STRATEGIC MANAGEMENT WORKBOOK REPORT

ON
KANSAI NEROLAC PAINTS

Team No-04
Section ‘B’
2nd Semester

TEAM MEMBERS
Nisha Palan 4NM18MBA56
Minnumol Joseph 4NM18MBA46
M Swathi Prabhu 4NM18MBA41
Mayur Shetty 4NY18MBA35
P Chethan Nayak 4NY18MBA46
Prajwal S N 4NY18MBA52

Shilpa Praveen
Professor, JKSHIM, Nitte
Date of Submission: 06-06-2019

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 WORKBOOK

FORMAT: 1
Chosen Industry: Chemical Industry
Chosen Enterprise: Kansai Paints Limited
Chosen Company: Kansai Nerolac Paints Limited

FORMAT: 2
Three levels of strategy (Corporate, Business and Functional)
Identify at least one case of a strategic management decision for each of the following cells.
Where relevant, give details of what the decision was, why, when, where, how etc. Include all
relevant details and justify why you classify the decision as strategic.

Type of decision The chosen company Competitor

(Kansai Nerolac Paints (you may choose different
Ltd.) competitors for the three
cases) (Asian Paints)
Corporate  In April 2018, the  Asian Paints
Company acquired acquired the balance
100% equity 49% stake of Sleek
shareholding in International Pvt
Marpol Pvt. Ltd, ltd in Dec 2017.
Goa (Marpol). This Now Sleek is fully
is one of the leading owned subsidiary of
companies in powder Asian Paints.
coating business.  Expansion of
 They started setting Business to African
up paint and Asian
manufacturing unit Continent.
Gujarat, Punjab and
Andhra Pradesh.
 And Expansion of
Business to Sri
Lanka.

Business  They has their  Agreement between

technical
collaboration with
Oshima Kogyo Co.
Ltd, Japan and
Protech Chemicals
Mold Tek Plastic
Ltd. and Asian
Paints- Where Mold
Tek has constructed a
plant at Mysore and

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 Ltd, Canada Vizag which
 Strong manufactures plastic
Advertisement- containers and
Nerolac is Associated supplies only to Asian
with 3 IPL teams in Paints.
2019 edition
Functional .  Integration of Supply
 Completely IT Chain Management
enabled Business (SCM), Solution from
running on SAP i2 Technologies and
HANA Enterprise Resource
Planning (ERP)
solution from SAP.

FORMAT: 3
Characteristics of Strategic Management Decisions
Take one of the decisions by the company that you identify by research above and complete
the following:
Chosen decision by the company: Acquired 100% equity shareholding in Marpol Pvt. Ltd,
Goa(Marpol).
Characteristics of Strategic Explain why the chosen decision by the company
Management decisions fits the characteristic listed in Col: 1. Don’t force
fit. Only explain if you are convinced.
1. Strengthening Existing Product As Marpol Pvt. Ltd is Powder Coating Industry with
Line different variety of product. It certainly generates
added advantages to Nerolac Ltd.

2. Helps in Expansion And As Marpol Pvt. Ltd is one of the leading Powder
Growth through Acquisition coatings in India. It helps in Nerolac to expand its
business in several other areas.

3. Decisions taken by the top level
management backed up by the
ideas of middle and lower level
employees.
The main decision to acquire the 100% equity of
Marpol Pvt. Ltd. Is taken by the top level
management as it’s the most important aspect of the
company. Company also has considered the ideas
provided by the middle and lower level department.

4. Make best use of SWOT Nerolac ltd. made the SWOT analysis of Marpol Pvt.
analysis . Ltd. before acquiring their shares.

5. Action Oriented and specific The decision to acquire Marpol Pvt. Ltd. shares was a

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 action oriented and was even more specific as there
was a proper proposal done from Nerolac ltd.

FORMAT: 4
Take one of the decisions by a major competitor of the company that you identify by
research above and complete the following:
Name of the Competitor: Asian Paints Ltd.
Chosen decision by the company: Asian Paints decision to acquire of Sleek International
Pvt. Ltd.

