaining power in relation to the suppliers. a large inventory has to be help to ensure timely availability of wide variety of shades. In addition to the tight specifications regarding quality . High import content means that the input costs depend on global prices. In industrial paints. in industrial paints the manufacturer needs to hold sufficient inventories to ensured . For other raw materials too. it also exposes the industry player to exchange rate fluctuations . and quit often only one supply. with each customer having at the most two of three suppliers. On the other hand. Moreover. Moreover. But in this case. CUSTOMER’S POWER Again.
it is difficult for small and new players to achieve a significant national presence due to the requirement of a wide distribution network. but these failed to become popular. In the industrial paints segment the entry barriers are reasonably high due to the fact that this segment requires sophisticated technology. the barriers to entry are low primarily due to the fact that sophisticated technology is not prime requisite. The segment is flooded with players in the unorganized sector who cater mainly to the local low3er end marker. However. However. THREAT OF SUBSTITUTES The paints industry does not face any real threat of substitutes. as one cannot foresee a situation where paints will not be required.timely supply of paints to the end user . BARRIESTS TO ENTRY In the decorative paints segment. Technologies for using polner based construction materials (which can be imparted suitable colour during the manufacturing process itself and hence do not need paint for building houses have tried out.for whom lack of supply typical means production problems. ENVIIRONMENT The external environment has a significant effect on the industry. The chief reason for this is that the demand for the . the cost advantage of the smaller players is slowly being nullified by the downward movement of excise duties on the organized sector.
The past yes has seen a drop in demand for automobiles and hence the industrial paints manufacturers expected a dip in sales this years. Government regulations affect this industry as much as they affect any other industry. has led to the invention of water-based paints. Roughly 50 per cent of the volume comes from the unorganized sector. white goods etc. though with a time lag . The number of players in the unorganized sector is greater than 2000 making them a force to reckon with.industrial paints segment is a derived demand. It depends on the user industries such as automobiles. COMPETITION WITHIN THE INDUSTRY The industry is characterized by intense completion. These are still not very popular in India. the decorative paints segment is with ness to intense competition due to the fact that a large part of the customers perceives very little . Environment concerns too can have an effect on the fortunes of this industry. For instance the concern about toxic fumes being emitted from paints that use petroleum products as solvents. though Goodlass Nerolac has launched a range of water-based paints recently (the Alls capes “range”.The recent trends of import and excise duties have been largely favorable to the industry. Within the organized sectors itself. Being import intensive. import duties being raised of lowered can cause trends changes in the cost structure of the players . mainly due t the low entry barriers and the history of high excise duties.
Also because of this fact. The primary determinate of success in such a scenario is the distribution strength. the unorganized sector is smaller in this segment . the competition is based more on the technology that goes into the products .differentiation between brands. In the industrial paints segment . .
as in the case with most industrial products.ANALSIS & DISCUSSION Players compete with each other to gain captive end users for their products. .
one of the major ingredients in paints manufacture pigments. it is the domestic leader in .Last year Kansai bought over the stake of Tata’s . In 1971 another plant was established pigments. The Indian arm of Jap[[an based Kansai paints . COMPANY PROFILE BACKGROUND GNPL was established in 1920.GOODLASS NEROLAC PAINTS LTD. The Tata’s had a 40% stake in the Company. is one of the leading players in the Indian paints market with presence in decorative paints as well as industrial paints . varnishes . Japan . GNPL . the company made a right issue. through group company Forbes Gokak Ltd. the Company entered into a technical cum financial collaboration with Kansai Paints . one of the major ingredients in paint manufacture.Manufacturing activities began with the establishment of a paints unit at Parel in 1920. one of the major ingredients ion paints manufacture pigments. coatings . which was commissioned in August 93 . In 1983. by Tata stable in collaboration with Goodlass of UK. In FY92. apart of the Cooksons group. thus making GNPL its subsidiary. Kansai who currently has a stake of 40% is the other major shareholder . for par funding its new Kanpur plant. enamels etc.
Threat of global competition is minimal .entrenched distribution network and established brands. Paints sector can be segment as decorative paints and industrial paints. as cross-border tie-ups in industrial are becoming order of the day. Most organized sector players are established with well.GNP has a network of 10700 dealers &550 computerized color-dispensing machines. With multi location manufacturing facilities helping it to have a very wide geographic reach.In future the industry will witness brand competition. Domestic pains sector. dominated by decorative paints (70%) . is expected to undergo a structural shift towards industrial paints .industrial paints and has virtually half of the auto paints marker. Demand is seasonal in nature – low during monsoon. industrial paints require special technology. it has an enviable leadership in Automotive OEM. . GNPL management has been focused on paints business in the lat three decades .The under developer industrial paints market holds maximum growth potential albeit on a lower base . high during festive seasons. so as to be able to offer a multitude of shades and colors to customers. While both are characterized by low capital costs and high working capital. product innovations and superior distribution networks. Brand building and dealer network act as effective entry barriers. Capacities are normally set up close to markets.
