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INTRODUCTION

Paint is a generic term for a range of chemical substances that help protect
surface a keep them looking good.Paint is defined as a group of emulsion,
consisting of pigment suspended in a liquid medium, for use as decorative or
protective coating. Today, contemporary paints and coatings consist of
countless compounds uniquely formulated to fulfill the varied requirements of
hundreds of thousands of application. “paint” ranges from the broad group of
environmentally-sound latex paint that many consumers use to decorate and
protect their homes and the translucent coating that line the interior of food
containers, to the chemically-complex, multi-components finishes that
automobile manufacturers apply on assembly line.

Though there are different types of paint for different surface, all paints are
mixture of four elements- solvent which gives it its flow and enable it to brush
on the surfaces, binders for cohesion as well as adhesion to the surfaces,
pigments for colour and capacity, and additives which give paint certain special
characteristics such as resistance to fungus, algae and rust.

A variety of paint exist fir different purpose. Emulsion, Distempers, Lustre and
matt finished and exterior finishes for walls; melanine based polyurethane
metal and wood. This large number of paint type combine with the range of
products manufactured within each type by any company constitutes a rather
complex market.

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INDUSTRY STRUCTURE

The Indian paint industry worth Rs 43 billion has been consolidated over the
past four years with the organized sector taking away share from unorganized
segment. The paint market is expected to grow 8-10%p.a over the next few
years. The growth could be higher if the industrial sector picks up as the
industrial paint segment is gaining more importance. Asian paints offer the best
exposure being the market leader and an innovative company.

PER CAPITA CONSUMPTION OF PAINTS (KG):
While high excise duties hindered the growth of the industry in the early
1990’s, growth picked up after 1992, mainly due to reduction of duties and
acceleration of industrial growth. The growth of the paint industry is mainly
attributed to urban markets. Consolidation is taking place in favor of large
players; an increasing cost and intense competition afflict smaller companies.

PER CAPITA CONSUMPTION (KG)

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MAJOR PLAYERS

1. ASIAN PAINTS LTD :
Asian paints are the largest player in India, and also the market leader in
decorative paint, with a 41%market share. It has a domestic installed capacity
of 1, 62,700 tpa for paint. With the government planning thrust in the housing
sector, players like Asian paints stand for the benefit, as the demand for
decorative paints will grow.

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Taking advantage of the increase in the automatic approval of overseas
investment, Asian paints recently acquired the entire paint business pf pacific
paints company pvt ltd. Australia for Aus $ 375000. Last year Asian paints had
acquired the largest paint company in Sri-lanka. Asian paints vision is to be
among the top five decorative paint companies in the world by 2007.

2. GOODLASS NEROLAC PAINTS LTD:
Goodlass nerolac paint is the leader in the industrial paint segment. Earlier this
year, kansai paint of Japan brought out the tata’s stake in goodlass nerolac
paints, to raise its stake in the company to 65%. Goodlass nerolac paint
manufacturing capacity is 88,140 TPA.

3. BERGER PAINTS LTD:
Berger paint ltd acquired Rajdoot paints ltd in FY 1999. Thus, it has
consolidated its position within the decorative segments. Installed capacity is
56,420 TPA. In addition to focus on its existing industrial paints/protective
coating business, the company is entering into a 50:50 joint venture with ICI
India ltd, exclusively for automobile and industrial paints. Both companies will
have equal representation of board of joint ventures.

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4. ICI INDIA LTD:
ICI India, is a subsidiary of ICI plc of UK, has hived of its explosive division
and is concentrating on the paints and rubber chemical business.

MAJOR FOREIGN COLLABORATION OF PAINT COMPANIES:

company collaboration Areas Of
collaboration
Asian paints PPG Ind.Inc Automotive Paints
Sigma coatings Electro deposition
Nippon paints Primers; high
performance coatings
Powder coating
Good lass Kansai Paints Auto and industrial
coatings

BERGER Herberstone gmbh Auto coatings;

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Inc Heavy duty coatings Teodur bv Powder coating J&N HerHerberstone gmbh Auto coating ICI (INDIA) ICI Plc Auto refinish MARKET SEGMENTATION: Paint can be broadly be classified as decorative and industrial on the basis of end use. INDUSTRIAL PAINTS: This material can be further divided into following four sub-segments depending on end user profile. PAINTS Val spar corp.  Automotive paints  Marine paints  Powder coating  High performance coating  Other general industrial finishes  Coil coating 6 .

New trends are emerging in technology and marketing. The ratio in India is also more likely to shift towards industrial segments. The Indian market is dominated by decorative segment. especially with growth in the auto and white goods industry. emulsion. medium. 7 . enamels. The paint industry is charatererised by low fixed asset intensity (as essentially it is a mixing process) but high working capital intensity (as the number of shades is large and there is seasonal demand). Indian industry will have to keep pace with global technological changes to maintain their competitiveness. Asian paint is a market leader with 41% market share followed by Goodlass nerolac and ICI respectively. The unorganized sector has historically been dominant by high excise structure. The investments are in brand building and distribution infrastructure. However. Introduction of tinting machine at the dealer/retailer level will bring down working capital cost. Over the last five years the excise rates have come down drastically from 40% to 18% resulting in erosion of unorganized sector’s share. Also new technology is being used to increase the utility and lifespan of paints. economy.  Price: Premium. DECORATIVE/ARCHITECTURE FINISH PAINTS: This market can be further segmented on the basis of the following:  Customer’s type : institutional/retail or domestic use. which comprises of almost 70% of consumption as compared to developed countries where the industrial segment is more dominant.  Product Features/Categories: Distempers. Already a few alliances have entered and the number is likely to increase in future.

The third plat set up at Hyderabad has a production capacity of 90.000 M. The outlook for the industry is positive especially given the good prospect for automotive and white goods Industry. Located on a 34000 sq. meter plot. The plant makes most products in company consumer range and also sophisticated automotive finished based on indigenous technology. The Bhandup plant has been resurrected with a production capacity of 20. Moreover.000 M. the largest single paint manufacturing facility in south Asia.annually.000 M. Thus.T and production capacity at Ankleshwar. The company’s plant at Bhandup was. its production capacity was 30000 metric tones per annum. The fourth paint plant set up at kasna (in U. The second plant at ankleshwar has a production capacity of 80.P) has a production capacity of 45000 M. housing is expected to grow rapidly on the back of rising incomes and government incentives. The key to success will be innovative marketing.and Taloja (Thane). It has entered into joint venture with PPG of US to cater to fast growing industrial segment. Patancheru and kasna are being scaled. Ankleshwar (Gujarat). we prefer Asian paints within the sector. which has proven track record in innovation and is indomitable in the decorative segments.T annually.APL is primarily present in decorative segment. Patancheru (Andhra Pradesh) and Kasna (near Delhi). 8 .T. The supply situation remains a cause for concern and will keep prices under check.T>annually. RAW MATERIALS AND MANUFACTURING FACILITIES: The companies paint manufacturing facilities are located at Bhandup (Mumbai). till the fire in 1996.

