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Table of Contents
Executive Summary 1. Company History 2. Industry Structure 3. Environment 4. Products 5. Price 6. Distribution Network 7. Promotion 8. Financial Analysis 9. Customer Survey Analysis 10. Suggestions 11. Appendix a. Sample Customer Questionnaire b. Sample Dealer Questionnaire c. Financial Statements d. Bibliography
The purpose and scope of document is to study, analyze and understand the business and marketing practices of Asian Paints Limited. In order to achieve this objective, two stages were identified – Data collection stage and the Analysis stage. The first stage includes the data collected from various sources regarding the following: 1. The Origin, History of the company, its growth, The board of Directors, Operation units in India and abroad 2. The three closest competitors in the paint industry – Goodlass Nerolac, Berger Paints, ICI , their origin and growth 3. Financial statements of the Company 4. Information about the 4 P’s of marketing – Product, Price, Place and Promotion in the Orissa market 5. A customer and dealer survey in Orissa to understand their decision making process The analysis stage includes understanding the implications and relevance of the data collected and drawing conclusions about the company’s business and marketing decisions. Asian Paints (AP) Limited is an out-an-out Indian firm in the paint industry that manufactures and markets a wide spectrum of decorative as well as industrial paints. Though it had a corporate position of a focused national paint company by catering to industrial and household customers in Indian market in the past, it has been systematically repositioning itself in the recent years to become a global player by entering into a number of other country markets. The Indian Paint industry is mainly divided into two segments – decorative paints segment and industrial paints segment. Asian Paints is the market leader in the decorative paints segment with a market share of 44 % followed by Berger Paints (17 %), Goodlass Nerolac (15 %) and ICI (12 %). However in the Industrial Paints, Goodlass Nerolac is the leader followed by ICI, Berger Paints and Asian paints. Known for its innovative marketing and distribution strength, Asian Paints is one of the consistent performers in the Indian corporate scene. The company has a track record of profitability, transparency in operations and strong balance sheet. Factors that have been given emphasis here include the low per capita consumption of paints (1.0 kilogram), growth in construction sector (it is being offered industry status) & growth in the auto/white goods market respectively spurring demand for decorative & industrial paints. The impact of recent issues & trends (like raw material costs, excise duty rationalizations, quality consciousness in user segments) on the industry dynamics can also be seen. The industry has also witnessed increased activity in the industrial variety of paints with the entry of Multi-National Companies in auto, consumer durables etc, which has been gaining steadily over decorative paints in the last one decade. With the industry to grow at a CAGR of 8-9 % for the next five years with growth level of 27.4 % for cars and 8.9 % for two wheelers we see a lot of opportunity in the automobile sector for the paint industry. Moreover housing industry is also likely to do well in the current year with the growth rate for the last year being 35 %. So the expected rate of growth for paint industry for the next five years is around 9-10 %.
At present industry requires highest efficiency in physical distribution as companies not working on operational efficiency business models have been losing. On account of this, companies need to invest in sophisticated Supply-Chain Management tools. Companies need to work on improving internal efficiencies to retain profits which are under pressure on account of dropping prices. The customer (retailer for the company) is seen to be dictating terms so companies have no choice but to lure more customers through incentives. At the same time, companies also need to attract final consumers by offering value-added services. So we came up with the following recommendations: To take up trade promotions, to build up relations with the intermediaries, a need to improve current inventory levels to cut down costs, a need to promote sub brands so as to increase subbrand awareness among the customers, improve advertising strategies for targeting female customers who have assumed a greater role in decision-making and a need to expand in industrial segment by forming strategic partnerships to take advantage of the upcoming industrial growth at national and regional levels.
almost double that of Goodlass Nerolac Paints. through innovative R&D and ambitious grass-roots marketing. Amar A. Mahendra C. After the completion of the restructuring. Satwalekar Mr. and iii. the vision for the company was stated. Board of Directors Mr. Dipankar Basu Mr. a name picked at random from a telephone directory. (1996-97 sales $94 million) the number two paint company in the country and Asian Paints continues to be a market leader in the decorative paints segment till date. Tarjani Vakil Mr. Shah Mr. Swaminathan Sivaram Mr.Asian Paints Limited 1. Asian Paints is one of the ten largest decorative paint companies in the world. Rajendra A. The restructuring was done to bring greater focus to its business. and is largest exporter exporting directly to 20 countries. Excellent marketing ii. Up against giant international paint companies. Mahendra M. Leadership in Information Technology In 1996-97 the total sales of Asian Paints reached $175 million. Shah Dr. Asian Paints hit on the innovative marketing strategy of reaching consumers in the remotest corners of the country with its small. it changed its name to Asian Paints Limited as a part of its global strategy. improve efficiencies. control cost and strengthen its leadership position. conveniently sized packs. four partners got together to manufacture paint in a garage in Bombay. By 1967. Deepak M. Choksi (Chairman) Mr. Dani 5 . Intensive distribution. Choksi Mr. For the next thirty years they maintained their position as market leader through i. Hasit A. At present. the company jolted its multinational competitors by emerging as India’s number one paint company. forming strong relationships with thousands of paint dealers in small towns all over India. Vakil Ms. Company History In 1942. Ashwin S. In 1998. Abhay A. Vakil (Managing Director) Mr. small-time paint manufacturer to a professionally managed organization competing with the best companies in the world. Recently. Dani (Vice-Chairman and MD) Mr. Booz Allen & Hamilton. The company is committed to realizing its vision and has chartered a complete plan of action for realizing its vision. The company was named Asian Oil and Paint Company. Ashwin C. the company embarked on a major restructuring strategy under the guidance of management consultants. During the 1950’s the company grew from being a family-managed.
Fiji.Myanmar.88% 12.20 million 6 .UAE Operating Companies Asian Paints and its subsidiaries South East Asia South Asia West Asia Berger International and its subsidiaries Asian Paints and its subsidiaries Berger International Limited and its subsidiaries Asian Paints and its subsidiaries Berger International and its subsidiaries SCIB paints Caribbean Africa and others Oman Barbados.relatives and associates Individuals Domestic companies Financial institutions Non-resident Indians FII’s and OCB’s Mutual funds and Banks 42. Along with its subsidiaries. 959. spread across the world. Thailand India. The shareholding pattern of Asian paints as on March 31.26% 21. Bangladesh.86% 17. Nepal.Group Subsidiaries Apco Coatings Asian Paints Industrial Coatings Limited Asian PPG Industries Limited Berger International Limited Taubmans Paints Scib Paints Limited.Trinidad and Tobago Egypt Table-1 Berger International Ltd. Vanuatu China .98% 2.36% Table-2 At present the total equity paid up capital of the company is Rs. Singapore. Jamaica . Samoa. Solomon islands. Asian Paints is one of top 10 decorative coating companies in the world. Tonga. has no operations in India. Malaysia . it now has 29 paint manufacturing facilities in 22 countries. Sri Lanka Bahrain . 2005 is as follows: Directors . The distribution of its operations in the world is given as below: Regions South Pacific Countries Australia .51% 0.15% 2.