GNPL has set a target for to achieve a sales turnover of Rs 12bn and a market share of 25% 2002-03 SALES BREAKUP .GNPL’s prospects are inextricable linked to those of the user sectors in automobiles and other industrial sectors .The two subsidiary companies primarily manufacture paints & enamels for parent company on contract basis .
4 75. Chimanlal Choksi. 0 95.8 5.525 95. Varnishes. of months Sales value (Rs mn) Inorganic pigments Organic pigments Paints .659 73.657 03/99 12 42. in 1942 as a partnership firm .186 03/00 12 6.002.933.4 03/01 12 6.0 55. varnishes .4 91.235. varnishes .239 273.In 1945.0 426. 0 100. enamels & oil (Ton) Unit realistion (Rs/ unit) Inorganic pigments (Ton ) Organic pigments (Ton Paints.8 786.6 4.0 52. 0 92.5 141.744.057.6 104. 0 91.0 517.825 ASIAN PAINTS COMPANY PROFILE BACKGROUND Champaklal H Choksey.211.000 207.Period ended No. enamels & oils (Ton) 03/98 12 72.615.2 60. under the name .448. SC Dani and A Vakil set up APIL. it was converted into a private limited company.0 505.888 88.5 64. enamels & oils Others Sales volume (unit) Inorganic pigments (Ton) Organic pigments (Ton) Paints.
which was later hived off onto a separate company. APIL also manufactures a key raw material Phthalic Anhydride.The other plants are at Ankleshwar in Gujarat . Capacity expansions have come in a phased manner. In 1965. especially in the areas of production and distribution logistics has helped APIL improve its operating efficiency . In 1973.In FY96 APIL’s ailing subsidiary Pentasia Chemicals Ltd. Patancheru in Andhra Pradesh and Kasna in Uttar Pradesh . Ltd. at its Ankleshwar plant. 30 % of which is costively consumed.All the plants have captive resin manufacturing faculties and are capable of producing the entire range of paints. APIL was able to cut back workforce. Locations APIL has 4paints manufacturing plants . under the name of Apcotex Lattices Ltd. Through a AVS scheme introduced in 1993. it was converted into a public limited company.It has three other plants located at Ankeleshwar (1981). was merged with APIL. Investment in information technology. the name was change to Asian Paints (India) Pvt.The oldest plant is at Bhandup in Mumabi . vinyl pyridine latex. Patancheru (1985) and Kasna (1990) . Productivity at the Bhandup plant has been lackluster. Ltd. Earlier APIL used to also manufacture another raw material.The Phthalic anhydride plant is located at .of Asian Oil and Paint Co Pvt. APIL’s first plant came up in Bhandup in 1957 .
is the market leader in decorative paints .000 50. Mumbai Ankleshwar Patancheru Andhra Pradesh Kasna .700 162.The installed Capacity of each manufacturing facilities are: Manufacturing facilities Bhandaup. as cross –border tie-ups in industrial paints .000 42. While both are characterized by low capital costs and high working capital intensive. Domestic paints sector . dominated by decorative paints (70%) is expected to undergo a structural shift towards industrial paints . ht latter requires special technology.The company has registered a net profile of Rs 1064mn in Fy01 as compared to Rs 973 mn in the previous year. Demand is seasonal in nature – low during monsoon.Uttar Pradesh Total Installed capacity (TAP) 20. Paints sector can be segmented application wise . Brand building and dealer network act as effective entry barriers.000 50. so as to be able to offer multitude of shades and colors to customers. Capacities are normally set up close to markets. Penta plant (result of PCL merger) is located at Cuddalore in Tamil Nadu . as decorative paints and industrial paints . high during festivals.Ankleshwar in Gujarat.700 APIL .It has remained focused on core business and has consistently improved operating efficiencies .India’s largest Paints Company .
212. It also has set a vision to be among the top five paint companies worldwide by 2005.4 165.7 792.339.7 251. The underdeveloped industrial paints market hold maximum growth potential.The company is restructuring its operations into three SBUs and has set target to be amongst the top ten decorative manufactures in the world by 2003.7 216. albeit competition.are becoming order of the day. APIL is set gain the maximum amongst the peer members from the uptrend in the housing sector .2 12.6 9. Threat of global competition in is minimal.APIL has set target of Gross sales of Rs21bn by 2003and earning growth of above 20% . APIL is investing heavily in dealer tinting machine “Colour World ”and IT technologies to keep ahead of competition .2 03/01 12 145.9 03/99 12 0.0 22237 695. of months Sales values (Rs mn) Formaldehyde Miscellaneous Penta erythritol Phathalic anhydride Paints .2 125.1 618.111. varnishes . enamels& oils 03/98 12 0. the company is looking out for alliances/ takeover in the emerging markets of Asia.7396 .4 280. product innovations and a fight for superior distribution network.1 485. SALES BREAKUP Period ended No .On export front .9 03/00 12 121. Most organized sector players are established with well-entrenched distribution network and established brands. Focussed on decorative paints segment.7 10.0 13.