INDUSTRY CHARACTERSTICS Raw material shortage: Till sometime ago. When the government was finally convinced that paints were a necessity and not a luxury. But all this stopped when raw material prices took an upward sprint. Pthalic anhydride (PAN) prices all over the world started increasing. This has prompted many large players to integrate backward to hedge uncertainty of raw material costs. There are two chemical factories producing phallic and penta two essential raw materials for paints. the bete-noire of the Indian paint industry was the high excise duty. These factories are situated at Ankleshwar and Cuddalore respectively. Working capital intensive: 9 . excise duty was slashed across the board from high of 60% excise duty reduced to around 20%of the benefits were passed on to the customers and there was a temporary surge in demand. This has resulted in high input cost. The other raw material in short supply in titanium dioxide.

the number of raw materials required can stretch upto 300. while is very lean during monsoons. The extent can be gauged from the fact that has a 12000 stronger dealer network selling more than 1500 shades through ‘Dealer Tinting Systems’. Thus.The number of shades is very large and a sufficient stock of every shades has to be matained at all levels of the distribution channel. A large stock pile needs to be maintained. Seasonal Nature of demand: The demand peak during festival season is very high especially for decorative paints. Also. as majority of these raw material are either imported or sourced from small chemical manufacturers. 10 . Low fixed asset requirement: A plant for manufacture of decorative paint can be set up with small capital investment. a major part of the sales are achieved in the second half of the fiscal year Entry Barriers: Huge investments are required for capacity creation and also to maintain the strong distribution network which is a critical success factor. However major investment is in setting up distribution channels and building up a brand. the working capital cycle is very high.

Goodlass Nerolac with Kansai paints (JAPAN). For example. With the reduction in excise duties. Critical Success Factors in the Industry 1. the price advantage of unorganized sector is being eroded. This has meant the reduction in the market share of unorganized sector. 2. The reputed paint companies have invariably collaborated with foreign companies for technology support. Sales in decorative paint are seasonal with 11 . This lead to very low margin at each level with the final retailer as little as 4-5%. Cost And Price Drivers: The paint industry costs and prices are driven by raw material costs which constitutes about 57% of the costs of sales. and government levies which constitutes 38% of the cost of paints. There are more than 300 inputs going into the manufacturing of paints and about 70% of them are based on petroleum. The petroleum prices are therefore one of the most important cost drivers. Working Capital management: The industry has high raw material content. The paint industry includes the extent of concentration in the paint industry which is very high. Asian Paints with Devoe marine (USA) and Nippon (JAPAN) Berger paints with Valspan Corporation (USA). the number of finished product is also large with varying pack sizes.

based upon its R&D efforts. the company has made tremendous progress and achieved leadership position in the country. industrial. automotive and maintenance coating employs well over 900 raw materials. Government of India. cost reduction. The R&D group 12 . Over the years. which it has consistently maintained for over the years.  Plant Location: Plant location helps service distribution network and bulk consumers. Debtor levels also rend to be high in this industry.  Technology: Paint is highly raw material intensive commodity. shade development and exploitation of new materials. An average range of trade sale. especially in the urban and the semi-urban markets. recognized by the department of science &technology. At a time the Indian paint industry was dominated by foreign paint companies of mostly British origin.  Distribution: Marketing of decorative paint requires extensive dealer networks. This posses a constant challenge for research and development efforts in formulating and reformulating products for better performance. new application. which have protective functions in addition to decorative one. As the environment in which paint is used. demanding evolution in paint technology. Asian paint has one of India’s largest paint research laboratories. more than half of sales coming in September – November festival season. Asian paint started operation as a wholly Indian company in small way with its own in house technology. the expectation of paint performance keeps on changing . keeps on changing with expanding problem of industrialization and attendant pollution.

3. Our ‘firsts’ in the paint industry include specialized chemical resistant coating. 2. thermosetting acrylic finishes and economic plastic emulsion paint. engineering and consumer durables. 4. manpower resources and facilities commensurate with its requirements. Five Forces in Present Paint Industry 1. is structured to provide separate focus to industrial paint technology and decorative paint technology. working capital efficiency and technology play a crucial role. Supply: Supply exceeds demand in both decorative as well as the industrial paint. The dependence on his R&D efforts has paid rich dividends. as the company was able to meet the market challenges with expansion of available market and penetration of new markets segments with the new products. Demand: Demand for decorative paints depends on housing sector and good monsoon. Industrial paint demand is linked to users industries like auto. computerized colour matching. distribution network. Bargaining Power of Suppliers: 13 . Naturally the company has always placed very high emphasis on its in house R&Dand built both. Barriers to Entry: Brand.

14 . 5. Higher prices through product differentiation are also followed as a competitive strategy. Sophisticated buyers of industrial paint also limit the bargaining powers of the suppliers. companies in the organized sector focus on brand building. Bargaining Power of Customers: Bargaining power of customers of paint products is high due to availability of wide choice. It is therefore that margin is better in decorative segments. 6. Price increase constrained with the presence of the unorganized sector for the decorative segment. Competition: In both the categories.

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While the demand for industrial paint comes from industries like automobile. At valued at about $60 bn. the demand for paint has grown at 10% for last five years. INTERNATIONAL SCENARIO The global demand for paint is estimated at over 21mtpa.6mn tones per annum to 1mn tpa by 2003. the industry picked up aided by improving economic condition and rationalization of excise structure. shipping engineering etc. According to Indian Paint Association. 16 . The industrial segment will grow faster due to the lower base and fast growth in major users like consumer durable and automobile. The high growth regions are the developing countries of Southeast Asia and Latin America. DEMAND-SUPPLY SCENARIO Paint demand is intrinsically related to economic development. The demand for decorative paint in India mainly arises from two segments viz construction of new building and retail demand for refurbishment.demand from decorative paint will be led by the household construction industry which is expected to grow almost 8% over the next five years considering the extreme shortage of housing and the government thrust on encouraging the housing activity are also likely to shift more towards rural areas. After 1992. consumer durable. After the sluggish growth in late 80’s and early 90’s. over the last two years demand slows down due to economic slow down. industry grew at rapid pace of more than 12% from 1992-96.a. Almost the entire growth can be attributed to volume increase as price realization has increase at less than 5%p. The industry is expected to grow at 3% over the next few years. demand will rise from current 0. High excise duties and lack luster industrial growth resulted in low growth of 2-4% during 1987-92. While the mature markets of North America and Western Europe are likely to witness very low growth.