5% in the last five years. The per capita consumption of paints in India stands at 1. In the 1990s.800 crores in value terms and is very fragmented. The current demand is estimated to be around 650.6%. the imports stopped which led to the setting up of manufacturing facilities by local entrepreneurs. Berger. which entered into collaboration with Goodlass Nerolac in 1984. This was mainly due to a drastic reduction in excise from a staggering 40% to 16%. which in a way is the current scenario as well. Industry Structure Indian Paint Industry is over 1000 years old. There are now twelve players in the organized sector with a market share of 70%. Till the Second World War the industry consisted of small producers and two foreign companies. British Paints (now Berger Paints). This is in contrast to the 55% share that the sector commanded a few years back. world leaders like Akzo Noble. ICI (12% market share). However. the growth was restricted in 2000-03 to single digits. the paint industry had recorded a healthy growth of 12-13 % annually.0-kg p. Jenson Nicholson (6% market share). Shalimar Paints and Rajdoot Paints.a. as compared to 1. Berger Paints (17% market share). ICI. 7 . There was a revival in 2003-2004 with a robust growth of 13%. The Indian Paints sector is valued at Rs 6. PPG has a joint venture with Asian Paints to manufacture industrial coatings. Dupont and BASF have set up base in India with product ranges such as auto refinishes. Its beginning can be traced back to the setting up of a factory by Shalimar paints in Calcutta back in 1902. India's share in the world paint market is just 0. Goodlass Nerolac (15% market share). helped by a growing economy. The organized sector has grown at a CAGR of 11.6 kg in China and 22 kg in the developed economies. powders and industrial coatings. The initial decades saw the complete dominance of British Paint companies such as Goodlass Walls (now Goodlass Nerolac). PPG. The major players are Asian Paints.000 tonnes per annum and is seasonal in nature. Goodlass Nerolac. Jenson & Nicholson and Snowcem India are no longer active players because of dwindling sales in recent years. After the war. is now the holding company for Goodlass Nerolac with 64. Still the foreign companies continued to dominate the market. Major companies in this segment include Asian Paints (44% market share).2. The unorganized sector comprising of over 2000 units has a combined market share of around 30%. ICI and Shalimar.52 % equity holding. Kansai Paints of Japan. Recently. Jenson & Nicholson and Blundell & Eomite. The Indian Paint industry can be divided as: Ø the organized sector comprising of large and medium size units Ø the unorganized or the small scale sector.
7 kg and 5. the low Indian figure is not a surprise. and premium emulsions.5% in 1992 to around 16% currently. Decorative paints: The decorative paint segment can be classified into interior paints and exterior or cement paints.S. This is in a sharp contrast to the trend in developed countries. on vehicles. This segment is marked by the presence of a large number of players from the organized as well as unorganized sector. since 1992 the government has been consistently lowering duties from 40. Moreover the paints sector was also allowed to claim MODVAT credit on petro-based products.decorative (architectural) paints and industrial paints.. High excise duties. matt/lustre finishes. medium and economy categories. Within the decorative segment. white goods and appliances. distempers. and 2. 8 . primers. 3640 crores in the organized sector) accounts for interior paints. Products The products of the paint industry can be classified into two major segments . the exterior category. Consumption of paints is skewed towards decorative paints which account for 70% of paints sold in India. where the ratio is skewed towards the industrial segment. is the fastest growing segment 20 % for the last three years. enamels. Fig-1 The products under the decorative finishes can be limestone coatings. While the decorative paints are used in protecting valuable assets like buildings. As the consumption goes with affordability. The premium category consists of plastic emulsions.8 kg in other developing countries like China and Brazil. particularly exterior emulsions. cement paints. which consists of premium. This has led to lowering of price differential between the organized and unorganized sector. However. the industrial paints are used for protection against corrosion and rust to steel structures. emulsions (first quality). low technology and low capital costs for production led to the incidence of a high number of units in the small scale sector. thus lowering the excise incidence further. the medium-priced category consists of synthetic enamels and the economy category consists of distempers.The per capita consumption of paint in India is 700 grams against 19 kg in the U. 80% of the decorative paint segment (about Rs.
capital goods. high performance coatings. its Japanese collaborator and Suzuki relations. USA) is a major supplier of paints to Opel Astra. Entry barriers in terms of technological and funds requirements are relatively lower in the paints sector. However decorative paints are marketing-savvy products and backed by large advertisement campaigns and dealership networks. Products of this segment are relatively price sensitive. Goodlass Nerolac is a major supplier to Maruti Suzuki because of Kansai. white goods and heavy industries. Fig-2 Demand for these paints is relatively price inelastic. coil coatings. to advertise and develop a brand over a period of time can only be afforded by companies in the organized sector. It is estimated that a plant of 1 m tpa will cost around Rs 120 m. Demand for decorative paints is seasonal with bulk of sales taking place during the festival seasons from September to December. sales remain slack during the monsoon months from June to August. The automotive and general industrial coatings occupy top slot in terms of production. For example.Competition is high and margins tend to be low in this segment. Industrial Paints: Industrial paints comprising 30% of the market include automotive paints. These serve as high cost entry barriers for new companies in this business. Goodlass Nerolac is the market leader in this segment. The huge investments required in setting up a vast marketing and dealership network. Major end user industries include shipping. The industrial paints segment due to specialized technology and high capital expenditure attracts fewer players. Besides. It is for the same reason that Asian Paints (tie-up with PPG Industries. The automotive segment is further bifurcated into OEMs and auto refinishes. powder coatings. Most Indian companies have tied up with or are in the process of tying up with international paint majors to have access to the latest technology. 9 . marine paints and general industrial coatings. It is for this reason that smaller companies and small scale sector units are slowly losing market share to the organized sector. A tie-up with a global paint manufacturer also enables the domestic company to supply to local customers of its partner. but is prone to business cycles and depends on industrial and economic growth. Asian Paints is the market leader in this segment.
zinc oxide etc. In case of small-scale units it forms up to 70% of the net sales. Raw materials are divided into three major groups. durability. Amongst the vital pigments used in the process of paint manufacture is Titanium dioxide (TiO2) and the industry consumes around 60% of TiO2.Table-3 Raw Materials: The paint industry is raw material intensive. In such a situation Asian Paints benefits by selling PAN in the open market. The raw materials are of a wide variety. raw materials account for 60% of net sales (industry average). Paint involves the mixing of various raw materials in various proportions. The other paint companies have to import their stock. For example. The high number of raw materials and finished goods highlights the working capital intensity of the sector. phthalic anhydride (PAN) is manufactured from orthoxylene and which goes into the production of paints along with titanium dioxide. A hike in the price of petroleum products raises input costs negating the impact of a cut in import tariffs on raw materials. resulting in high inventory cost. On an average. High cost and erratic availability of raw materials mark the Indian paint industry. accounting for one-third of the total raw materials cost. Since PAN prices generally outpace international orthoxylene prices by almost 50% paint companies end up paying a fortune when prices rise. The shortage of one specific material could result in severe manufacturing problems It is estimated that 18-20% of the total raw materials used the industry are imported. Thus paint companies benefit when the petrochemical industry goes into its cyclical downswing. Most paint companies are hit by the fact that they do not make the raw materials themselves.). Raw materials frequently run into short supply. It is also one of the major raw materials. Asian Paints is the only paint company that manufactures PAN. Pigments are finely ground solids of different shades to give colour. This pigment is available in two grades: anatase and 10 . Most of the raw materials are petroleum based. solvents (mineral turpentine) and resins and additives. Around 300-400 raw materials are required to manufacture different kinds of paints. consistency and other properties to paint. pigments (titanium dioxide. namely.