0 2.691 29.018 53.0 1.867.712.060. 77.366.587 Penta erythritol 99.0 15.9420 enamels & oils (Ton) Sodiumformate(Ton) 971.218 75.476 75. varnishes .3 31.3 2.0 2.829.100 48.0 anhydride(Ton) Paints .156.0 16.518.Sodium formate Others Sales volume (unit) Formaldehyde(Ton Miscellaneous(Ton) Penta erythritol(Ton) Phathalic 14.414.727 (Ton) .0 Unit realization (Rs/unit) Formaldehyde (Ton) 12.335 39.664 36.0 2.0 17.0 19.984 48.706 76. 0 20.271.760 9.848 88. 10.839.0 181. anhydride 35.0 2.600 varnishes.779 15.195.0 162.2 2.011 (Ton) Phthalic (Ton) Paints.0 79.146.194 Miscellaneous (Ton) 52.7 21.1 237. 116.918 1.0 1.052 77.831.169 enamels&oils (Ton) Sodium format 14.104 78.0 2.0 131.376.573.0 20.333 13.688.2840 15.0 14.110.0 3.
Nerolac Colour Scape was launched by establishing what the company calls in the Nerolac Colour Club . followed by Berger Paints’ colour Bank and ICI’s Colour solutions . Colour Scape were launched across India by April of year 1998 . Nerolac’s move foloes soon after Asian Paints launched Color world . Asian Paints launched Colour world earlier in January in the same year . an integrated colour matching system designed to be a one-stop colour shop. initiated by Jenson & Nicholson’s Instacolor in the late 1996 . an interactive platform aimed at benefiting both the . tinting machines have become the marketing stunt for all paint majors.MARKETING STRATEGIES GOODLASS NEROLAC Goodlass Nerolac joins the instant shades band The Rs 480 crore Goodlass Nerolac became the last of the big pain major to jump into the instant shades market with the launch of Nerolac colour scape.
5 lakh and Jenson and Nicholson ‘s Rs 8 lakh. in addition with some other minor aspects like the potential of the location . they did not offer it indiscriminately to every dealer who opted for it. Dealers have the benefit to avail it through several installment schemes with a down payment of minimum of Rs 1 lakh. Both these aspects . were given their due importance. The company was aware that such projects had proved expensive for companies like J&N. even if the sales at that point of time were not up to the mark.05 shades and can see how their rooms will look with the help of a visualiser system . he will become a member of the Nerolac Colour Club. compared with Asian Paints ‘ Colour World which costs 6. it has several added features by which the company expects to change the way paints are sold in this county. Hence. is nor just a colour dispensing machine .95 lacs . it did not set itself an installation target. While the customer will have access to over 1.dealers and the company as soon as the dealer opts to set a Colour Scape shop. Though initial responses from the dealers in Mumbai were encouraging. and instead strategically placed these kind of shops in accordance with the location and the quantam of sales of the particular dealer. Colour Scape costs the dealer Rs 5. Colour Scape . however . the dealer will be able to tip them on the variety of . and will restrain its marketing efforts to potentially viable market.
this kind of strategy at the point of purchase convinces the customer to become a consumer by enabling him to see exactly what his dram home will look like after the painting . So . considering the fact that Paints’ purchase is more of purchases which comes under the category of emotional purchases and customers are not very particular about the color and the type .In terms of discounting the scrip trades at a priceearning ratio of 10.Even when the Sensex has risen 25 per cent since May 1999 . Industrial paints are technologically intensive but GNPL is well – positioned due to its Japanese technical collaborators Kansai and Nihon Tokushu Toryo.1.GNPL has emained range – bound between Rs 140 and Rs 160 . This can prove to be a major marketing strategy for the Nerolac paints . especially automotive paints. a Tata company has a 30 Per cent stake. The growth of the paints industry is directly linked to the GDP and the industrial paints segment is linked to the automobile sector .The industrial paints segment account for 30 per cent of the Rs 2700 crore organized market. Kansai also hold a 36 per cent stake in stake in GNPL while Forbes Gokak. and it hopes the they will bring good times to it.1 against Asian paints 17. The bullishness for GNPL stems from the fact hat its major presence is in industrial paints .paints . The number two –paint manufacture Gooldlass Nerolac Paints (GNPL) has not seen the semblance of a bull in the last two years . .