250 active firms. In other cases (e. Tonnage gains in the industrial coating segment will be constrained by a shift in trend towards higher solid coatings (such as powder coatings). THE WORLD COATING SCENARIO The total output of the world paint and manufacturing industry was valued at $54 billion in 1996. Kansai Paints. On the other hand. The industry supported some 12. These trends have evident around the world but have had the most impact in more mature markets. ICI.. and will promote stronger tonnage gains. and Nippon Paints) coating represents the primary line of business. Over the last few years the industry has been consolidating with an objective to strengthen the product lines and distribution chains.g. roughly 2. India’s market is only 0. Most of developed world has already effected such as switch to water-based formulations for most architectural applications. thinner coats. and require generally fewer. almost 60% of the world market. HOECHST 17 . The developing world is also experiencing this trend. but is growing at annual clip of 10%. KANSAI (JAPAN).g. For many of these companies (E. NIPPON (JAPAN).The share of industrial paint is 70% and rest is accounted by decorative segment. BASF (GERMANY). globally positioned firms.65 mn tones.5 percent annually to nearly 26 million tones.7% of world demand. By the year 2002 the valued will be $72 billion. which weigh more than their solvent-brone counter parts. The world paint and coatings industry is becoming increasingly dominated by a small group of highly focused. the architectural segment is seeing a continuous shift towards water- based paints. The largest player is ICI of UK with a share of around 10% followed by Akzo-Nobel (Netherlands). PPG (US).India included. Sherwin Williams. This has led to series of mergers and acquisitions. which often weigh less per kilo than solvent brone coatings. AKZO NOBEL. This industry is expand to forecast 3. Also.

we are experiencing a shift from solvent based coating to water based coatings. hence all paint companies will have to comply the environmental regulations. Although the Asia Pacific region hold the long term prospects as a market for paints and coating. since exported goods must meet the environmental codes of the target market. South Korea and Thailand. Even companies in developed regions should be prepared in this area. India was not severely affected by this crisis.DUPONT and COURTALDS) the firm strong position has arisen from involvement in various upstream petro chemical activities. During 1990’s. Meeting environmental regulation is another challenge for paint companies in developed world. Global trend towards free trade will have an impact on product mix. primarily due to financial crises has hit this region. regional production has been lower. which will boost demand for architectural coatings. India. as paint product as soon adopting global standards. The formation of trading blocks like NAFTA will involve the establishment of more environmental regulation of member nations. the drive has spread to industrial and specialty coatings segment. A very interesting trend is emerging in the architectural coatings segment. particularly in Indonesia. The higher performance standards for industrial coatings have necessitated intense product reformulation efforts. However. in a earlier budget have announce a new housing policy. which should result in boom for the construction sector. 18 . including production of many of basic raw material used in coating production. Water based coatings now account for most of house-hold paint demand in developed countries and is gaining ground in developing countries too. The wave of currency devaluation and shape rise in interest rate will seriously dram pen spending in key paint sector such as construction and durable in short term. leading to a number of alternatives technologies. The most rapid gain in paints and coatings production will be registered in the developing regions of Latin America and Asia-Pacific.

DUPOINT. the worlds top ten Paint and coatings suppliers accounted for nearly 42 percent pf the market. Whereas PPG. However. In 1996 Architectural Paint accounted for 58% of the total output with the industrial coatings accounting for the remainder. In 1998. KANSAI Paint. and Benjamin Moore focus primarily on architectural paint. which gives a top 20 firms a collective market share of over 50 percent. NIPPON Paint and RPM focus heavily on the industrial segment. The next ten producers accounted to additional 13 percent of sales. BASF. ICI. due relatively simple technology. and especially to maintain high inventory and the dealer level and high transportation cost. The most basic division is between architectural coating and industrial coating. the world’s top player has a strong presence in both the segments. LILY industries and DAI NIPPON focus entirely on industrial coatings. the industrial coating segment is slightly larger in value (Dollar) terms because industrial coating trends to cost significantly more than architectural paint. Globally Industrial paint are the major segment accounting for around 70% of the market. (60:40 in favor of industrial coating) Sherwin William. courtyards.Global production of paint and coatings can be divided in two broad sectors: Architectural Paint and Industrial Coatings. global trade is overall sparse. Asian Paints. Emerging Trends and Opportunities 19 . 4 kg in Philippines and 16 kg in Taiwan. AKZO NOBEL. Per capita consumption is 26 kg in the USA.

ICL is also hoping the duette will be used instead of wallpaper. 4) Increased thrust on brand creation and distribution : .The increase share of organized sector implies that brand awareness will be a thrust area. This was sold along with a roller for the Venetian glass look.By concentrating on certain niches. Simplified logistics management: with the machines generating shades instantly. 3) Niche marketing: . Asian Paints offered almost 150 shades in its synthetic enamel range. This however. These are then generated by mixing colourants with the base paint. 20 .1) Technology:-The introduction of tinting machine has changed significantly changed marketing technology. dealer can now stock only the base material and thus save almost 20-25% in the working capital cycle.The lowering of excise has opened the high volume but low value market is semi urban and rural areas. For instance. This now stands changed as almost 2000 shades can be created in seven minutes through these machines.Nerolac has a lions share in the industrial market segment and virtual monopoly over the automotive paints. good lass Nerolac paint found a lot of its in automotive paints for maruti. These machines each costing approximately Rs 60mn are installed at dealer outlets and enable the customers to choose between any of several hundreds shades. does not mean that niche strategy is bound to succeed. Also. and delivered almost instantly. unmatched in the industry. some companies have earned good result. For instance. a major competitive advantage of a company was the range of color it offered. This brand received no more than lukewarm response in the market. prior to this technology. which is currently dominated by the unorganized sector. a paint with a suitable fragrance. ICL ended up raid in the faces with its niche marketing strategy with natural hints. The two major implications of these machines are differentiation on color ranges is reduced. The future of this brand is yet uncertain. 2) Expansion of product profile:.

00 04/12/1996 31/12/1995 690.00 17/06/1996 250.319.60 06/01/2005 31/12/2004 352. outsourcing requirements are likely to be reduced as new capacities go on stream in the organized sector.00 26/04/1999 31/12/1998 370.strong brands are emerging as the most important entry barrier.319.00 13/10/2000 31/12/1999 451.00 22/08/2003 31/12/2002 399.00 09/06/1992 255.125.00 27/01/2000 205.10 02/06/2006 03/10/2005 520.00 25/11/1997 31/12/1996 480.00 23/01/2004 245.00 22/01/2008 Yearly High Low : BSE Year Ending High HighDate Low LowDate 14/08/2008 1.00 22/04/1998 198.00 28/09/2005 302.00 05/03/2007 29/12/2006 790.00 01/08/1994 340.334.35 19/08/2003 257.50 01/08/1997 265.00 17/05/2004 31/12/2003 472.00 20/11/1992 FY 2007 – Annual Results of Asian paints: Presentation structure 21 .95 31/01/2008 875.00 26/07/1995 256.00 07/02/2006 501.00 07/05/2008 903.00 02/12/1993 245.00 22/01/2008 31/12/2007 1. Fifty Two Week High Low ExchangeName FiftyTwoWeekHigh HighDate FiftyTwoWeekLow LowDate NSE 1.95 31/01/2008 875.00 25/07/2002 250.00 10/03/1993 31/12/1992 515. 5) Industry consolidation: .95 26/11/2001 229.10 04/01/2002 31/12/2001 289.00 06/01/1994 31/12/1993 420.The small scale industry is expected to witness a shake out as the share of organized sector increases.00 22/01/2008 BSE 1. The opening of rural market has also necessitated the expansion of distribution reach.00 23/06/1998 31/12/1997 378.00 23/11/1995 31/12/1994 640.00 12/04/2001 31/12/2000 501.00 31/12/2007 642. Also.25 30/08/1999 195.