fungicides. we need to look at each of the competitors. powder coating resins etc. Solvents are volatile organic compounds (VOC) used to dissolve. Solvents such as ethylene glycols and alcohols are finding wider use as co-solvents in new water-borne formulations. Additives are added in small proportion to the paint to improve its performance characteristics in various ways. especially ilmenite of which it has 12% of the world’s deposits. TiO2 is responsible for the demand-supply gap. In order to understand the environment. polyesters. 30% of the paint business is contributed by painting of new construction area.1 bn . India has the potential to emerge as a net exporter of TiO2 in the next five years. hectic constructions in the housing segment. They are the second largest company in India in the 11 . It is ironical that the paint industry presently imports TiO2 in excess of Rs. suspend or change the physical properties of other materials. which also reduces the cost of paint formation. Most resin manufacturers make alkyds. India has abundant raw materials for the manufacture of TiO2. wetting agents. The growth will be about 12-13 % in the industrials and 8-9 % in the decoratives. Current trends The industry is riding high on the growth in the automobile industry. If the raw materials are properly utilized. resins and plasticisers that give paint its protective property. They are generally used to bring down the viscosity of paints to the desired level. epoxy resins. amino resins. ICI and Shalimar.5 % in the current year mean a growth of 9-10 % in the paint business. Binders are generally oils. 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. If the strong demand growth boosts domestic production of TiO2. of which anatase is exclusively used in interiors while rutile is preferred in exteriors. Skinning inhibitors. 3. GDP growth projections of 6-6.rutile. improving infrastructure and overall feel good factor in industry. They constitute 70%-75% of the paint liquid and ultimately escape into the atmosphere when the fluid dries. Berger Paints. Goodlass Nerolac This company’s paint decors every third car in the country. there will be an increased usage in various sectors. driers are included in this category. emulsion polymers.a figure that may touch Rs 2 bn by the turn of the century. Environment The chief competitors to Asian Paints are – Goodlass Nerolac.
Ltd. USA and Oshima Kogya Company Ltd. Sales rose to Rs. The Company declared its first dividend and shifted the H. In 1930. Sales offices were opened in Delhi and Mumbai and in 1951 a depot was started in Guwahati. turned into a joint venture of the Tata Forbes and the Kansai Paints with the latter acquiring 36% of its share capital. Kansai Paints Company Ltd. Calcutta. In 1986. By 1959. In 1976. Goodlass Nerolac Paints Ltd. In 1957. grew popular as Goodlass Nerolac Paints (Pvt. was born. became a part of the Tata Forbes Group on acquisition of a part of the foreign shareholdings by Forbes Gokak.I. the Company entered the Synthetics Paints market. In 1933. modernization of the Howrah Factory was completed and the first Resin Plant commissioned. 12 . Subsequently. which is the largest paint manufacturing company in Japan and among the top ten coating companies of the world. Ltd. In 1975. Goodlass Nerolac Paints Ltd. Holland. Goodlass Wall (India) Ltd..) Ltd. Japan for different products.. As a result. U. the controlling interest of British Paints (India) Limited passed on to Cel. Du-Pont de Nemours & Company Inc.A. Lead Industries Group Ltd. Berger Paints This company started in 1947 as British Paints when it acquired Hadfield's (India) Limited. by 1946. Japan. By 1965 British Paints (Holdings) Limited. During this journey. was acquired by Celanese Corporation.. acquired entire share capital of Gahagan Paints in 1933 and thus. UK. Ltd.. They are the leaders in powder coatings. In 1999. With that. Japan took over the entire stake of Tata Forbes group. Goodlass Wall (India) Ltd.decorative segment with a market share of around 20%. S. Goodlass Nerolac Paints Ltd. the foreign holding of the Company was reduced from 60% to 45% through a Public issue. three British companies merged to formulate Lead Industries Group Ltd. Goodlass Nerolac Paints Ltd is a subsidiary of Kansai Paint Company Limited. a paint company that produced 150 tonnes of ready mixed stiff paints. In 1969 Celanese Corporation sold their interest in the Indian Company to Berger Jenson Nicholson Limited. 925 crores. Nerolac has entered into technical collaborations with other industry leaders such as E. Euro N.60 lakhs in 1952. In 1983. Japan and Nihon Tokushu Toryo Co. This company started in 1920 as Gahagan Paints and Varnish Co. Goodlass Wall Pvt. Also. Ltd. with a human asset of over 1900 professionals and a sales turnover of Rs. Ltd. it went public in the same year and established itself as Goodlass Nerolac Paints Ltd. to 32.O.V.. A year later the foreign holding was diluted to below 40% by sale of a portion of the shares to the UB Group. varnishes and distempers.. strengthened itself by entering in technical collaboration agreements with Kansai Paints Co. at Lower Parel in Bombay. was known as Goodlass Wall Pvt. Chowringhee Road. UK.
(India) was incorporated and the company's name was subsequently changed to Imperial Chemical Industries (India) Ltd. Brunner Mond & Co.. The latter half of the nineties saw Berger attain the ISO . ICI (India)’s turnover in 1996-97 was $180 million and paint amounted to $77. ICI (India) ranked No. Bison Acrylic Distemper and Rangoli Acrylic Emulsion. after Asian Paints. As part of its expansion program. ICI ICI India was the subsidiary of the $15 billion British multinational company ICI Plc. 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. During its 70 years in India. Rubber chemicals 17%. In 1923. in 1929. and surfactants. The 1996 sales break up was as follows: Paints 43%. a new paint-manufacturing unit at Pondicherry was commissioned in early 1997. was introduced marking one of the first steps into painting related services. By 1997. ICI had created six subsidiary companies in businesses such as research.In 1983. The sales of the company touched 276 crores by 1995-96. pharmaceuticals. seeds. 13 . nitrocellulose. specialty chemicals. polyester fiber. paints. all ICI companies consolidated in one of the largest mergers in Indian corporate history. Illusions multi chrome finishes was also introduced as "designer finishes for walls" allowing consumers to transform their walls into fashion statements. one of the four Companies that combined to form ICI in UK in 1926. and Other Products 4%. polyurethane. 4 in the paint business. ‘Berger Pro Links’. In 1990’s. This is a first for the Indian paint industry. agro-chemicals. opened a trading office to sell alkalis and dyes in Calcutta. caustic soda. rubber chemicals. as a part of a restructuring exercise ICI had exited or was planning to exit from several non-core businesses.4 million. explosives. Goodlass Nerolac Paints and Berger Paints. In 1984. Explosives 28%. the name of the Company was changed to Berger Paints India Limited (BPIL) and by this time the Berger's operations were divisionalized into the Retail Business Line (RBL) and the Industrial Business Line (IBL) in order to better cater to the needs of the customers. Mr G S Dhingra and their associates. Viton Refinish for cars. the stake of the UB Group in the Company was purchased. Berger Paints Home Decor a complete painting solution service was launched making painting a hassle free activity for consumers. Unlike the other paint companies ICI (India) was a diversified unit and paint constituted 43% of its net sales. Brunner Mond & Co. a service aimed at providing paint and application related information to professionals. Pharmaceuticals 8%. by Mr K S Dhingra..9000 ceritification (1996) and establishment of Berger's Quality Management System. In 1991. During this period many new products were launched like "Luxol Silk" the first premium emulsion in India. urea. chlorine.