Characteristics of Strategic Management Explain why the chosen decision by the

decisions competitor company fits the characteristic
listed in Col: 1
1 Formulated by Top Management, Sub The acquisition of Sleek International Pvt Ltd
strategy by middle-low employees was the decision formulated by the top
management of Asian paints and other sub-
strategies like that of the number of shares
etc. were discussed by the middle-low
employees also.
2 Helps in determination of expansion and The acquisition helped Asian paints in the
growth through the acquisition expansion and growth in its various other
segments.
3 Integrated and Dynamic The decision taken is integrated and dynamic
as it was successful decision by the top
management.
4 Make best use of SWOT analysis Asian paints made best use of SWOT
analysis of Sleek International before
acquiring it.

VALUES OF THE COMPANY

FORMAT: 5
What are the explicitly stated Mission/ vision/ goals/ objectives etc. etc. of the enterprise.
State how the enterprise articulates its philosophy (whether as mission/ vision/ goals/
objectives etc.).

Philosophy: With a philosophy that encourages compassion and vision that as tremendous
foresight, the way ahead has been charted for success and growth. Our belief in them
provides us with the firm foundation to build our business and it serves as a blueprint to guide
us as we surge ahead. Kansai Paints Ltd. Organization has laid out the future direction. We
believe that magic happens when people come together with the shared mission, clear
strategy and shared values.

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We have embarked on this new journey with the new vision, mission, and the new set of core
values.

Vision Statement: “We design solutions that protect, inspire and touch lives every day.”

Mission Statement: “We leverage superior technology to contribute to our Customers and
Society, in a sustainable manner, with innovative Products and Services, through a competent
workforce built on a culture of Customer Focus, Integrity and Respect to our Stakeholders.”

Core Values: Our core values are a representation of an enthusiastic group of people,
together around a single purpose. “icare!” defines the way we live our core values every day.

FORMAT: 6
What are the implicitly stated Mission/ vision/ goals/ objectives. How do you come to your
conclusions and justify your statements

The implicitly stated objectives are:

 Nerolac paints provide complete satisfaction to its customers with respect of quality
and reliability
 KNPL take a leap towards the green- world. It aims to promote sustainable
environment and safety management that contributes to environment conservations.
 It provide Customer requirement by updating the technology, striving greater
efficiency in operation.
 KNPL proactively convenes training and capacity building initiatives to help
unemployed youth generate livelihood through workshops. These sessions also help
professionals to enhance their skill level so as to ensure the skilled workforce is
available for the National Development.

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FORMAT: 7
Connect the explicitly and implicitly derived philosophy of the company and critique it

Vision
The technological edge of KNPL leads to innovations which satisfy consumer’s needs in
better way provides high quality, cost effective and sustainable solution.

Mission
Responsibly contributing to development of society, improve in the quality of product and
accountable for the impact of stakeholders value.

FORMAT: 8
WHAT ARE THE BUSINESSES WITHIN THE ENTERPRISE
1 Kansai Paints Nepal Pvt. Ltd.
2 Kansai Paints Lanka Pvt. Ltd.
3 Marpol Private Limited, Goa (Marpol)
4 Perma Construction Aids Pvt.Ltd
(28/12/2018)

PRODUCTS
Interior Wall Paints
Exterior wall paints
Wood Coatings
Metalenamel paints
Paint Ancillary

FORMAT: 9
Discuss connected/ relatedness/ unconnectedness among the businesses. Draw a
connectedness diagram.

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FORMAT: 10
Do Portfolio Analysis in the following space (use BCG Matrix)
(Make sure there are no strong dependencies between the businesses)

STARS QUESTION MARK?

AUTOMOBILES  INDUSTRIAL PAINTS
 Deltron  Protective coatings
 2K Nexa Autocolor  Floor coatings
 ?
CASH COW DOGS
DECORATIVE PAINTS ANCILLARY PAINTS
Exterior wall paints and Metal surface. WALL PATTI
Primer paints, Stainers.