Good growth witnessed by all business units.Consolidated results –FY2007: • Paint volumes for the year including international increased by 18. – All three business units registered in excess of 15% volume growth. Increased by 25.5 % driven by – Good growth registered by Paints-India business and theMiddle East region • Material costs as a percentage to sales have gone up marginally • HR costs have risen by 17. Highlights . 9. • Results: Q4 – FY 2007 • Results: FY 2007 • Outlook: FY 2008 Highlights: Q4 – FY2007 Consolidated Net sales and operating income. 666 mn. – Good performance by the Decorative Business Unit – Improved performance by International operations • Material costs have risen during the quarter • Operating margins have improved due toimpressive volume growth Consolidated P&L – Q4 FY07: Standalone P&L – Q4 FY07: EOI (Extra Ordinary Item) – Provision for diminution in value of Investment.4 % to Rs. Presentation structure • Results: Q4 – FY 2007 • Results: FY 2007 • Outlook: FY 2008 7. • Value Sales have grown by 21.4 % to Rs. 2621 mn • However operating margins have been maintained due to control on other overheads.589 million.7 % to 481. 22 . Volume growth has been impressive for the Quarter. -Net Profit has risen by 43 % to Rs.976 KL.

Rs.9 % to Rs.3million Asian Paints .0 % for FY07 – Estimated at 9.Standalone P&L : FY2007 Environment – FY2007 • India • GDP growth at 9.5 % • Chemicals business registered revenue growth of 12. 336 million was provided towards diminution in the value of investments in overseas units – Adjusting for EOI.Standalone P&L : FY2007 EOI (Extra Ordinary Item) – Provision for diminution in value of Investment. 961.50 % of Asian PPG Industries sales are included Consolidated Sales breakup: FY 2007 & Q4 FY 07 10 Asian Paints Consolidated Results FY2007 • Asian Paints Standalone Results • Decorative Business – India • Industrial Operations – India • International Operations 11 Asian Paints .5 mn (adjusting for inter segment revenue) – PBIT for this business increased by 105.7 % due to strong growth by all segments of the paints business • Net profit has increased by 45.Consolidated P&L –FY 2007 9 .2 % for FY 08 aided by a surge in industry and services sector 23 . 12 • Net Sales grew by 21.7% to Rs.9% to Rs. 2720 mn – Due to the performance of the Decorative – India business – In FY’2006 results. 246.8 . Net profit has risen by 23.

– Higher growth than FY07 predicted for services and industrial sector • Inflation and rising interest rates are a cause for concern • Manufacturing.construction. 24 . 112 and Rs.Paint Industry – India : FY 2007 • Paints industry estimated between Rs. – While Southern region of the country continues to do very well. 115 billion for FY2007 – Value growth is estimated at around 18% in FY2007 • Decorative paints estimated to have grown by around 19 % in value • Industrial Paints is estimated to have grown by around 17 % in value • Demand conditions have been good in most segments of the paint industry • Input costs continued its upward trend during the year putting pressure on operating margins of paint companies. automobiles – all have registered good growth for FY2007 14 .Asian Paints Consolidated Results FY2007 • Asian Paints Standalone Results • Decorative Business – India • Industrial Operations – India • International Operations 16. Demand for decorative paints was good nearly throughout the year and in most parts of the country. consumer goods. Capital goods. 15. the exceptions were Delhi and North East region • All segments for Decorative India registered double digit growth. cement.

Paints : Decoratives India 17. Jaipur and Baroda – APHS is now present in 12 cities in the country • Manufacturing facility – Ankleshwar plant has received environmental clearance for 100. – Overall prince increase in the year was around 4. Phthalic Anhydride and vegetableoil. Paints : Decoratives India • Price of TiO2 have been fairly stable during the year • Prices of raw materials increased sharply in 2nd and 3rd quarter in FY 2007 – Major increases were in Xylene.e.000 kl. 18. – 25 .Paints : Decoratives India • Asian Paints Home Solutions – Added 2 cities in FY2007 i. • Excellent growth in all wall finish products – Impressive growth recorded by interior and exterior emulsions • 8500 Colour Worlds now installed in the country – Penetration into small towns continues.25% – All price increases have been absorbed well by the market • New Products – Royale Play range expanded – Luxury Ultra Gloss enamel launched in many markets • Colour Next 2007 launched – The company is beginning to be recognised as an authority in forecasting colour trends. Pricing FY 2006 – Four price increases effected during the year. 19.000 kl from 80.

SCIB Paints and Tubman’s. and building shareholder equity. the group operates around the world through its subsidiaries Berger International Limited.7 billion(around USD 851 million). fast track growth. Apco Coatings. COMPANY PROFILE Asian Paints Limited Company Analysis 17thJuly2007 Price target-1.150 Shareholding Pattern (as on 31 March’07) Key Statistics (as on 16 July’07) COMPANY OVERVIEW Asian Paints is India's largest paint company and the third largest paint company in Asia today. INVESTMENT RATIONALE 26 . The company has an enviable reputation in the corporate world for professionalism. Asian Paints operates in 21 countries and has 29 paint manufacturing facilities in the world servicing consumers in over 65 countries. with a turnover of Rs 36. Besides Asian Paints.

Maharashtra was commissioned during last quarter of FY06-07. e-security services and solution is unique to Rolta because no other company is providingsimilar combination anywhere 27 . Plans are being drawn up and work on the civil structure is Expected to commence from October.000 KL by the month of September 2007. The plant at Ankleshwar has received environmental and other clearances to produce up to 1. Some additional facilities. need to be installed at Ankleshwar as well as Patancheru and Kasna plant so as to produce at the rated capacity on consistent basis. During last year.located in USA. COMPANY OVERVIEW Rolta India Limited is an Indian Information Technology company with its corporate headquarter in Mumbaithe company operates through a network of 42 regional offices across India combined with its seven subsidiaries.Engineering design. With these capacities at Baddi and Sarigam. The company is adding a polymer plant at Sriperumbudur which is expected to be commissioned in the first quarter of 2007-08. UK. Germany. Canada.The first phase of the Greenfield industrial liquid paints facility at Taloja.000 KL.The production is being ramped up at the facility and it is expected to reach the installed capacity of 14. with wide array of multi-million dollar projects in over 35 countries. the capacity of the Sriperumbudur plantwas raised to 50. This capacity came in handy as emulsion paints sales grew well.000 KL per annum early in 2006-07. The Company in order to meet market requirements is Planning to enhance the capacity of the plant at Sarigam.00. The enhanced capacity will be available during the second quarter of the FY08-09. especially storage and handling. Saudi Arabia and the United Arab Emirates. per annum. This combination of Geospatial. Rolta is todaya market leader in Geospatial and Engineering segments with a unique combination of IT-based solutions and services. Netherland.This will help the company to improve its service levels to Industrial customers and also bring about cost efficiencies Associated with manufacturing the bulk of industrial Products at a single location. 2007. APICL will be placed to service the powder coating requirements.

design and procurement management (EPCM) services to power.500million. encompassing the entire product. both in the domestic and international markets. operations. Control Communications. France. Intelligence. maintenance and simulation. Inc. JOINT VENTURES Rolta India Limited joint venture with Thales. modeling. This combination provides Rolta with competitive advantage overother companies by being able to combine its domain knowledge to tailor solutions more precisely to itscustomer needs. Taking this leadership further. 28 . refinery and petrochemical projects worldwide. manufacturing. pursuing large contracts business..000 technical professionals and domain experts from talent available in West Bengal. Rolta is a leader with a market share of over 85% in the Engineering Design Automation segment in India and one of the major Plant Information Management Services providers worldwide. This Information Technology park will add another milestone to the success story of the Rolta India Limited and will intensify its competitive edge. This facility once completed will be providing employment to 5. Surveillance. Rolta's strategic joint venture with Stone & Webster. Target Acquisition and Reconnaissance Information Systems (C4ISTAR) for the defense and homeland security sectors. tooling. systems and solutions for developing state-of- the-art Command. Engineering design services. Computers. detailing. This partnership has evolved into an independent full service engineering and procurement operation. analysis. This IT park will have facilities for delivery of Information Technology based Geospatial services. Rolta provides a complete range of advanced engineering design services. ROLTA TO SET UP IT PARK IN KOLKATA Rolta India Limited has announced the setting up of Information Technology Park at Kolkata as a part of its expansion plan.in the world. Software development and ERP implementation services worldwide. will be providing a broad spectrum of cutting-edge technologies. provides high-quality cost-effective engineering. plant lifecycle designing. This facility will be set-up in phases with an investment of about Rs 2.