as it was called. They invested $11 million in a new decorative paints plant near Bombay and were constructing a $16. Decorative paints can be further divided into interior and exterior wall paints. The ‘10X Plan’.ICI identified paints as a thrust area and was aggressively moving to improve their position. Products Paints can be generally divided into decorative paints and industrial paints. Decorative Segment Interior Wall Paints Product Segment Asian Paints Berger Goodlass Nerolac Pearl Luster Jenson Nicholson Special Effects ICI Shalimar Royale Exquisite Luxury emulsion paint with Emulsion luxurious finish and silky glowing appearance Premium Emulsion Emulsion with rich and matt finish and superior quality Tractor Acrylic emulsion at Emulsion the similar price as distemper Tractor Water Acrylic & based Synthetic paint. Industrial paints consist of the automotive category also. ICI (India) intends to go on an offensive with a target of achieving ten-fold growth in 10 years. 4. Each of these products has a range of products varying from the premium segment to the economy segment. envisaged a strategy based on acquisitions. wood and metal enamels. take-overs and alliances.7 million plant for industrial paints near Chandigarh in North India. long Distemper lasting & value for money Luxol silk Dulux Hussain Designer Collection Silk Rangoli All Scapes 24 carat Robbaliac acrylic Dulux Designer Silk Low Sheen Dulux Wash & Wear - Bison Emulsion Nerolac Premium Acrylic emulsion - Superlac Acrylic Emulsion Bison Distemper Nerolac Jensolin Acrylic Acrylic Distemper Distemper Dulux Wash & Wear Shalimar No 1 14 .
Apcolite Premium Satin Berger Goodlass Nerolac Jenson Nicholson ICI Luxol Luster Brolac Dulux Super Polyurethane Enamel High Enamel Gloss 15 . Dulux Render Effects Dulux Weather shield Low Sheen - Xtra Premium Acrylic finish Premium Acrylic Distemper - Table-5 Enamels Product Segment Premium Segment Asian Paints Apco Premium Gloss Enamel.Water based paint at affordable prices Utsav Acrylic Distemper - - - - - Table-4 Exterior Wall Paints Product Segment Technologi cally high end product Asian Paints Elastomer ic-HiPerforma nce Exterior Paint Apex Textured Exterior Emulsion Berger Goodlass Nerolac Excel 100% Acrylic Jenson Nicholso n Special Effects exterior ICI Shalimar Weather Coat Premium Textured Segment Walmasta Nerotex Matt Armour Quartz Non Textured Segment Ace Exterior Emulsion Duracem Suraksha Plastic Robbiace m Super Cement Paint - Economy Segment Ustav Exterior Distempe r - Nerocem Dulux Weather shield Garden Shades Low Sheen Dulux Tuscan Effects.
Asian paints has an umbrella brand by the name of Utsav that covers the economy segment in all paint categories. Price In the paints industry price is the used only as a differentiator between the various segments in the same product line. Generally increase or decrease of prices is effected across all brands in the market. which are not produced by all brands. volume discounts. Pricing decisions in the paint industry largely depend on the price of the inputs like petroproducts. with just a difference of 30 to 40 paise per square feet. metal primers. may be priced at a higher price. The Utsav sub-brand is aimed at the Indian rural populace who are on the lookout for cheap but durable and beautiful paints. stainers. Industrial Segment All the paint brands produce industrial paints like epoxy based paints. aluminum paints. Due to internal competition. the dealers pass on this advantage to the customers by reducing their own margins to 23%. Luxol Satin Nerolac Synthetic Enamel Umbrella Synthetic Enamel Dulux Super Enamel Semi Gloss Economy Segment Utsav Enamel Goody Synthetic Enamel Table-6 - - Apart from these there a certain speciality paints produced by these brands which are not produced by all the brands and cannot be categorized. varnishes. etc. etc. seasonal discounts and allowances. Most of the paint companies offer a 5% margin to the dealer. The prices of different brands in the same segment remain more or less similar. polyurethane coatings. The dealers take advantage of these discounts to gather more business. 16 . Apart from these all the paint brands also make some miscellaneous products like surface primers . thinners. In the Orissa market Shalimar paints is the leader in this segment. Some of the speciality products. other raw materials. 5. Paint companies offer a lot of discounts like cash discounts. excise duties and taxes and the general operating profits.Medium Segment Gattu Synthetic Enamel Luxol HiGloss. This is a cause of concern for the paint companies because they have to keep a constant check on the prices offered in the market. The dealers offer more of discounts and the companies are not able to firm up the prices.
Manufacturing Units Regional Depots Dealers fig-3 7. a recent trend that is emerging in the Indian paint market is that the major brands have all identified the importance of reaching out to the common man instead of just limiting themselves to the intermediaries. The The sales executives are also responsible for the collection of outstandings. The executives keep canvassing the market and meeting the dealers to get the orders. Promotion The paint industry until 1999 was concentrated mostly on increasing sales by intensive trade promotion wherein the dealers. The material is dispatched from the depot in the name of the dealer. The distribution system is taken care by area sales managers and executives. Other jobs of the sales team consist of grievance redressal and customer feedback. Finally the truck is unloaded and the small orders of the dealers are dispatched to them. 17 . Distribution network Asian Paints has six manufacturing locations all over India and 70 sales branches. Each of the manufacturing plants makes different products. There was little emphasis on theme advertising directed towards the customer. The depots are fed by regional warehouses.6. Generally paint companies allow a maximum outstanding of 2-3 lakhs for 45 days. These depots maintain a minimum order quantity which is arrived at from the monthly demand forecast. Generally some orders of the same region are clubbed together and dispatched in trucks. Asian paints has around 15000 dealers who are catered to by the sales executives. The orders are collected by the sales executives and passed on to the nearest depot. contractors and other components of the supply chain.
But while the choice of paints forms an important part of the process. except the exterior paint ageing. The ads are a reflection of the fact that people are a lot more involved in doing up their homes now. you know it has really caught the imagination of people. treasured pictures. But the outreach effort does not end there. A couple of take-offs have been noticed on this TVC. contractors and painters. almost lyrical Har ghar kuch kehta hai. instead. when you start seeing take-offs on a creative effort. One for their exterior paints where they show the man. his wife. which was launched nationally in February. his car. Specifically. The visuals are complemented by a voice-over that is really a poem that expresses the home's thoughts about its residents. in fact everything. campaign.. on whom Asian Paints focuses by initiating and developing innovative activities and promotions. it is not the highlight. The creative idea behind the campaign is that a home speaks volumes about the people who live in it. People absolutely adore that advertisement. This helps build the Asian Paints family so that customers get a high degree of personalized service and professional guidance to facilitate their final decision.Fig-4 Asian Paint’s advertising has created brand awareness. There are two current favorites. In fact.. there are glimpses of hand-picked furniture. is essentially about the relationship people have with their homes. Asian Paints has recognized the importance of communicating to and involving key players who influence the final brand choice. highlighted what the brand has to offer and has consistently brought all of it top-of-the-mind for the customer. the spots look at the effort and the strong emotions that go into doing up a home. These include channel partners. The colourful. the intimacy of the family and the pride that comes at the end of the process. decorating it and simply living in it. This is expressed through a montage of visuals of the family interacting with the home -painting it. Advertisements: Asian Paints has had several memorable advertising campaigns. 18 .