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On the basis of financial performance, chances of future growth and market share, the
products manufactured by an organization can be placed into different categories. Bajaj has
maintained the strong position in the two and three-wheeler segment despite heavy
competition Bajaj Auto has been analysed through BCG Matrix in the following points:

Stars
Stars are those products which are achieving high market growth and maintaining high
market share when compared to all other products of the same company. These products are
good and promising products to the company. Stars are both cash generators and cash users.
Stars require more money to increase their market growth and it is tending to become the
cash cows in the future. Stars are very aggressive in market penetration; they use vertical and
horizontal market integration. The products of Kansai Paints which comes under Stars are
automobile paints. Because these products have more sales.

Question mark
Question Mark is those products of which the future is unpredictable. These products require
much closer concentration. There are two possibilities in case of question mark. At present,
they hold low market share and consumes large amount of cash expecting that it will grow
and become star in the future. But it does not always succeed even after large amount of
investments they struggle to gain market share and eventually become dogs. Products comes
under question mark are Industrial paints such as Protective coatings and Floor coatings.

Cash Cows
Cash cows are those products those which very well established and achieving reasonable
good sale for minimum market efforts. They are star product of the company in past and
became cash cows as the market changes. Here, the company should not invest additional
amount into cash cows but has to support them. If there is no support for cash cows, they
would not be capable of such innovations. Some of those products are Decorative paints such
as Exterior wall paints and Metal surface.

Dog
Comparing to all the products, market share and market growth of this dog products will be
very less. They are not worth investing, because they generate low or negative cash returns.
But these products may be a star product in the past. Therefore, it is always important to
perform deeper analysis for each product to make sure they are not worth investing. Primer
paints, Stainers will come under this.

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IDENTITY OF THE BUSINESS UNIT CHOSEN WITHIN OF THE COMPANY

FORMAT: 11
What is the product market space for the business? Compare with competitors. Consider
concepts like strategic groups, niche markets. Identify the reasonable basis for forming
strategic groups. It may be useful to start with the mapping of product market space for the
whole industry.

HIGHEST

ASIAN PAINTS

AKZO NOBEL
INDIA

BERGER
P PAINTS

I
NEROLAC
C PAINTS

SHALIMAR
PAINTS

LOWEST RANGE AND MARKET CAPITAL HIGHEST

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In terms of mapping of product we have considered X axis as a range of decorative paints
and market capital of concerned company where Y axis as price of wall paints “emulsion”
as a base.
So in terms of Asian Paints Company have around 15+ various decorative paints and cost of
the paint is overtopping and their market capital is 40,775.50 (Rs. Cr.). So we have mapped
on the right top on the graph.
Berger Paint Company has less range of decorative paints when compared to Asian paint
and even the cost is also reasonably cheaper when compared to Asian Paints. Their market
capital is 7,066.33 (Rs. Cr.).
In terms of Nerolac Paint Company they have less range of decorative paint when compared
with Asian and Berger and even the cost of the paint is bit cheaper and their market capital is
5,737.88(Rs. Cr.).
Shalimar Paints have moderate range of decorative paints and paints are available at cheaper
rate when compared to other paint company. Their market capital is 104.58 (Rs. Cr.).
In terms of Akzo Paint Company they have a poor range of decorative paints because they
mainly provide paints to Industries, Aerospace. But their paint cost too high when compared
to Shalimar, Nerolac and Berger. But their market capital is 3,596.11 (Rs. Cr.).

PRICE OF PRODUCT Walls (Emulsion)

COMPANY PRICE (PER LT)
ASIAN PAINTS 450
AKZO PAINTS 440
BERGER PAINTS 430
NEROLAC PAINTS 400
SHALIMAR 380

FORMAT: 12
What are the implicitly stated Mission/ vision/ goals/ objectives of the SBU. How do you
come to your conclusions and justify your statements
Firm’s vision, mission and objectives in a competitive environment are strategic intent. It is
about winning competition battles and gaining leadership position by putting organisational
resources to best use.