Excel.It account for 90 per cent of Maruti’s requirement which in turn contributes 8-10 per cent to the GNPL turnover .The company has been conscious enough to maintain a strong product profile through regular brand launches . besides being a leader in the industrial segment. GNPL ‘s positions will be consolidated .This should give GNPL an added advantage to combat Asian Paints – PPG(50:50) in the industrial paints segment . varnishes and synthetic enamels and pigments .With the entry of new players . Llscapes and Pearl .They were up 27 per cent over previous month . This industry is also expected to do well with the economy.Apart from automobiles the white good industrial paints .It spends nearly Rs9-10crore a year on advertising and sales promotion and this has helped it to expand its presence in the decorative segment also. Its brand are Nerolac.GNPL manufactures paints . GNPL has also signed agreements with Mitsubishi Honda and Telco Indica . . Kanpur in Uttar Pradesh and Lote Parshuram is Maharashtra . far ahead of Asian Paints at 15-17 per cent and ICI with 9 per cent . GNPL is the number one player in industrial paints with a 43 per cent share .The company has three manufacturing facilities at parel in Mumbai .GNPL has also enter into a strategic tie-up with Dupont o US for the OEM segment to cater to the Us car manufacturers in India .Maruti sales have risen 17.2 per cent for quarter April –June 1999 and in June itself .
company officials said.Gold . Goodlass Nerolac . .Despite being a late entrant in the decorative segment. GNPL: has become the number two player in three years. Though the paint industry is raw material and working capital intensive .Nerolac . The company is also planning an aggressive foray into the rural market with its brand Good. Nearly 50 per cent of sales comes from decorative and the company has been an aggressive advertiser. Paints demand from the housing sector will also o\improve with the economy.This will be a relatively cheaper and afforded brand as compared to the other brand .Excell . Cloudscapes and Goodygold . Rural market in India has a hug potential which is yet to be tapped . now a subsidiary of Kansa Paint of Japan is going for a brand consolidation strategy and reduce the number of brand to 6-7 from its portfolio of 17 .GNPL was not able to appreciate in this bull run while Asian Paints drastically rebounded to Rs 363 from Rs 197 in may 1999! Second rung paint stock should see a bull run led by Goodlass Nerolac . suraksha .Besides an expanded capacity and a strong domestic network coupled with a recovery in demand entails a good future .GNPL is strongly positioned with neatly Rs 40 crore plus in the form of investments and cash . Senior company officials say the brands that would be retained are Alscapes .
to enhance their presence in the eastern region. its focus on the decorative paints segment as well. was the only reply that came from the senior official that was visited. Goodlass Nerolac. In the decorative paints segment. but the exact plans cannot be ascertained due to obvious reasons. “We have kept our doors open for that possibility”. And. Goodlass Nerolac. Which is the leading player in industrial paints. In order to grow in the decorative market the company in under taking other initiative like increasing its advertisement budget from Rs 12 crores to Rs 18 crores. . where it trails Asian Paints. Currently the company ranks second in the decorative paints.Goodllass Nerolac is also looking also growing through the acquisition route. as already stated. it has a share of 14 per cent and plans to increase it to percent. has decided to increase. the company will be concentrating on indirect distribution channel. has. three manufacturing units in the Western region of the country and one each in the North and south.
which it claims accurately gave its its customer interface. call this more a logical progression its “Merawale ” initiative of almost a decade ago . And much more include and entirely new concept-or so the company claims –in paints retailing.The initiative includes a wide spectrum of an entirely new palette of 1. something Asian Paints prides itself on . Asian Paints . something. with the explicit purpose of fine –tuning its customer service orientation .150 shades developed by the company ‘s R& D and much more . of course .as it launched the concept of Colour World .MATKETING STRATEGIES ASINA PAINTS COLOUR ME RIGHT Colour World launched by Asian Paints is the first initiative in supposedly meeting local colour tastes in India! The Rs 883 core Asian Paints finally seems to be responding to the challenge posed by Jensen & Nicholson’s mix-n-match instacolor aggression in decorative paints . The retailing concept is the culmination of an extensive tow year consumer research programme (see box) by the company . Clearly the thrust of this concept is to provide the .
and an expansion of colour range is nothing new by now .For that lies at the crore of this marketing concept”.says . Thus . we are placing ourselves in an enviable position . An official explains that this investment now is with a longterm perspective . the company will provide dealer support Ex-panded . having covered every segment in the decorative paints market .To consolidate this exercise at the retailing level .state of the art tinter shaker equipment and merchandising units . “An investment of about Rs 5-to Rs6 lakh is required per outlet in order to ensure that dealers are sufficiently equipped to create & consumer – friendly environment . the company is willing to mix it for her to her satisfaction at the dealer end . why initiative now ? The economy is in a full the decorative paints industry is growing at the rate of a mere five to six per cent . if a consumer wants a shade between two defined shades . which is targeted at the middle and upper income segment in the paint market . specially designed display panels . that means the company is willing to provide software and industries . the paraphernalia that this entails include an interactive touch screen compute .customer with all the tools required to optimize the selection process . “We would to increase our franchise in our existent network . Competitors have done it already. A general manager marketing at Asian Paints .” About talks of the new shades that have been . with the launch of Colour World . Question is .