Laxman in 1954). This symbolizes the idea that Asian Paints has the color range to satisfy even the most selective of customers.One of their most successful campaigns has been the “mera wala green”. is most popular and easily recognized.K. The lady looking at all those colors take a long time to choose her color. It has a very subtle way of telling the people that all possible colors in all possible shades are available with them. Pneumonic: The company’s mascot ‘Gattu’ (designed by R. an impish boy with the paint tin and brush. 19 . The performer in the katthakali make-up symbolizes a wide range of colors. one of the epitomes of the ideal mascot.
. urban and up market. creams. you can get a first 20 . The aim of these services is to provide the customer with a way to make an informed judgment as to which product would be the most suited to their particular needs. It features 8 color families of purples. Asian Paints Screen Test service: through this service the customer is able to identify whether a particular shade will suit their rooms. gives all the company’s products a uniform look which is very much more contemporary. in yellow and red. these colors are then manufactured on the spot by mixing various colours. peaches and pinks. Gattu has been dropped from the communication except as an inch-high pneumonic on the back and lids of the paint tins. In this facility the customer can send a picture of his room and the company using computer techniques identifies the color most suited to the room Asian Paints Color Genie: 'Asian Paints Color Genie' is a concept that can get the shade of any sample in the paint to be applied on the wall. This service can be availed very easily. greys. Asian Paints Samplers are 200 ml paint tins which can be used to sample shades on the wall. Thus. These come in a range of shades that are available through an Asian Paints Color World outlet. It is currently available in Asian Paints Royale Luxury Emulsion. It features a visual array of Asian Paints shades to help one make the right shade decision. This provides the customer with virtually indefinite number (around 1500) of shades to choose from. in line with the new branding strategy. This is available in select stores of the Asian Paints Color World Stores. Each color family features a collection of popular Asian Paints shades in that color family. with new packaging. greens.. all one need's to do is pick up these sampler tins at a nominal price from any of the select Asian Paints Color World retail stores and experiment in one's own house. blues. with the vertical of the ‘p’ converted into a brushstroke). Color world: Asian Paints provides the color mixing facility which is known as the “color world”. beiges. It is based on the use of an instrument known as the 'Spectrophotometer' which can read the color of the sample and convert it into a formulation to arrive at the same color for the paint on the walls. Asian Paints Trufinish: Asian Paints Trufinish is a unique paint finishes' display palette that allows you to touch and feel the finishes' of popular Asian Paints products. This has been incorporated in the advertisement. Hence. the brand has gotten a facelift. Thus. a contemporary logo and corporate colours. The new look (Asian Paints is the logo.However. Services: Asian paints offer a number of services to the customers.
Sales Promotion: The company has been concentrating more on sales promotion than on advertising. The company comes out with many different sales promotion schemes during the festival season. huge emphasis is given on trade promotion.hand feel of the final finish that paint would deliver on the walls at the paint store itself. 2) Trade promotion – As part of the company’s policy. These services are offered on the company’s website to make it accessible to a very wide range of customers. The most popular schemes include cash discounts. Scratch cards that are provided with specific size of packages are examples. gifts such as 21 . Keeping this in mind the company’s decision of doing more sales promotion than advertising stands justified. foreign trips. The company comes up with several incentive schemes for the dealers. Further product features for each of these products is also available in the form of information panels. The dealers and contractors who are a part of the distribution chain are given special attention. On analyzing the customer survey data it becomes evident that since the customer is returning to the store after an average of about three years it is better to concentrate more on the dealers who are in the business through out the year. The company also offers a large number of services to the customers to assist them in their buying decisions. especially the durga pooja festival in Orissa and West Bengal. Sales promotion can broadly be divided into two categories: 1) Customer promotion – this section includes all the sales promotion activities directed towards the customers. Fig-5 There are a number of gifts and schemes on the larger packs. Coupons and free gifts are offered on packs of more than 10 kgs.
leading to lower volatility of cash flows. growth in construction sector (it is being offered industry status) & growth in the auto/white goods market respectively spurring demand for decorative & industrial paints. consumer durables etc. Consumers seem to have decided to postpone their re-painting decisions. or replacement. demand arises usually during festivals. Today the awareness level on preventing corrosion through paints is relatively high. when people paint their homes. The company also aims at building and retaining dealer loyalty through these meetings. margins have also been lower in this segment. Traditionally. The Indian paints industry offers lucrative scope for stable revenue streams to manufacturers of both decorative & industrial paints. This segment however has been characterized by stagnant growth rates. We have analyzed the financial statements of Asian Paints for the last six years and those of the competitors in order to come up with some implications of the data represented. the propensity to re-paint houses seems to have dropped over the last few quarters because of the deceleration in economic activity. 22 . which has been gaining steadily over decorative paints in the last one decade. The industry has also witnessed increased activity in the industrial variety of paints with the entry of Multi-National Companies in auto. The company also organizes regional dealer meets regularly. Factors that have been given emphasis here include the low per capita consumption of paints (1. the wider dispersion of consumers reduces the overall risk. Asian Paints has been the Market Leader in the Decorative Paints Segment.0 kilogram). The re-painting. Here the dealers are briefed about the company’s new products and the technical details and application procedures of these products.refrigerators etc for dealers who succeed in meeting or exceeding pre-determined sales targets. Asian Paints is one of the consistent performers in the Indian corporate scene. Therefore. transparency in operations and strong balance sheet. The growth in the construction activity leads to first-time demand for the new structures coming up. 8. Traditionally. The fiscal is expected to grow at around 8 per cent. However. Known for its innovative marketing and distribution strength. affecting off-take. quality consciousness in user segments) on the industry dynamics can also be seen. The demand for decorative paints is a function of the growth in construction activity and the demand for re-painting. Financial Analysis The Indian paint industry has come a long way from the days when paints were considered a luxury item. But an important characteristic is the lower volatility of cash flows. The company has a track record of profitability. The impact of recent issues & trends (like excise duty rationalizations. tax incentives and lower levels of interest rates would encourage the customers to invest in homes and thereby a growth in the construction activity. Housing Loan disbursements. a development that should be a huge boost to the paint industry.
In the same time span. Though demand is constrained. 23 . The company has undertaken aggressive cost cutting measures. For instance. Therefore. Paints have taken on some of the traits of FMCG products. One such sub-segment in the decorative segment is the fast-growing exterior emulsion paints.2% in FY97 to 58. we can observe that the Cash from Operating Activities (CFO) is positive whereas the general trend of Cash from Financing (CFF) and Cash from Investing Activities (CFI) is negative. a major raw material for the paint sector.Given that the growth rates are likely to be modest in the near term. including Asian Paints. have reduced prices of their products. CFI is negative as the company is paying off the loans which improves the cash flows as the interest becomes lower and lower with the payment of the loans.to long-term. Given the current slowdown in demand. Therefore. whereby raw materials consumed as a percentage of net sales has come down from 62. the share of expenditure on advertisement rose from around 9 per cent to around 21 per cent. It is a high-end product but volumes have been improving and margins are also high.2% in FY01 and is still decreasing. Growth in exterior paints is expected to be around 40 per cent. This should help the company to some extent in maintaining margins. keeping both these factors in mind sales promotion through advertisement should play a crucial role in maintaining growth rates. which is significant for the decorative segment. Therefore. sales and administrative expenses as a percentage of total sales have risen from around 10 per cent in 1993 to around 14 per cent in 2001. and acquisitions cannot be ruled out. In the recent past most major paint manufacturers. and the subsequent fall in input prices have led to the reduction in prices. Over the last few years. Keeping this in mind. Rising competition means customers now have access to a wider range of products. the outlook continues to be positive. Considering the Cash Flow Statement of Asian Paints over the past 6 years given in the appendix. in the medium. Asian Paints has been increasing its sales and promotional expenses. profitability can be driven by pushing volumes and by entering new markets. the company is likely to put more pressure on the advertising effort to try and at least maintain its current growth rates. to push volumes companies have to make sure that their products are visible. The company has initiated steps to increase capacity. the company has adopted the strategy of increasing its ad-spend. The prevailing over-capacity situation in the world markets for titanium dioxide. The decision by the main players to pass on to customers the gains of the falling costs clearly indicates a demand squeeze. The ability to innovate and enter new markets or unveil new products would also be crucial. Raw Material is the major cost-driver in the paint industry. the company does not foresee this situation to continue for long.