Based on SBU, the mission, vision, goals of Kansai Nerolac paints enhance the charted
for success and growth. And the organisation has laid out the future directions. It emerges the
leadership positions. There’s no limit to the possibilities of growth and dreams at Nerolac.

FORMAT: 13
Connect product market positioning with the mission/ vision of the enterprise? Is there a
proper fit?
Nerolac has taken different positioning in this segment as our competitors are talking about
beautification of colours but KNPL have taken a stand on Eco friendly and healthy paints by

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creating the low volatile Organic Compounds (VOC) campaign [a compound which excludes
carbon monoxide, metallic carbides which participate in atmospheric photochemical
reactions] and has introduced the new product called Nerolac Impression Eco clean

Connected to mission/vision
 The people were unaware about the low VOC so through social cause company will
be able to educate the people.
 Company decided to concentrate on lead free paints keeping healthy as a primary
issue
 Creating awareness about the brand
By this we can conclude that there is a proper fit with mission /vision statement and
the market positioning.

IDENTITY OF THE COMPETITOR

FORMAT: 14
Choose Nearest Competitor: _____ Asian Paints _____________________
What are the explicitly stated Mission/ vision/ goals/ objectives etc. etc. of the nearest
competitor. State how it designates its philosophy (whether as mission/ vision/ goals/
objectives etc.).
Vision: Asian Paint aims to become one of the top five decorative coatings companies
worldwide by leveraging its expertise in the higher growth emerging market. Simultaneity,
the company intended to build long term value in the industrial coatings business through
alliances with established global partners.
Mission: To provide paints as per market demand, ensuring desired level and quality of
customer (dealer) service, continued availability of the right product mix of right quality at
the right time.

Core Values:
 Commitment and Integrity in dealing with internal and external customers.
 A strong belief in individual ability and creating an environment in which
entrepreneurial spirit is encouraged.
 Ownership and Responsibility.
 To continuously rejuvenate every living and working space of people and bring joy to
their lives.
The enterprise articulates its philosophy through its vision statement by;
 Understanding the management and its involvement right from the start.
 Adequate or correct marketing research is done at each and every level.
 There is no lack of vision on the relationships between processes, technology and
organization.

FORMAT: 15
What are its implicitly stated Mission/ vision/ goals/ objectives. How do you come to your
conclusions and justify your statements

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The implicitly stated objectives are:
 Aggressive promotion of brand and increasing its reach to the market.
 It aims at providing higher grade products and improves its operational efficiency.
 Also the company aims at satisfying and taking care of all its stake holders like its
suppliers and also the environment.
 It mainly focuses on the customers satisfactions as per managing good quality.

FORMAT: 16
Connect the explicitly and implicitly derived philosophy of the nearest competitor and
critique it
Vision: They have achieved Market leader in overall paint market (44%) & in decorative
paint market in India (38%).

Mission: Asian Paint gives more importance on Quality and consumer satisfaction.

FORMAT: 17
Apply Porter’s 5-force analysis to the INDUSTRY you have chosen and assess the strength
of the various forces the industry faces
Power of Suppliers
 To have a final product it requires large raw materials
 Some raw material suppliers are less in the market so bargaining power remains in the
hands of suppliers.

Power of Buyers
 Personal Users
 Bargaining power is too high. They are always price sensitive.
 Brand switching option is high as there are many players in the industry.
 Industrial Users
 They purchase in large quantity. So they have high bargaining power.
 Users are having high knowledge about the product.

Power of substitutes
 In place of Decorative paints, alternative can be wallpapers, tiles can be used.
 Some place people use Lime wash instead of paints.

Power of new entrants

 Paint industry is dominated by some of players (Asian, Nerolac, Berger, Dulex) so it
is difficult to others to enter into the market.
 Foreign players can enter due to their high knowledge and expertise and innovative
ideas.

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Competitive Rivalry
 80% of Paint industry is dominated by some of top players (Asian, Nerolac, Berger,
Dulex)
 Some of the local markets or unorganised market provides some competition.