24 16477.55 28212. FINANCIAL STATEMENT ANALYSIS Rs.17 14.45 21.2 4217.95 29 .65 Total Expenditure 14729.79 19.35 23995.76 3519.62 19415.38 2937.42 19.93 Growth (%) 11.84 OPM 15.37 Operating Profit 2695.47 15.99 19.15 23191.39 19672.13 15. mn Revenues 17424.56 Growth (%) 8.

86 9.33 24.867.55 2005 2005-06 2006-07 For the financial year ended 2006-07 company has displayed good financial performance.28 454.65 27.80 mn.90 3878.191.Other Income 216.55 mn with the growth rate of 21.720.217.46 mn.82 1399.94 Adjusted PAT 1543.26 359. The company net profit is up by 22% to stand at Rs 2. The company reported the operating profit of Rs 4.14 359.54 969. Research The company has reported the EPS of Rs 28.15 PBT 2379.212. This has been followed by rising return on net worth .05 2699.15 3253.48 mn for the FY06-07 in comparison to FY05-06 net profit of Rs 1.25 Growth (%) 15.91 Adjusted NPM 8.07 Interest 52.878.10 for the FY06-07 in comparison to FY05-06 EPS of Rs 23.73 Depreciation 480.31 3384.519.87 4099.65%.86 1780. The company has reported the 36% return on net worth for the FY06-07 in comparison to FY05-06 return of 34% on the net 30 . The revenues for the Company stood at Rs 28.56 mn for the FY06- 07 Compounding at the growth rate of 19.17 9. The EBITDA for the company rose to Rs 4.40 2750.35 21.84 1170.1 476.622.84% against the operating profit of Rs 3.05 455.93 mn for the FY06- 07 in comparison to the FY05-06 revenues of Rs 23.07 mn with the growth rate of 19% in comparison to FY05-06 EBITDA of Rs 3.20 for the FY05-06.19 Tax 835.of the company.31 68.10 with the growth rate of 22%.46 4622.77 316.47 2214.26 EBIDT 2912.54 38.

Therefore company has been consistently generating good return for its shareholders and in future it is likely to add more to the wealth. Limited and any of its employees shall not be responsible for the content. Therefore. Hem Finlease Private Limited. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument. Hem Securities Limited.worth. all care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. Strong growth prospects for decorative paints arising from the higher pace of construction activity and a ramp-up in revenues from international operations could aid sales growth over the next couple of years. the stock trades at a price earnings multiple of about 25 times expected FY08 earnings. Profit margins may receive help from moderating input prices and an appreciation in the rupee. At the current market price of Rs 872. have long or short positions in.150. including persons involved in the preparation or issuance of this material may from time to time. directors. Hem Multi Commodities Pvt. officers. and buy or sell the securities there of. company (ies) mentioned here in and the same have acted upon or used the information prior to. The companies and its affiliates. Whilst we are not soliciting any action based on this information. VALUATION The stock of Asian Paints appears to be a good addition to the portfolio for conservative investors. and employees. Disclaimer: This document is prepared on the basis of publicly available information and other sources believed to be reliable. 31 . we recommend the stock for the long term investment with price target of Rs 1. or immediately following the publication.

Japan. of UK. GOODLASS NEROLAC PAINT LTD 1. In 1971 another plant was established at Thane. one of the indegredents in paint manufacture. a part of cookson group. KANSAI PAINT COMPANY: 32 . Kansai who currently has a stake of 40% is the other major shareholder. The tata’s had 40% stake in the company through group company Forbes Gokak ltd. the company entered into technical cum financial collaboration with kansai paints. In 1983. Last year Kansai brought over stake of Tata’s. The Thane plant had also facilities of manufacturing pigments. thus making GNPL its subsidiary. Manufacturing activities began with the establishment of paint unit at parel in 1920. by Tata steel in collaboration with goodlass. Background: GNPL was established in 1920. which was commissioned in august 1993. In FY92 the company made a right issue for funding its new Kanpur plant.

marine.sealands and underbody compounds. GNPL has almost all the major automotive OEM as its customers except the Korean ones.  INDUSTRIAL PAINT: GNPL is the market leader in the industrial paint. Last year company spends close to Rs 2. Other key accounts are Bajaj Auto.high performanance coating. and heavy duty coatings. environment friendly products.  BUSINESS: GNPL one of the oldest paint manufacturing companies. Hero Honda etc.powder coating. It has 21 subsidiaries in 12 countries. Japan. USA. metal. Ameron coating Inc. Whirlpool. Kansai has its 45% sales coming from automotive coating.for pretreatment chemicals. a 40% share of two wheeler and 20% share of commercial vechicles OEM market. Its collaboration with different companies to cater to different segment as follows. USA. India accounts for 40% of kansai investment subsidiaries.4bn on R&D with the thrust being on high technology. Its product range also includes decorative paints and organic and inorganic paint. Japan. traditionally used for automotive coatings. It has a major share of alkyd and amino paints. With a 43% share. GNPL dominates the OEM share with the 70% of share of passenger cars OEM market. suppliers to maruti 70% of maruti’s paint requirements account for 12% of sales. Japan – for all automotive coatings. Valspar Corporation.Nihon Parkerizing co ltd.Kansai Paint Company is the largest company in Japan and among the top ten in the world with 1991 consolidated sales of $2bn. has concentrated on the industrial paint segment. which are rapidly replacing NC lacquers. In the automotive 33 .Kansai paint co ltd. Nihon tokushue toryo. GNPL has technical collaboration with a number of manufacturers that gives it a competitive edge over the competitors in the industrial paint segment. 26% from decorative paint and 29% from containers.