Hence it is also a measure of the company’s financial strength. the interest cover shows a considerable increase in the past six years.217 1. As can be seen from the ratios in the appendix.273 1. Debt Equity Ratio (= total liabilities/shareholder’s equity): A measure of the company's financial leverage calculated by dividing long-term debt by shareholders equity.332 8 25 21 Mar 2002 0.92 23 35 Mar 2004 0.272 8 22 15 Mar 2001 0. It indicates what proportion of equity and debt the company is using to finance its assets.135 0. Some ways to improve this could be: • • • • • Paying some debts Increasing your current assets from loans or other borrowings with a maturity of more than one year Converting non-current assets into current assets Increasing your current assets from new equity contributions Putting profits back into the business Interest Cover (= net profit before interest/interest paid): It indicates the safety margin that the business has in terms of being able to meet its interest obligations.308 0.135 1. A high interest cover ratio means that the business is easily able to meet its interest obligations from profits.32 27 26 Mar 2003 0.119 0. Average Number of Creditor Days (= Average number of Creditors/Purchases per day): It indicates how many days on average it takes the company to pay its creditors. Average Number of Debtor Days (= Average no of Debtors/ Average Sales): This is an indication of the number of days of sales reflected in the Balance Sheet as Debtors. There is a declining trend in the current ratio in Asian Paints over the six years. Since the sales have been increasing in the past few years. days of creditors Mar 2000 0.556 1.Ratio Analysis: Liquidity Ratios: Liquidity ratios (times) Long term debt / equity Total debt / equity Current ratio Interest cover Avg. Due to the increase in the profits Asian Paints is able to meet its interest obligations.075 in 2005 is too close for comfort. days of debtors Avg. It says that the business is taking full advantage of the trade credit available to it.321 13.212 17.166 0.462 1. From the table. The trends in the past six years show almost a consistent value of debtor days.251 0. A ratio of 1.338 0.29 22 53 Table-7 Current Ratio (= current assets / current liabilities): It is the ability of the company to pay its short term liabilities. the debtors also must be increasing in order for the ratio to remain the same.15 1.1 22.075 29. This has consistently been increasing in the past six years.29 22 45 Mar 2005 0. one can conclude that the D/E is well below 1:1 and has been 24 .
Asian Paints (AP) has recently obtained permission from the Registrar of Companies. In addition. Sri Lanka and Russia among others where market penetration is relatively low and expected growth rates quite high. 25 . Hence. A decade earlier. shareholders want a higher reward (dividend rate) than lenders (interest rate). Some of the effect of this price hike in Crude oil and raw materials is alleviated by the proposal in the Budget that has reduced peak Customs duty from 20 per cent to 15 per cent and the appreciating rupee. But the industrial paints segment constitutes only around 4 per cent of the turnover. as it derives a significant portion of its revenues from the decorative paints space. a world leader in industrial paints. housing loans have become a compelling proposition. a longer painting season (with Diwali occurring in mid-November as opposed to October in 2003) and introduction of VAT were some of the reasons for the fluctuations observed. The fillip this would provide to housing demand was a substantial plus for Asian Paints. its impact on the valuation is unlikely to be significant The unorganized sector is a strong force and controls almost 35 per cent of the industry involving estimated 2. the prices of crude oil were extremely volatile throughout the year. Today's consumer is evolving and has become quality and brand conscious. It now has access to some of the deficit markets such as Bangladesh. to Asian Paints Ltd as a part of its ‘Think Global’ strategy.reducing over the past few years. Asian Paints has a presence in the form of AsianPPG. Because of this. Increase in raw material costs will equally affect both the organized and the unorganized sector.500-3. Inflation and shortage of raw materials. To reduce its operational risk profile. with the Budget announcing a deduction of up to Rs 1 lakh from the taxable income. This could also mean too little which means that the company is not realizing the full potential of its business and may actually hurt your overall profitability as in such a large company. 2004-2005 There were some significant events in 2004-2005 which have impacted the company’s financial position during the year. the prices of many raw materials and packing materials used by the company witnessed a large unexpected surge. growth of the housing finance sector supported by government policies. Maharashtra to change its name from Asian Paints India Ltd. the reduction of excise duties from a high of 40 per cent to 16 per cent in the last decade has reduced the advantage of the unorganized segment. On the demand side. a joint venture with PPG. the unorganized segment used to have a much higher share of the market but this is slowly changing.000 players. On the raw material front. The industrial segment which also includes the automobile segment is the fast growth segment where Goodlass Nerolac is the market leader. and hence the company is chiefly financing itself using equity rather than debt. Asian Paints has opted to go the global route.
all these stages do not occur in every purchase as the customer skips some of them.7 years between any 2 consecutive purchases by the same customer. the customer recognizes a problem or need and in this case for example: I have to paint the house so I need to buy some paint.9. How often does this need arise? Question: How often do you paint? The analysis of the surveyed data suggests that there is an interval of around 2. As we found that customer had little awareness and say in the final purchase of a particular product. The generic buying process of a consumer is given below. We approached 40 customers and analyzed their purchase behavior. we met about ten dealers to understand the customers’ perceived behavior and their influence on the final decision making by the customer. However. 26 . Customer Survey Analysis: The objective of this survey is to understand the consumer’s decision making process. Fig-6 The buying process starts with need or problem recognition. This is a very sample small size and covers customers in the state of Orissa only. At this stage. We cannot vouch that the responses of customers all over the country will be the same.
neighbors etc • Commercial sources: advertising. examining.of customers 20 15 Series1 10 5 0 1 Year 3 Years No. of years interval 5 Years Fig-7 An “aroused” customer then needs to decide how much information (if any) is required. the customer is likely to start a process of information gathering. Decision-Influencers 30 No. radio. then a purchase decision is likely to be made there and then. friends. If there is a deficiency in information. television. of customers 25 20 15 10 5 0 Pa int er s Ar ch ite cts Co ntr ac tor s De ale rs No. salespeople.Frequency of Usage 25 No. consumer organizations. point-ofpurchase displays • Public sources: newspapers. using the product We found that the commercial sources play the major role in the customer decision making process.of customers Categories 27 . dealers. packaging. If the need is strong and there is a product or service that meets the need close to hand. retailers. specialist magazines • Experiential sources: handling. He/she can gather information from several sources: • Personal sources: family. The painters were found to be the most dominant.