FORMAT: 18
Applying Porter’s 5-force model, analyze the competitive position of the BUSINESS you
have chosen and find what the factors are “threatening” to your firm. Are there ways to
neutralize the impact of competitive disadvantage the firm has vis-à-vis the five forces. Do
these forces differently impact your firm vis-à-vis its nearest competitor? Explain

Power of Suppliers
The Company has a supplier base of more than 500 material suppliers. Out of these, close to
350 are local suppliers. The Company tries to source its raw materials from local vendors to
the maximum extent possible; but it needs to import some of the specialized raw materials as
there is no local alternative.
Raw Materials (in %)
2014-15 2015-16 2016-17 2017-18 2018-19
Imported 40 46 42 45 42
Indigenous 60 54 58 55 58

Company procures bulk liquid chemicals in tankers instead of barrels.

Power of Buyers
Buyer power is more. As buyer has different option to select the paint under same category
from different brands. All class of people can be targeted.

Power of substitutes
There is less number of substitutes. So customer cannot switch to other substitute to get same
benefits at same costs. But for some lower quality product they may change Nerolac product
to some other substitute.

Power of new entrants

Due to high cost of investment it is difficult to other company to start or invest in paint
business. As there is large investment and no guarantee of return. But company with
advanced technology may survive and this will be threat to Nerolac.

Competitive Rivalry
In Powder Coating Nerolac has almost monopoly in the market as there is no competitor. But
in Decorative there is huge competition. Price and Quality plays a very important role. So to
Attract customer Nerolac has to give discounts, warranties.

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FORMAT: 19
Undertake a PESTLE Analysis of your business – consider both domestic and
international factors if applicable
Current situation
Political Regulatory Practices –Kansai
Nerolac Paints has to manage
diverse regulations in the
various markets it is present
in.
Economic Lack of production of Maruti
(client company) due to
decrease in demand because
of increase in fuel rate
Social Societal norms and hierarchy
–The society of India is
different from the home
market of Kansai Nerolac
Paints.
Technological Empowerment of supply
chain partners –Technology
has shortened the product life
cycle and it has enabled
suppliers to quickly develop
new product.
Legal Environment laws and guides
–Kansai Nerolac paints needs
to do to meet those laws and
regulations.
Ecological Volatility in price of crude
oil because of water scarcity
FORMAT: 20
What are the resources of the business?
 Chemicals
 Technology: SAP application like SAP R/3
 R&D
 Logistics
Likely changes in the future
Regulations regarding not
only market entry but also in
chemical manufacturing can
operate in the local market.
Maruti Suzuki is company’s
biggest client company cuts
its production this leads to
decrease in market share of
nerolac as more than 40%
revenue are from automotive
paints
It should strive to build a
local team that understands
the societal norms and
attitudes better to serve the
customers in India.
Promoting diverse range of
products.
Legal protection of
intellectual property.
Increase in price of crude oil
leads to increase in the price
of raw material leads to
increase in final price of
product
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  Human Resource

FORMAT: 21
Subject the above to VRIN (Valuable, Rare, Inimitable, Non-substitutable) analysis

Resource:1 of the Comments

firm-Human
resources
Valuable Yes, employees are the most valuable assets of Knasai Nerolac ltd.
As employees is the main reason for the growth of the company.
There are 2997 employees in the company as on 31st March 2019.
Rare No, Other competitors of Nerolac company also depend upon the
human resources. We can also find same creative employees in other
companies also. Thus it’s not a rare thing. (We, at KNPL believe in
enhancing capabilities of our employees, and employees being the
most critical assets, various programs that ensure upgrading of skills
and competencies are delivered to the employees, which in-turn
enhances them at delivering the best to their ability. KNPL has deep
rooted core values to which all the employees are connected. Further
to the same at KNPL there are also defined Competency/Skill
Frameworks for all the employees across all the cadres.)
Inimitable Human skills may differ to certain extent but we could find some
similarity in working style, skills of workers thus it’s not inimitable.
Non-substitutable Employees can be substituted. As now a day humans replaced by
machines. Thus it’s not non substitutable.