up from 52057 tonnes. lote Parshuram (RATNAGIRI). it is a distant #2 in the decorative paint segment. and Dehat (KANPUR). Last year GNPL has expanded capacity at two its plants and set up new plant. 34 . any-surface. Its super acrylic distemper is claimed to be the first water-based. It has alls capes as a premium segment product. in fact a major portion of its apex plan of Rs 400 mn is earned market towards IT. It also has two more plants through 100% subsidiaries at Madras (capacity 27. It has recently launched acrylic system. GNPL is also trying to regain its market supremacy in markets like General industries and Auto ancillaries. All this has taken the total capacity to 101000 TPA from 57500TPA. For FY06/07. The company has introduced VRS to employees of kavesar plant at Thane.segment.  MANUFACTURING FACILITIES: GNPL has plants at Lower Parel (MUMBAI). Its paints are sold under brand name of Nerolac. GNPL achieved sales of 61000 tonnes. However. It has recently launched paint excel to counter competition in exterior paint segment. This includes implementing ERP program to improve it operational efficiencies and integrating all of its 60 odd depots. environment friendly painting segment. It has 62 sales offices and depots and more than 7000 dedicated dealers. which it had exited due capacity constraints. GNPL has launched three technology led products namely Zola coat (multi-colour designer finish paint) satin emulsion (acrylic emulsion for premium silky finish) and nerosign (colour specifically for sign board painting).  DECORATIVE PAINTS: GNPL has a stronger presence in distempers and emulsions.000 TPA) and vatva in Gujarat (9000 TPA). way behind industry.  THRUST ON IT: GNPL is planning a major push in the IT segment. Emulsions are the fastest growing segment in the decorative paints. GNPL has launched low brake ED primers and common base coats to remove body and lumper colour mismatch.

now known as ICI India research and technology centre. Further Plan of Action: . when brwnner mond &co. In 1984. (CAFI) were incorporated to manufacture polyester operations in panki at Kanpur.Development of eco-friendly coating products. ICI formed Nalco chemical ltd. In the early 1970’s IcI established additional manufacturing capacity for paints at Hyderabad and in 1978. With Nalco company USA with each holding 40% of the equity. ICI began with manufacturing chlorine and caustic soda at Rishra. opened a trading office to sell alkyls and dyes in Calcutta. In 1976 a research facility was established at Thane. In 1987. ici diversified into crop protection chemicals and pharmaceuticals at Ennore near Chennai.Development of Waterborne Exterior Metallic finish Paint ICI IANDIA LTD  BACKGROUND: ICI’S presence to India dates back to 1911. . In 1989 35 . West Bengal. the ici companies in Indian merged. . one of the four companies that combined to form ici in uk in 1926. 3. . The site was later expanded to manufacture paints and rubber chemicals and fibers of India ltd.Development of UV curable plastic coatings. In 1929 companies name was changed to Imperial chemical industry (INDIA) ltd.Development of water borne tile coatings.

USA and Zeneca. ICI major brands in decorative paints are Terrene. the first phase of ICI India’s restructuring was completed with the disinvestment of the fibers. Another paint plant was commissioned at mohali near chandigharh and the surfactants innovation centre opened at Thane. ICI established a joint venture called initiating explosive system India ltd. fertilizers and seed business. MO Bulk explosive GOMIA. UK. In 1993. In1996. ICI launched new products “Wasr Swear” and “Supercote Textured finish” and also expanded its colour solution to 200 outlets.Honda and Tafe. Of these Decorative paints contributes 55%. BIHAR Bulk explosive VALSAD. specialty chemicals and materials. Gujarat. Plant locations are. GUJARAT Catalysts HYDERABAD. Auto-refinish 30%. CHANDIGARH Paints ENNORE. In 1997 the new paint plant and polyurethanes systems house were commissioned at Thane.specialty chemical plant was commissioned at Thane. CHENNAI Paints  BUSINESS: ICI’s main business is of paints. Major brands are Duco for automotive refinish and In industrial paints segment the 36 . In 1995 agrochemical business was transferred to a joint venture with Zeneca limited in UK. AP Nitrocelluse MOHALI.Paints ICI has around 35% of its turnover from paints. In 1998 ICI acquired the nitrocellulose business of asha nitrochem industry ltd at valaspar. IcI also exited from its joint venture with Nalco chemical company. LOCATION PRODUCT MANUFACTURED ROURKELA. Deluxe. Motors and Industrial 15%. ORRISA Bulk explosive SINGRAUIL.

The plant near Calcutta has been recently expanded and modernized at a cost of Rs 50 mn to manufacture products for domestic market and experts. retanders etc. at rishra. pesticides industry and general industry sector. peptisers. cosmetic and pharmaceuticals companies. Under its ICI has Permosel brand in solid and metallic colours. West Bengal. The total number of retail network hasBeen expanded to more than 6500. SURFACTANTS: (UNIQUEMA) The division has started operating by the name of uniquema. Rubber Chemicals ICI India is a market leader in the rubber chemical in India at the new state of the art an horizontal plant set up in technical collaboration with sumita chemicals of Japan.client list include Fiat. ICI has four plans strategically located in four different regions Situated at Calcutta. ICI launched 200 new products in surfactants. The newly commissioned plant at Mohali has pioneered the movable mixer manufacturing technology for Refinish paints and has also developed and implemented ACS Market mix system for Autocolour in India. With the commissioning of the Chandigarh facility the total paint capacity has gone up to 6000 KL. used in wide variety of end products with around 50% consumed by tyre industry with other based products accounting for the rest. Starting with textile auxiliaries the surfactants business has developed and diversified portfolio for supply of products of textile. Daewoo. Mumbai. In year 2005 sales decline due to recession in automobile segment. ICI manufactures a wide range of rubber chemicals acceletors. Last year catalyst syntax is the new name of 37 . Perspex for acrylic sheets. antioxidants. Hyderabad and Chandigarh with the Addition of 1500 outlets. With its manufacturing unit and research and technology centre focused on textile auxiliaries has been put up at thane near Mumbai.

The pharmaceutical business is amongst the fastest growing and profitable one. automotive. ICI is the trading group of ICI India offering a wide variety of chemicals for import and export with the main focus on chlorine chemical and titanium dioxide. and ICI tracerco. The business portfolio includes both human and veterinary pharmaceuticals. The manufacturing plant at Kanpur caters the supply of catalyst to the Indian customers and some of the catalyst. It also acquires the businee of nitrrocellouse business of Asha ntrochem last year. The Indian operations are covered under the global operations of ISO 9001 certification. unichema. Chennai with the establishment of a 1000 TPA blending operation. For this it has tied up with GSFC. It sold up its 49%stake in Zeneca Agrochemical for Rs 194.7 mn. anesthetic and antiseptic. ICI acrylics are the world’s largest acrylic company with 55% of world volumes. printing inks. ICI has a state art manufacturing plant at Ennore near Madras. Most of the product being marketed is original ICI research product. It receives Rs 911 mn net of its 38 . In cardiac vascular main brands are tenormiu. In human pharmaceuticals there are three major portfolios cardiac. ICI India also exports to Europe and Middle East. In India it still operates under ICI banners. leather finish lacquers. artificial jewelry etc. crossfield.ICI India mainly import product from the parent and market it. ICI has set up plant at Thane to enhance value addition through tailor made products. furniture. construction.ICI’s expanded catalyst business formed by the merger of ICI katalca. wood lacquers. The major customers are refiners and fertilizers POLYURETHANE ICI India set up the polyurethane business at Ennore. PHARMACEUTICALS While the pharmaceuticals business of ICI worldwide has been hived off into another company called Zeneca. The appliances. Industrial nitrocellulose finds application into auto-refinish paints. footwears. CASE and eco-blinders sector offers major opportunities for the polyurethane business in India. htc. Inderal and tetmosal. Subsequently the main office was moved from Ennore to Thane. foil coatings.