Advertising spend for the next couple of years.In eight moths .specifically developed . but the thrust will be the new concept. the company expects to strengthen its position on Calcutta and Delhi which are a among its relatively weak markets. Again .In numbers . at the same prices . Asian Paints gained two –to. “We are confident that the new initiative will result in higher sales for the company. with this initiative . Colour World in crating an attractive shop ambience aims to draw this very consumer in .Maharashtra.” Further on this . will remain at Rs 20 crore per annum. expected share increase is one per cent per annum for the net few years . Rajasthan and Madhy Pradesh – and most of the south . The evolution of Asian Paints consumer orientation from the Merawala stage (over the last decade) to Colour World is a .three per cent share in the decorative paints market . he says that these shades will be extender to all premium brands in the company ‘s basket . Now .Eventually the concept is aimed at making the Asian Paints outlet s” One stop colour Shops” expanding its sway in the desorative pains segment . between 1991-92 and 1996-97 . it has a stronghold on the western region. the company plans to refurbish 500 outlets across the country . The company plans to refurbish 500 outlets across the country.
.Asian Paints has already started moving on its new initiative in Kerala and Baroda . Prices .Their Merawale concept was tailored according to consumer research findings that revealed that the consumer was becoming more aware and was willing to pay more for some value addition . says . At every outlet . give that margins on paint are fairly low.150 shades.What says competition? Jensen & Nicholson . These observations await validation . The same concept has been refined now . Coming from Asian Paints the initiative is bound to be notice . At this point in the time . S for the long term the company intends fully to ser the ball roll.. which are substantial paint consuming markets.In the meantime . next to the touch –screen will be a massive shade board with the 1.Then . they realised that the shade card was the most effective tool of communication between the company and the customer. would remain the same.transition from “a rational route to dream shades for your home” . “The fact that the new colorants from Asian Paints will be produced indigineously could make for a quality that is second best . it could be unrealistic to expect dealers to plough sizeable investments into refurbishing their outlets. after all .In the course and consumer preference have become better defined .
Asian Paints has also devise new Web based marketing strategy to commerce business to business (B2B) transactions on the Net in one year.” Business Standard.Customer and supplier orders. The company is tight – lipped about the cost of the new structure . “As cyberlaws emerge and customer confidence in the security of Internet dealing improves . browse the features . And so the company is optimistic that as cyberlaws take shape in India .” It is very difficult to arrive at a specific number as the expenditure will be on as ongoing basis . the company will be able to sell paints on the Net. AT the same time . Web-drive selling will also bring down inventors .”In a year we expect interactions with banks .The day is not far when customer are drawn to our website . benefits and prices of our product and place orders which are supplied through the nearest dealer . insurers and large industrial customers to be through the Net .” and official adds . we expect the B2B transaction to happen on the Net .The opportunity to cut cost factory forward is immense. services in the nature of information and account management will be processed through the Net. The view in the company is that e-commerce will first impact the B2B transactions .
the paint major has chalked out an aggressive strategy for the overseas marker .?Apart from its growing dominance in India . Mauritius and the Middle East . and is also looking at acquisitions in Bangladesh.” Vice president (international and program office ) of the company .considerably not only at our end but also with suppliers of raw materials and vendor . said. Asian Paints is already using its website for hiring talent and dealing with vendors though in limited way .900 crore India paints industry is one of the performing companies in the domestic manufacturing sector .Emerging from the shadow of an economic slowdown . Asian Paints (India ) Ltd (APL) the undisputed market leader of the Rs4. double the overall industry growth rate of 12 per cent . they are certain that the Internet will make fundamental change in the way they do business. Asian Paints recorded a 24 per cent volume growth in 2000 . .
The primary reason is the rationalization of the excise duty structure . which dominate the decorative and industrial segment respectively by some margin over the other .INDUSTRY DYNAMICS With the organize sector steadily gaining market share from unorganized players the marker has become extremely competitive .In the industrial segment .This ginal increase in price and continuing cost efficacies in sourcing and plant yield will .In the industry segment. Goodlass Nerolac is the market leader with a 40 per cent share compared to Asian Paints ` 16 per cent. Goodlass with 19 per cent . Over the past few years.Heading the decorative sector is Asian Paints with more than a 40 per cent .It has been observed that the paint industry growth rate is double that then of the Gross Domestic Product (GDP) growth for the year. In this picture . which has come down to 16 per cent by end 1999 for 40 per cent in 1999 . a number of policies cum structural change have change the dynamic of the paint industry .The organized paint sector which account for around 65 per cent of the total market is expected to grow at a rate of about 12-14 per cent . there are two companies .
The official mascot the little boy Gattu .Apart from pains .With per capita paint consumption at 200 gm . FINANCIALS Asian Paints continue its impressive performance in the second quarter ended September 2000 by registering a topic holding cost of the .We are very confident of maintaining our margin as well ad holding the price line. Over the year the company has build a strong brand equity . it also manufactures phthalic anhydride (PAN) the two raw key material for paints.enable us maintain margin for the entire years . holding a drip.dealers can offer over thousand shades with the dealers .” He adds. The potential to upgrade the exterior segment from cement paints to exterior emulsions.This in turn improves the operational efficient by considerably reducing the inventory company.created by well known artist RK Laxman . This has not only helped the company significant improve volume offtake but also to concentrate on the manufacturing of three basic colours . which is much less than 5 kg for developed countries . Another focus area for APL is the rural market . there exists a huge untapped market .With the help of these machines and the basis colours . COMPETITIVE ADVANTAGE Asian Paints is one of the few integrated paint companies the country .