Asian Paints had the best brand recall. of customers 30 25 20 15 10 5 0 TV New s Papers Hoardings Word of mouth No. the customer must choose between the alternative brands. Television as the most effective media in influencing buyer’s decisions for the purchase of paints. Hence the marketer would need to provide extensive information regarding the positive effects of buying the product. This evaluation can be influenced by the TOMA. An important consideration in this is the degree of involvement of customer in the purchase. it is a highinvolvement purchase and the customer is likely to conduct an extensive evaluation. The results of our TOMA analysis are given below. Of the public sources. Many customers identified. majority of the respondents gave Asian Paints as their first preferred choice. Television plays the most influential role as is shown below.Fig-8 Public sources also play a significant role in “pull” strategy for the consumer. of customers of Asian Paints Media Fig-9 In the evaluation stage. 28 . It scores much higher than the other audio-visual sources of media. When you think of paints what are the brand names that come to your mind? When customers were surveyed for naming any 4 brands in the paint industry that first came to their mind. Media Advantage 45 40 35 No. Since this involves high expenditure and risk. products and services.
Color variety. We have looked at the following attributes: Price. Durability.Brand Appeal 45 40 35 30 25 20 15 10 5 0 No of Customers No. 29 . of customers ICI(Dulux) Nerolac Berger Asian paints Brand fig-10 We need to also look at the importance the customer gives to particular attributes of a product and its comparison with the competitor’s products. Nerolac was found to have the highest preference by a customer who evaluated different brands based on price. we came to the conclusion that prices do not play a significant role in evaluating different brands because the prices are more or less the same for a particular product category across different brands. Availability and Coverage. From the survey that we have conducted on a limited sample. Price: PRICE 12% 15% Jenson & Nicholson Asian paints Nerolac Berger ICI(Dulux) Shalimaar 26% 17% 30% fig-11 From our experience in the marketing survey.
Durability: Durability 16% 16% 28% Asian paints Nerolac Berger ICI(Dulux) 17% 23% Shalimaar fig-12 From the survey. 30 . followed by Nerolac and Berger. We also found that color is an important driver of purchasing behavior and many buying decisions are based on color alone. we found that the durability of Asian Paints and Nerolac as perceived by the consumer was more or less the same and the other brands were perceived to have a lower durability. Color Variety: Range of Colours 10% 15% 30% Asian paints Nerolac Berger ICI(Dulux) 22% 23% Shalimaar Fig-13 Asian Paints was perceived as a brand which offers the highest range of colors/ shades for the customer.
This arises from a concept that is known as “cognitive dissonance”. rains etc. The easy availability of paint is one of the reasons of consumers higher demand for the product. may feel that an alternative would have been preferable. The final Stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns after making a purchase decision. Availability 15% 14% 31% Asian paints Nerolac Berger ICI(Dulux) 19% 21% Shalimaar Fig-14 Coverage: Coverage 10% 14% 28% Asian paints Nerolac Berger ICI(Dulux) 23% 25% Shalimaar Fig-15 We found that coverage did not play a significant role in the decision process and it depended mostly on the application of the paint – interior or exterior. The customer. The interior of a house for example underwent a very little wear and tear but exterior was affected by external factors such as sun resistance. having bought a product.Availability: Asian Paints is perceived to be readily available by consumers in the market which indeed is so. In these circumstances that 31 .
Dealer questionnaire analysis : Since dealers turned out to be the major influencers in the decision making process. Collection of customer feedback: Most of the dealers did not collect customer feedback. One more observation was that many of the customers were brand loyal and therefore did not switch brands. Prerequisites for becoming a dealer: Earlier the company used to give dealership to only a select few depending on the monetary might of the businessman. Prevalence of the brand: Most dealers responded that Asian Paints is the most prevalent brand because its brand awareness is the highest. painters and contractors. Some of them were also induced by profit margins and availability of shades. This shows that the customers are not informed themselves and depend more or less on advice from the above. Successive purchases by the customers were taken to be the customer’s approval of the brand. However.customer will not repurchase immediately. color mix selection and application of product. But this is not a consideration now a days because the company wants to capture the market by increasing its distribution network. we questioned all the Asian Paints dealers in Bhubaneshwar. but is likely to switch brands next time. This is indicative of the companies aggressive trade promotion. Services provided by dealers: Most dealers provide the services like painter references. Customer responses suggest that Asian Paints scores highest on durability and this leads to repurchases by the customer. Who is the influencer of the customer decision: It was observed that customers are mostly influenced by dealers. Their advertisements are the most effective and stay with the audience. foreign trips and expensive gifts on surpassing sales targets. Best marketing strategy: Most dealers were of the opinion that Asian Paints has the best marketing strategy because of more efficient sales-force. The dealers also said that people perceive that Asian Paints provides best quality and the widest color range. in this case the repurchase decisions do not occur immediately and the paint is evaluated for its durability over time. how they decide which brand to sell. most of them replied that customer demand for the brand was the major deciding factor. Incentives given to dealers: Incentives include cash discounts on bulk buys. more effective TV promos and wider color range. cost calculation. The objective was to understand the dealers perception of Asian Paints and the competing brands.These are the responses from the dealers. Market Pull: On being asked. 32 .
Since the intermediaries play a very important role in the marketing of the brand. The inventories as a proportion of net working capital are increasing from around 200 in the year 2000 to more than 800 in the year 2005. It enjoys the largest customer base in the Orissa market. still it needs to take initiatives to reduce its inventory levels. So the company can target this new set of interested customers by increased advertising in women magazines. 5. Therefore the company needs to emphasise more on the promotion of sub-brands. Tractor. 7. So Asian Paints should start focusing on this 33 . the required stock can be made and sold. This decision was justified till now because there were very few industries in Orissa. More and more women can be found perusing the shelves at paint stalls in search of the right type of paint for their homes. As per the feedback obtained the customers were unable to associate sub brands like Apex. 6. Since the intermediaries play a very vital role in the value chain of Asian Paints the company should devise methods to map the views of the dealers. the company should take initiatives like painter training programme with Asian Paints certificates. But this may not apply on the basis of industrial products in which tie-ups in home countries and their OEM customers.Dealer feedback: The dealer is not taken into consideration for marketing decisions. 10. Suggestions After analyzing the data obtained from the consumers and the dealers it was evident that Asian Paints is the market leader. The services provided by the company on the website are not being used because of the low penetration of internet in India. Asian Paints requires new associations and strategic partnerships to move ahead in the industry segment which contributes to 30% of the paint business. brand image and distribution logistics. Recently Orissa has signed a lot of MoUs for FDI and this will bring in a lot of industries into the state. 3. Apcolite and Utsav with the parent brand. Our group came up with the following suggestions for improving upon the current customer base and expanding into other high potential sectors besides the decorative segment 1. Asian Paints has a marginal presence in the industrial segment particularly in Orissa. So we recommend that these facilities should be made available at the point of purchase. For decorative range of products it is difficult for international companies to set up shop on a standalone basis because of existing barriers like strong network of existing players. Supply to the industrial segment: Asian Paints has a minimal presence in the industrial segment. 4. In the face of cut-throat competition and new technology. Though Asian Paints is the first company to employ eBPO for inventory management. The dealer perception is that Shalimar paints is the leader in the industrial segment in the Orissa market. 2. This will increase the creditability of the painters in the market and they will become brand loyal. Moreover with larger product diversification inventory management becomes costlier and tedious.