4 11.49 6 €) Net income 136 142 (4) * Continuing operations before incidentals Pro forma. May 7.52 0.506 3.4 as equity.3 7.The company achieved underlying growth in local currencies in most of its 39 . earnings per share increased 6 percent. However. investments of Rs 76. in local currencies. Although net income from continuing operations of â‚136 million was down 4 percent. in most businesses  Autonomous growth of 6 percent offset by currency headwind  ICI integration and synergies on track  Earnings per share of continuing operations up 6 percent  Total net income €118 million.3 Earnings per share (in 0. due to the share buyback programs .486 1 EBITDA 398 403 (1) EBITDA margin (in %) 11. this was offset by a similar negative currency impact. 2008 Financial highlights * Q1 2007 In € millions Q1 2008 % change ** Revenue 3.6 EBIT 257 254 1 EBIT margin (in %) 7. It has also sold properties in Delhi and kolkatta for a total sum of Rs 840 mn. Operational highlights for the quarter  Ongoing trend of underlying growth. Operational margins of continuing operations were flat. up €40 million AkzoNobel today reported 6 percent autonomous growth for the first quarter of 2008. indicating a strong underlying trend.

but due to negative currency effects. total revenue was down 4 percent. However. as expected.Looking at the results in more detail. supported by almost all businesses. There was double digit revenue growth at Decorative Paints in the emerging markets. I remain confident for the remainder of the year that we will deliver on our promises of outgrowing our markets. This seasonality was compounded by the poor weather conditions and an early Easter holiday. Total revenue developed as follows: In % versus Acquisitions/ Q1 2007 Total Volume Price Currency divestments pro forma Decorative (4) (2) 3 (6) 1 Paints Performance 1 2 2 (6) 2 Coatings Specialty 5 4 7 (6) Chemicals AkzoNobel 1 2 4 (6) 1 40 . reaching double digit levels in emerging markets. Growth at Performance Coatings was offset by currency pressure. although Marine & Protective Coatings produced another strong quarter. AkzoNobel CFO Keith Nichols commented: I am pleased with the stable performance which demonstrates the strength of our transformed company. Autonomous top line growth of 6 percent was reduced to a positive benefit of just 1 percent due to the currency translation impact.businesses. and continuing with the successful integration of ICI . Specialty Chemicals realized strong autonomous growth of 11 percent. The first quarter is not traditionally strong within the decorative sector. The testing environment continued in the first quarter.

41 . Industrial Activities performance was impacted by currencies and the soft economic conditions in the US. EBITDA and EBIT margins were down compared with last year. the trading environment continued to be soft. Marine & Protective Coatings delivered another strong quarter. Growth was also healthy in most Central and East European countries.1 percent. with revenue up 5 percent on last year. indicating that most businesses have continuing high asset utilization. EBITDA and EBIT margins improved compared with the first quarter of 2007. which was felt by all businesses. Performance was strong in the emerging markets. Specialty Chemicals It was another good quarter. In the US. this was offset by the currency headwind of 6 percent. Polymer Chemicals and Chemicals Pakistan businesses in particular are operating at a clearly improved level. Despite the significant currency impact on the top line. mainly due to the impact of currencies. the trade business performed well. with all activities contributing. while the retail segment faced weaker market conditions. slightly below the first quarter of 2007. while the EBITDA margin amounted to 17. Despite the tough currency conditions. but adverse weather conditions in Europe and eastern Canada towards the end of the quarter resulted in a delay in market demand. Higher raw material and energy prices were compensated by price increases of 7 percent. EBITDA increased to €205 million (up 1 percent). The Surface Chemistry. Autonomous growth was 11 percent. Before incidentals. In most mature markets.Decorative Pain The year began well. benefiting from changes in product mix and a continuing focus on cost control. with double digit growth in Asia and Latin America. Performance Coating Although the achievement of 4 percent autonomous growth was encouraging. Acquisitions added 2 percent to revenue. resulting in flat total first quarter revenue.

up €40 million compared with the previous year. Prior to the Henkel on sale at the beginning of April “ for cash proceeds of €4 billion “ AkzoNobel concluded a legal restructuring of National Starch. Cash Position and strong financial position On January 2. largely related to ICI integration costs (€84 million). Total net income for the first quarter of 2008 was €118 million. AkzoNobel remains confident of outgrowing its markets and at least maintaining results in line with 2007. Discontinued operations realized a net income of €82 million. down 4 percent compared with last year.1 billion.5 billion. This explains a relatively high cash and short-term borrowing position at the end of the first quarter of 2008. Net income including incidentals from continuing operations was €36 million (2007: €78 million). ICI was acquired for a gross price of €11. It is expected that the full €3 billion programs will be completed in approximately 12 months. 42 . 2008. AkzoNobel embarked on a new €1 billion share buyback program as a first tranche of a €3 billion program. Invested capital increased due to the ICI acquisition and the related goodwill and intangibles of €8. of which 5 billion related to assets and liabilities held for sale. and an amortization of the step-up of acquired inventories totaling €42 million. Net Income Net income from continuing operations before incidentals amounted to €136 million. Trading condition Despite softer economic conditions in the mature markets and the negative impact of currencies. During the quarter there were incidental charges of €151 million (2007: €90 million). In mid- March.

The Company manufacture and sell paints. ships paints. etc. dry colours. enamels. It is India's second largest decorative paint manufacturer (11% share) and also the third largest industrial paint manufacturer (14%). commerce and industry. distemper. BERGER PAINT INDIA LTD Profile Berger Paints is the third largest paint manufacturer in India with an overall market share of 19%. Some of the brands manufactured are Castle. Murisan. Apexior. Luxol. Duroglaze. 1923 The Company was incorporated on 17th December. Crisil has upgraded the fixed deposit 43 . Synthetic. Over two-thirds of its turnover comes from decorative paints and the balance from industrial paints. and strategic partnership. Parrot. pastes. in West Bengal. boiler components and various other kinds of paints to meet the requirements of trade. preferably with foreign firms. varnishes. Soligum. both internally and externally. 2000 The Company proposes to expand its operation through acquisitions.

2007 44 .1% stake in the Singapore based paints company. Signs term sheet for acquiring the entire paint business(including the entire intellectual property rights ) of Snowcem India Ltd. 2004 Delhi based Punjab National Bank (PNB) and Bangalore-based Vijaya Bank enter into a four-way partnership with Principal Financial of the US and Berger Paints to set up an insurance broking company 2006 Berger Paints India Ltd has entered into a Joint Venture Agreement (JV) with Nippon Bee Chemical Co Ltd of Japan for the purpose of formation of a Company for manufacture and sale of coatings for plastic substrates used in automobiles and parts thereof in India. Despite a slight increase in sales.Board recommends a dividend @ 60% on equity capital of the company.14. the net profit of Berger Paints India Ltd has dropped by around 10 per cent for the half-year ended September 30. 2001. 2003 -BOD decided not to amalgamate Berger Auto & Industrial Coatings Ltd with the company. has unveiled a new brand promotion Strategy which it claims to be the first of its kind in the industry.Acquires 50% stake in Berger Auto & Industrial Coating Ltd. Berger Paints Ltd and ICI Ltd.14cr for the second quarter end. 2002 Board decides to pay interim dividend @25% on the ordinary shares. inducts Jalal Dani as the Chairman of the company .Posts 54% growth in the net profit to Rs.programme of Berger Paints from FAA to FAA+. 2001 Berger Paints India Ltd. after buying out50. have formed a 50:50 joint venture to manufacture auto and industrial coatings at Rishra in West Bengal.