Despite a substantial increase in the cost of raw martial during this fiscal the company was able to maintain its operations profile margins to well above 16 per cent . net profile have also leapfrogged by over 27 per cent to RS 23. its fifth in India .the difference between the return on capital and the opportunity cost of capital. During the quarter .It has also been able to maintain its profit margins at around 9 pre cent . They are yet to decide on the location . it return on net worth (RONW) of about 29 per cent is much more than any of its competitors .growth of 272.65 crore in the corresponding period last year .A final decision on the project will be taken in the forthcoming months . well above the industry average of 17 per cent.AT the same time . is now focusing more on the domestic market by planning to set up another manufacturing unit .The company has been consistently notching positive economic value added (EVA). Asian Paint after its international acquisition spree last year .But .86 crore in the previous year . It enjoy a healthy return on capital employed (ROCE) of over 35 per cent .it will not be anywhere close to their existing four units. .
which has resumed operations last week. Acquisitions and mergers are like marriages whereby both patties have to mutually agree on certain terms and conditions. At present the company has four manufacturing units : Bhandup in Mumbai . Asian Pains would also not why away from acquisitions . and at Ankalshwar in Gujarat .Its Kasna plant .its competitors – Berger Paints .AT the same time . .Kasna and Patancheru .In eastern India . both in up . Analysts point out that Asian Pains could looked at setting the new plant in south India as is does not have presence there . they are planning such a move but currently cannot talk on specifics on this topic . It is understood that Asian Paint had been negotiation with both Shalimar Paints and J& N for a possible acquisition. analysts added . Shalimar Paints and Jenses & Nicholson – already have strong presence . their objective will also be to drive the existing assets to the maximum. while the company may also look at raising debt. despite the recent construction boom . it would bethought internal accruals.In fact the company is looking at setting up the new plant in a rural or a backward area in order to reap the benefits of the tax sops available . About funding the proposed expansion .
Asian Paints has transferred its industrial paints unit to the venture and the company had said it look at setting up its own unit when operations gather momentum. .Asian Paint `s joint venture with the PPG Industries of US for industrial paints .Meanwhile .Asian PPG . is planning to set up its own plant near pune.
dealers can now stock only the base material and thus save almost 20-25% in the working capital cycle.These are then generated by mixing dyes with the base paint and delivered almost instantly . Asian Paints offered almost 150 shades in its synthetic enamel range . This now stand change as almost 2000 shades can be created in seven minutes through these machines. Simplified logistics management : With the machine generating shades instantly .These machines each costing approximately Rs60 mn are installed at dealer outlets and enable the customer to choose between any of several hundred shades . unmatched in the industry . For instance . .EMERGING TRENDS AND OPPORTUNITIES Technology The introduction of tinting machine has significantly changed marketing technology .The two major implications of this machine are: Differentiation on Colour range is reduce: Prior to this technology . a major competitive avenge of a company was the range of colors it offered .
Expansion of Product Profile: The lowering of excise has opened the high volume but low value marker in the semi urban and rural area . which is currently dominated by the unorganized sector.Also strong brand are emerging as the most important entry barrier . New Segment Opening Up .The opening up of rural markets has also necessitated the expansion of distribution reach. Dealer Network Asian Paints Goodlass Berger ICI Industry Consolidation Nos. Increased Thrust on Brand Creation And Distribution The increased share of organized sector implies that brand awareness will be a thrust area . Also outsourcing requirements are likely to be reduced as new capacities go onstream in the organized sector . 14500 7000 5500 4500 The small –scale industry is expected to witness a shake out as the share of organized sector increases .
.55 kg. Outlook The industry is expected to grow for the newt five years driven by increasing industrialization and increasing disposable incomes. new segment like auto refinishing market arte likely to expand rapidly . The emerging trends in technology and marketing imply that the industry is likely to consolidate over the next few years with the marginal players being wipes out and industry leaders gaining market share .Indian companies will also need to tie up with international major to have access to the latest technology.Already companies like ICI have launched specialized brands for this segment .This outlines the untapped potential . as compared to around 4 kg in SE Asian economies and more than n 20 kg in the developed countries .Thus .With increased industrialization . Per annum . Large international players are likely to either enter India of enhance their presence in India in view of the growing market. Thus joint ventures and strategic alliances will be the order of the day . The per capita consumption is low 0. critical success factors will shift from manufacturing to marketing and distribution.