However recently towards the end of 2004-05 there has been increase in level of inventory due to VAT uncertainties and in anticipation of higher material prices. Efficient working capital management has been the strength of the company for years. Increased working capitals lead to diversion from productive investments. Though Asian Paints has employed i2 SCM to cut costs. the present scenario still requires unifying the planning down to the plant level. 34 . This segment is highly paying because of the low distribution cost and bulk orders.segment and take the first mover advantage. 8.
Appendix Customer Questionnaire Name of the customer:______________________________________________ 1. How did you get to know about these brands? a) Newspapers e) Dealer 4. Which brand advertisement has the greatest appeal? a) Asian paints b) Nerolac c) Dulux d) Shalimar 6. Arrange these brands on the basis of the order of preference for each product attribute. Shalimar-S Price 35 . Given here are some product attributes and some paint brands. When you think of paints what are the brand names that come to your mind? List any four_____________________________________________________ 3. Asian Paints-AP. Which of these medium is most effective? b) TV c) Hoardings d) Friends/Family 5. Nerolac-N. How often do you paint your house/ office? a) 1 yr b) 3 yrs c) 5 yrs or more 2. Berger-B. ICI (Dulux) -D.
Utsav c. cost calculators b. consultancy services d.Durability Coverage Colour variety Availability Low High 7. Colour mixing machine c. Dulux 36 . What are the services offered by paint companies that you know of? a. online services 9. Royale (Asian/Nerolac/ICI) b. Whom do you consult while taking painting decisions? a) architects b) painters c) contractors d) dealers 8. Which company do you associate these products with? a. Tractor d. Apex e.
What do you do to collect feedback from the customers? 6. What are the schemes that paint companies offer for sales? 5. How do you decide which brand you sell? 2. Do you supply paints in the industrial segment? 37 . What services do you provide to promote your brand? 4.Questionnaire for Asian Paints Dealer Dealer: M/S __________________________________ 1. Is dealer feedback taken into consideration while taking marketing decisions? 9. Which brand do you think is most prevalent and why? 3. What are prerequisites for becoming a dealer of Asian Paints? 10. How do consumers make their final selection? 7. According to you which company has the best marketing strategy? 8.
41 943.63 13.36 145.58 60.35 1.33 1450.87 9.02 35.462 1.73 292.97 27. & DRE) Equity capital Long term borrowings Capital employed Current liabilities & provisions Total assets / liabilities (excl.95 476.38 14.23 8.86 142.09 1206.7 27.97 555.43 16.71 9. reval.01 1322. reval.1 7.42 64.74 544.36 Mar 2005 12 mths 2366.97 45.32 970.73 158.83 120.09 13.89 337.65 28.84 16.32 0. Rs.77 13.272 8 0.05 119.19 78.06 Mar 2002 12 mths 1662.52 633.48 9.23 20.308 0.1 Margins ratios (%) PBDIT (NNRT) / sales PBDT (NNRT) / sales PAT (NNRT) / sales PBDIT (NNRT) / net sales PBDT (NNRT) / net sales PAT (NNRT) / net sales 13.49 0 236.38 1333.63 10.71 249.1 64.15 221.67 216.09 27.26 14.67 35.36 16.63 9.73 507.075 29.55 3.92 7.17 15.22 6.67 12.77 12.135 0.62 226.28 15.338 0.16 25.1 141.49 40.15 7.29 38 .68 780.135 1.18 140.06 38.33 Mar 2003 12 mths 1887.28 7.27 1672.Audited Result for the years 2000-2005 Asian Paints Ltd.45 169.35 12.07 855.22 95.51 8.5 405.68 9.08 1841. Crore (Non-Annualised) Gross sales Net sales VOP Other income Cost of production Selling & marketing expenses Distribution expenses PBDIT (NNRT) PBDT (NNRT) PBT (NNRT) PAT (NNRT) Exports Imports Gross fixed assets (excl.9 617 402.35 14.26 718.93 14.85 105.321 13.95 24.212 17.58 1414.11 Growth (%) Gross sales Cost of production PBDIT PAT GFA Total assets 19.15 1.48 402.15 169.71 1412. & DRE) Mar 2000 12 mths 1383.29 0.56 9.85 443.273 1.28 586.89 305.81 15.5 17.06 26.217 1.45 Mar 2001 12 mths 1526.23 823.96 531.76 13.78 594.95 21.91 21.43 154.98 15.27 7.96 15.55 2111.18 351.87 15.66 3.89 15.55 186.556 1.61 32.56 11.68 544.82 44.39 459.74 14.33 Returns ratios (%) PAT (NNRT) / net worth PAT (NNRT) / total assets PBIT (NNRT) / capital employed PAT (NNRT) / capital employed 29.18 0.03 1214.84 14.85 13.19 101.74 15.06 13.28 Liquidity ratios (times) Long term debt / equity Total debt / equity Current ratio Interest cover 0.65 192.9 15.54 95.12 108.92 1847.78 113.31 269.23 7.55 21.46 13.17 388.76 36.84 333.55 829.36 10.71 13.56 1064.37 233.26 50.65 13.119 0.62 208.96 640.74 12.64 21.92 67.27 14.01 1083.77 442.02 9.15 255.84 15.19 137.2 11.92 0.02 96.55 1194.63 64.18 545.89 13.94 603.33 6.95 407.76 13.55 16.73 8.11 15.332 8 0.5 40.25 11.16 83.69 325.02 17.6 7.21 1225.7 17.96 190.08 30.28 6.09 11.79 14.33 281.36 118.06 268.1 22.24 468.69 8.36 7.98 274.6 332.48 42.7 1641.26 129.98 13.47 176.21 13.29 177.37 7.77 14.56 179.251 0.51 Mar 2004 12 mths 2111.32 14.65 41.55 316.9 287.43 691.51 2.29 69.29 12. & WIP) Current assets Net worth (net of reval.55 7.16 2037.92 71.33 6.166 0.29 572.97 14.
CMIE database 12.com 2.adfags. www. www.com 3.84 3. days of creditors - 99 84 22 15 103 82 25 21 93 66 27 26 83 48 23 35 83 38 22 45 89 36 22 53 Asset utilisation ratios (times) VOP / total assets VOP / GFA 1.tutor2u. www.superbrandsindia.com 6.bergerpaints. www.asianpaints.David Aakar 39 . www. www.dulux. Marketing Management – Philip Kotler 14. Strategic Market Management.2005 13.nerolac.com 4.com 7.89 2.com 8.com 5.77 2.jensonnicholson.com 9.myiris.63 1.com 10.81 1. www.22 d. ISI emerging markets database 11. Bibliography 1.76 1. days of debtors Avg.5 1.73 2. www. www.84 3 1.Gross working capital cycle (days) Net working capital cycle (days) Avg. The Hindu-Survey of Indian Industry.71 2.
212 (approx.Filename: Marketing Management Project ( Asian Paints) Directory: C:\Documents and Settings\tapan\Desktop Template: C:\Documents and Settings\tapan\Application Data\Microsoft\Templates\Normal.dot Title: Environment-Industry-Company (EIC) Analysis for Asian Paints Subject: Author: ximb Keywords: Comments: Creation Date: 12/13/2007 3:07 PM Change Number: 2 Last Saved On: 12/13/2007 3:07 PM Last Saved By: tapan Total Editing Time: 1 Minute Last Printed On: 12/13/2007 3:07 PM As of Last Complete Printing Number of Pages: 39 Number of Words: 10.) .) Number of Characters: 58.214 (approx.
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