FORMAT: 22
Resource:2 of the Comments
firm-Technology
Valuable With the development of new technology in the industry company is
definitely getting competitive advantage. Technologies like Repair
Coating method, Low VOC coating, Water Borne Coating, High
Solid Coating is the major game changer to the industry.
Rare Repair Coating Method. Used by the Nerolac Co. ltd. is a rare
technology used only by the nerolac Co. ltd. And technologies like
Low VOC coating, Water Borne Coating methods are only used by
its top competitors.

Inimitable Repair Coating Method used by Nerolac Co. ltd. is patented. [Patent
No. U.S. 6,821,569B2] So this method cannot be used by its
competitors.

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Non-substitutable Technologies can be substitutable as the time passes advancement
and change in technology is must.

FORMAT: 23
Resource:3 of the Comments
firm-Patents

Valuable Yes, patent rights obtained by the company are the most valuable
asset of the company, As other companies cannot copy these things
from company. Most of the innovative things of Knsai Nerolac Co.
ltd. are patented under patent act.

Rare Yes, anything patented under patents act is rare. And other
companies also cannot use technology or products which are
patented.
Inimitable Yes, It’s inimitable until the patent expires, After wards other
companies can use it for their use. But till than it belongs to patented
company.
Non-substitutable For getting patent there is no substitute.

FORMAT: 24

What are the resources of the nearest competitor? Asian Paints

 Home and office products
 Chemicals
 Paints and Coatings
 HR
 Technology
 Research and Development.

FORMAT: 25
Subject the above to VRIN analysis
Resource:1 of the Comments
nearest competitor
(Technology)
Valuable Yes, Augmented Reality (AR)/Virtual Reality (VR) as a technology
have moved into productive usage wherein the Company has
deployed a VR-based training module to equip its teams to manage
customer complaints. Prototypes for 3D visualisations using AR

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 have also been tested.

Rare No, present days many company has come up with this technology

Inimitable No, it’s not a Inimitable because a specific company does not have
right over that software

Non-substitutable No, it’s substitutable. As year passes many new alternative will come
and replace present technology

FORMAT: 26
Do the resources of the company form capabilities
Yes, the resources of Kansai Nerolac ltd. such as Human Resources, Technology, Research
and Development, Patents are critical in nature. As R&D of Kansai Nerolac Ltd. has found
some innovative technologies like Low Voc coating, Direct to Metal Coating, Water Borne
Coating, High Solid Coating these technologies will give comparative advantage to the
company over its competitors. AQUEOUS COATING COMPOSITON, WATER-BASED
COATING COMPOSITION, AQUEOUS COATING COMPOSITION METHOD and
various other chemicals used in paints have got patent. Thus it can only be used by the
company so it is another advantage to the company. And lastly to fulfil all these tasks Human
Resource is the key factor. And all the activities are done with the help of employees.

FORMAT: 27
Do the resources of the competitor form capabilities
The competitor i.e. Asian paint’s main resources of Asian paints are Home and office
products, Chemicals, HR, Technology, R&D all these resources play crucial role in the
company. Asian Paints offers wide range of home and office products they have Interior
painting, Exterior paintings, Wood finishes and Water proofing paintings. From their quality
home and office products they’re at the top paint company in India. Royale aspire, Royale
atmose, Royale luxury emulsion are their main luxury product. Asian Paints R&D consists of
more than 200experts who are bringing in new technology very often. They have brought few
energy saving processes such as Cycle time reduction, Reusing water waste, Creation of
energy saving, Heat-management technology. These are helpful in reducing the cost as well
saving energy. Teflon technology used by the Asian paints in their new Royale products
helps to protect the walls from getting many stains and scratches. They have used many
technologies like automated storage and retrieval systems, S/4HANA, 3-D visualization
technology and many others. Asian paints have 6067 employees who are essential to their
smooth functioning

FORMAT: 28
What rivalry can you anticipate between your company and the competitors to preserve
their respective resources?