French car manufactures . Peugeot .But with duties rationalised and cost and price coming down the most preferred ones are for decorative purposes.The main reason could be the entry of worlds major in the Indian automobile sector . are . Mercedes and Opel and the American Ford .While the western would was moving away from solvent based paints for environment reasons . Industrial paints ate growing at a much heallthiesr5 rate then decorative segment .Till recently the only foreign players on the Indian passenger car market was the Japanese giant . today there are at least six global cat major operating in India.India was India was in a way primitive the use of these paints . Korean major . till recently .However .SWOT . Suzuki Motors . were the solvent – based paint even when water – based paints are more eco-friendly and easy to use . 2. Daewoo .ANALYSIS Strengths: 1. A major change in the consumption pattern within the decorative segment is the preference for water based paints . the German auto giant . In India the most widely –used paints .The government regarded water based paints as a luxury item and consequently taxes on input as well the finished products were kept high thus making them unaffordable to the middle class .
people would love to have colorful walls .Also the tends to the most preferred shade can be determined by the company and the production can be carried on accordingly. . because otherwise it will be that much costlier for them to export it from anywhere else. but definitely not dusty floors and oily odorous .Sadly the former is not possible without the latter and it is the paint industry which stand to suffer. this setting up of bases necessarily implicates towards their needs for industrial paint which they will be procuring from domestic marker . Weaknesses: A. is now being played by mostly all major players. The way companies operation have also under gone a drastic change – more choice for the customer .Second .One as stock has to be maintained only in one colour (the base colour . as the missing is done only on orders the company does not take the risk of stocking pre-mixed colour shads with the dealer which might not get sold at all . While the customer gets a wide choice and better service the company benefits in two ways .And .The shade card game started by Asian Paints some eight years ago with its slogan “Mera Wala green”. 3. 4.All this means financial saving .here to stay having set up base despite some initial wrangles over export obligation . white ) the company saves inventory carrying costs .
2.(Industrial paint are made using red oxide. They posses properties like water and electricity resistance and rust prevention and hence are widely used of protection of steel concrete and wood ) Then there is also rural –urban imbalance .000 crore on account of corrosion . India looses over Rs. First the ratio of pains consumed for decorative and industrial purpose in India is 70 :30 Elsewhere the ratio is diametrically the opposite . Further .bitumen etc. the imbalance in consumption takes two forms.Paint being dubbed a luxury continue to be increasingly sole in the metropolitan cities and big towns . It may seem implausible . yet it is true .The per capita consumption of pains in India is low 0.B. Primitive technology.32 kg as against 25 kg in the US. s it should be .The making of paint primarily involve the blending of 300 different item in .Thus due to neglect of industrial protective use of paints .But it certainly adds on to the following socioeconomic factors : 1. zinc chrome .though pain companies have start to reach out to village a vast rural marker still remains untapped . aluminum . 4.Imbalanced consumption pattern.The inconvenience of painting alone is not the cause for a slowdown in the paints industry .
But at the same time. Other factors.To top it all is the nearly 36% excise levy (a 6% rise in the latest budget ).The capital cost per tonne is Fairly low at Rs.000 tonnes . .000 small unit to set up manufacturing facilities and peck away at 50 % of total Indian pains market . 3.So industry source argue that every increase in excise means a corresponding higher government outlay on paints. toluene . butanol etc. xylene. 12 crore for 25. ) Another major raw material titanium dioxide .The irony is that the government account for nearly 40% of the total paints sold in the country .In most varieties of pains the technology level is not very high . The excise structure reflects the luxury image of paints.On the one hand there is vary little painting work done during the monsoon s.the other 50% is accounted for by 24 units in the organised sector .various proportions . This has enables 2. a Good monsoon increases the purchasing power of the framers paving the way for higher sales . These include the monsoons and the growth in the housing sector .In fact .Nearly 70% of the raw materials are perto base (white spirit. 4. monsoons have a dual effect on the industry . High cost structure – The paints industry is raw material intensive . has to be imported in large q2uantities .
India has been a continuous importer of titanium dioxide in spits of enormous reserves of the raw material . he rfitter unit would be better off eyeing takeover targets for expansion rather than going for fresh capacities .. are estimated to be around 160 million tones or 12 % of World resources .. Unlike the decorative paints segment which is expected to grow at a slow rate of 3-4% the demand for industrial paints is rising at an average rate of 10% .It has also tie up with Nippon paints of Japan for a coil coating and powdered coating .Asian paints has tie up with Devoe Marine Coating of Us for marine painting .The market leader seem to have taken congnisance of this fact.Like wise .A similar shake up is expected in the organized sector too . For instance .Tamil Nadu and orissa .Goodlass Nerolac has allied with Kansai Paint for Sophisticated automotive sector paints s.Thus sooner or later world leaders of titanium dioxide .Industrial paints have fairly high value addition d require a level of technology which cannot be easily matched by the small sector . Stagnant demand combined with intense competition has taken its toll on some small units .Opportunities: 1. Deposits of ilmenite found along the coasts of Kerala .The quality is also reported to be of a higher grade . ilmenite. 3.Hence . 2.
technology (like Du Pont ) will find it viable to enter into joint ventures with Indian companies .That should reduce cost and selling price and lead to higher sales and profits. 4. Finally , there is immense scope for product innovation liked , in March 1991 ,MRK introduced ‘Vapocure’, an industrial process for product abroad is paint s-cement .It is made by adding ceramic compounds to the basic paint material and gives a better “Finish “ to building exteriors. Blend all this with economic stability (leading to control over inflation ) and good monsoons over the next two year (implying overall higher purchasing power ) and the paint industry can rightly dream of tomorrow many shades brighter than today.