647.4 Price  % % 0.8  52 week H/L Rs 68.3  % ch 1-month % -5.5 ch   Mkt Rs 9. % -36.0  P/CF X 8.9 Cap m )  Vol '000 3.9 ch week  % ch 12.3 EPS (31/03/2008 Rs 2. BERGER PAINTS INDIA LIMITED (BRGR) Price History Top  Rs 30.6/25.3  P/E X 10.1  Shares O/S m 318.Berger Paints India Ltd has entered into a Joint Venture Agreement (JV) with Nippon Bee Chemical Co Ltd of Japan for the purpose of formation of a Company for manufacture and sale of coatings for plastic substrates used in automobiles and parts thereof in India.8 month (Price History as on 05/12/08) Top 45 .92  % % -1.

1 6.466 3.782 4.2 26.6 8.852 4.6 margin Effective tax % 20.Interim Results No.3 16.397 3.262 Expenses Rs m 3.238 Other income Rs m 34 70 24 Turnover Rs m 3.9 margin * Results Consolidated | Interim results exclude extraordinary / exceptional items | Historical Quarterly Results 46 .363 3. of Months 3 3 3 Year Ending 31/03/2008 30/06/2008 30/09/2008 NET SALES Rs m 3.832 Gross profit Rs m 357 317 406 Depreciation Rs m 49 50 47 Interest Rs m 40 22 33 Profit before Rs m 302 315 350 tax Tax Rs m 61 83 59 Profit after Rs m 241 232 291 tax Gross profit % 10.9 rate Net profit % 7.2 6.4 9.006 3.

service.While the organize sector accounts for Rs 3500 Crore. Most of the demand comes during the October to March period.  While Asian paints is the market leader in decorative paints.  Industry is working capital intensive. the unorganized sector accounts a major portion of supply.General engineering paints accounts for balance.  In industrial paints.  Technology.  Raw materials accost account for around 50%of the total cost of production.  Demand is seasonal. Goodlass Nerolac is the market leader in the industrial paint. IMPACT ON BUDGET  Market size of the Indian paint industry –Rs 5000crore.  In decorative paints. while automotive paints accounts for around 30 to 35%.  Decorative paints and industrial paints accounts for around 70% and 30%of the total demand respectively. primers and wood finishes. and geographical reach are the key success factor.  In terms of volume. product innovation. 47 . distribution network. enamels accounts for the maximum share followed by wall finishes. the unorganized sector accounts for the balance of rs1500crore. brand recall.

powder and protective coatings logged in healthy growth rates. Demand especially for decorative paints was strong led by increased construction activity and in the industrial paints business. rising crude prices will have a major bearing on the operating margins going forward. Budget measures  Customs duty exemption to be withdrawn on naphtha for use in the manufacture of polymers in order to correct price distortions and revenue losses. the performance of the paints industry last year was healthy on the back of a robust growth in the Indian GDP. In the next five years.  Increased emphasis on Bharat Nirman and improving infrastructure. Having said that. 48 .Budget paints 2008-09 Given that the growth of the Indian paints industry to a large extent hinges on GDP growth.  Naphtha for use in the manufacture of polymers will be subjected to normal rate of 5%. the industry is expected to grow at a CAGR of around 11% to 12% and paint companies are expected to clock strong growth rates backed by capacity additions undertaken by them.

 Increased emphasis on bolstering infrastructure in the country is a positive for companies. two wheelers and three wheelers will benefit paint companies. Basic inorganic chemicals reduced from 15% to 10%. 6 m additional houses to be constructed for the poor. Budget 2005-06 Construction of residential complexes having more than twelve residential houses or apartments together with common areas and other appurtenances. IT to generate around 7 m jobs till 2009. Budget 2006-07 Peak rate of customs duty reduced from 15% to 12. Duty to be reduced on major bulk plastics like PVC. capital goods and power will be beneficial to Asian Paints.  Emphasis on improving infrastructure such as roads. which has been witnessing strong growth in its powder and protective coatings businesses. LDPE and PP from 10% to 5%. All raw materials imports to attract a common duty. the change in exemption and deductions available to individuals and the increase in exemption for women.5%.  Reduction of duty on import of raw materials used in the paints industry. on styrene. Company Impact  Reduction in excise duty on small cars. two wheelers and three wheelers will benefit Kansai Nerolac and Asian Paints given their strong presence in the automotive paints segment. as the prices of cars will decline thereby boosting volumes.Peak customs duty reduced from 20% to 15% The new income tax brackets. Budget Impact  Reduction in excise duty on small cars. EDC and VCM which are 49 . as it will enhance the performance of powder and protective coatings. Under the rural development programme. on naphtha for plastics to nil. Excise duty is being reduced from 24% to 16% on small motor vehicles. Exemption on tax deductible housing loan to continue.

Additional education cess of 1% to fund secondary and higher education. industrial paint demand could grow at a much higher rate than the last five years. While the decorative segment is growing at 1% per annum. Reduction in custom duty on chemicals from 12. Key Negatives  Raw material worries: Since the paint sector is highly raw material intensive. the industrial paint segment (led by powder and protective coatings) is also expected to record strong growth rates going forward. raw materials for plastics to 2%. 50 .5% to 7. which has impacted paint demand. Budget 2007-08 Hike in allocation for rural and urban housing infrastructure development. rise in crude and petrochemical prices affects performance and the reliance is unlikely to reduce going forward.  Capex cycle booster: With investment cycle showing signs of momentum.  A mixed bag: A robust housing sector is likely to boost demand in the decorative segment. Long-term growth potential of the auto sector is also a big positive. Key Positives  Steady growth: The Indian paint industry has very low consumption levels as compared to the other developing economies.Dividend distribution tax to be hiked from 12. In the last six years. the country has witnessed three years of poor rainfall.  Structural shift: Continuous fall in excise duty in the past has benefited organised players and the impending consolidation will add to the pricing power.5% to 15%.  Monsoon blues: The performance of the decorative division also hinges on rainfall. Emphasis on the Bharat Nirman project and its timely completion.5%.

4. thus trust. 5. 2. BERGER PAINTS LTD. There exists a healthy and vibrant culture in the organization . Productivity is the higher organizational goal and the employees strive hard to achieve the goal. Conclusions 1. 51 . The employees do not mind working in teams. and learn from each other’s experiences. 6. It has found that the employees are not satisfied with the compensation package offered by the organization. 7. There is a hih level of trust among the employees and proactiveness in the organization. Has a strong customer focus and majority of the employees feel that they have bright prospects in the organization as a whole. 3. Employees are a little conservative about experiment but they welcome change as and when required.

rediff.indiatimes.bergerpaints.cms http://www.org/wiki/Berger_Paints_India.com/ 52 . http://money.com/companies/Berger-Paints-India-Ltd/11580002. Webliography http://en. http://economictimes.com/berger-paints-india-ltd/stocks/companyid- 13971.wikipedia.

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