Threats: When it comes to technology , the paints industry presents a strange case .The manufacturing process of the final product is so primitive that every that every Tom ,Dick and Harry has mastered its! And , even the technology for only Tom ,Dick knows the major raw material Titanium dioxide(Ti02) and harry! In other words, manufacture of Ti02 is a closely guarded secret of only a handful of players worldwide .The include Du point(USA) ,British Titanium Products Ishihare (Japan) and Kronos (Australia ).Ti01 forms the base whit , for all
paints .It comes in two varieties rutile (used for exteriors ) and antase (preferred for paints used in interiors ) In India there are two unit both in the public sector manufacturing titanium dioxide – Kerala Minerals and metals (KMML) and Tavancore Titanium products (TTPL) .Domestic production however is stagnating around16,500 tonne against capacity of 37,000 tonne ,Further ,the quality too leaves a lot to be desire .Hence , imports of Ti02 continue at an increasing rate . Nearly 70% of Ti02 produced /imported in India goes to the pains industry .Major paint manufactures have tried to go in for backward integration into some of the raw material (phthalic anhydride , co-polymers for plastic emulsions etc.) But all effort to make a foray of Ti02 have not met the success. World rather than pass on technology to other i.e. whopping 25 parties hold licensed /letter of intent for Ti02 but none have so far materialize . So as import bill of companies remain on the upbeat , thanks to the huge import billing for Ti02 , the margins continue to take a beating.
The various limitations faced during the marking of the project Companies official were not very co operative in giving out information regarding the marking strategies as well as their immediate M&A plans of their firms. Exact information regarding the marketing strategies specific to past 3 year was not readily available , although general information was available .So even after strong efforts , there maybe certain instances of some missing links in the study , which is regretted. Time and distance constraints were always there which may have affected the report.
The organised sector comprises of handful of large units. distemper and cement paints.The decorative paints market can be further be subsumed into emulsions .CONCLUSION Investor . synthetic enamels . should carefully look at the structure of the paint industry. which constitute approximately 40% of the total production of paints . With the narrowing of he differential in excise duties between the organised and unorganised sector. the market share of the organised sector is expected to grow in the future .The differential .in contrast to the developed economies where industrial paints normally have half the market . has narrowing since 1993 and the excise duties between the organized sector is now at 18% (from the highest of 40. The essence of the small sector is in the easier to evaluate lower-end products such as distempers and cement paints . in terms of sheer volume . The industry can further be divided into two broad segment – decorative (architectural ) paints and industrial paints . The categorization is important because of the differential in excise duties faced by these two sectors . however .The small sector will probable start contact manufacturing for the large units or may develop niche markets based on location. interested in any form of investing.The decorative segment is the dominant segment. It has a large unorganized sector .25% ).
.whereas the middle range enamels and the premium range emulsions are the terrain of the large players. The industrial paints segment comprises of the industrial coating the automotive coating segment . There are more than 300 input going into the manufacturing process of paints of which 70% are petroleum based . with the entry of the auto majors (multinationals) resulting in a literal boom in this sector.The main growth for the industrial paints market has been the high growth in automotive coating .The raw material are Pigments.
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4 Who influence you to buy particular Paints? a) Neighbor b) Ad c) Newspaper & Magazine d) Others Q.3 Can your name the leading brand of paints? a) Asian paints C) Others Q.2 Place form you buy this paint? a) Market b) Supermarket d) Others c) wholesaler Q.1 Name the paints you buy? a) Asian Paints b) GoodlassNerolac c) Others Q.Questionnaire Q.5 Please Grade the brandusyou know as per the following characteristics ? (1) Poor 2) Fair 3) good 4) Very Good b)Goodlass Nerolac .
Brand Asian Paint Goodlass Nerolac Others Availabity Brand Pricing Packaging Quality image Q.5 most important ) To each of the following service you receive from the supplier based on their importance. Attributes Provision of credit Delivery in small lots Product variety Delivery time Delivered supply Product quality Margins Pricing Others(Please specify) Rank Q.6 Assign suitable ranking ( 0-not at all important .7 Will you trade in paint brand in the future? Definitely Probably Not sure Probably Definitely not not .
9 Occupation :___________________ Q.Q.8 Name:________________________ Q.10 Address:_____________________ ______________________ ______________________ _______________________ .
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