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  They can turn the potential customers into actual customers and also capture the
rivals’ customers, and competing for sales to shared customers.
 The suppliers of the company can get the better offers from the other company. By
this they would try to decrease the competition.

FORMAT: 29

Do SWOT Analysis for the business

Strengths
 One of the largest coating companies in India and market leader in automotive and
powder coating.
 Being market leaders in automotive category they have most coveted customers like
Maruti Suzuki, Toyota, Kirloskar, Tata Motors, Yamaha, Honda, Volvo India, Ashok
Leyland etc.
 Being a subsidiary of Kansai Paint Company Limited, the technological edge of
Kansai has helped company innovate to satisfy consumer’s needs in a better way.
 Key factors to their success are: R&D, Innovation, Quality and Aggressive Branding
and Marketing strategies.
 It has robust supply chain network.

Opportunities
 Economic Policies Reduction in GST rates for paints is a step in the right direction
for the industry as a whole. In addition a thrust on infrastructure and housing is
beneficial for the industry.
 Rural Thrust The interim budget for 2019-20 has focused on increased spending
towards agriculture and farmer welfare by 20%. This will increase income in the
hands of the rural consumer and hence be an opportunity for growth.
 Environment consciousness the growing consciousness on environment is an
opportunity. The Company has Healthy Home Paints as a central theme. Product and
process innovations introduced have helped to curtail energy consumption on
customer production lines. Super durable coating solutions have been helping its
customers to enhance life of their products. In its operations, the Company is taking
advantage of renewable energy.
 Niche Markets Niche markets represent an opportunity for the Company to leverage
its technical and distribution strengths. The Company has forayed into the market of
niche products – unrepresented and paint-related segments.
Weaknesses
In decorative paints Industry Customer tastes and perceptions change very fast and products
may become obsolete with change in trends, hence production planning and inventory
problem.

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Threats
 Geopolitical situation Trade frictions are beginning to materialize, with the USA
and China locked in a retaliatory trade war. In addition, there is the threat of sanctions
which has an impact on crude. India, being an integral part of the global trade
network, will have to remain wary.
 New Competitors New Competitors are entering the Indian Paint Market. KNPL
endeavours to be proactive in countering any challenges that may arise due to
increased competition in the market.
 Climate change Indications of a late monsoon, on the lines of the previous
year, point towards a slower than normal rural economic growth. A normal monsoon
can aid not only the agricultural sector but the rural economy.

FORMAT: 30
Develop two or three scenarios that may happen in the next 5-7 years. Describe the
scenarios…
Coming Up with New Projects
 They informed that Company has made progress regarding setting up of paint
manufacturing units at Sayakha Industrial Estate in Gujarat, Goindwal Sahib
near Amritsar in Punjab and a R&D Centre at Vashi, Navi Mumbai, Company at
Achutapuram, Vishakhapatnam district in Andhra Pradesh to set up a paint
manufacturing unit. The Company’s paint manufacturing unit at Sayakha Industrial
Estate in Gujarat became operational during this financial year. Also, the R&D Centre
at Vashi, Navi Mumbai has commenced its operations during the year under review.
At Goindwal Sahib near Amritsar in Punjab, all construction activities of the unit have
been completed and are likely to commence operations during the current financial
year. At Achutapuram, Visakhapatnam district in Andhra Pradesh, the project is in the
planning stage. In further years their company progress can be seen at a peak.
 Where Nerolac Kansai paints is also included in Indian paint industry outlook 2022.
Where it says the company CAGR will grow by 12% by 2021-22 in value terms.
Research mainly focused on decorative and industrial paint segment.

FORMAT: 31
What according to you is the Generic Strategy adopted by the firm
Broad Differentiation strategy-
To differentiate the company’s product from rivals, the company adopts the latest technology
and is successful. KNPL has worked on removing hazardous heavy metals from their paints-
among this lead being most prominent metal. It has removed Nerolac from the passenger cars
products long ago. This was also applied in decorative products. At present the entire
Decorative range of products which are used in households has become lead free by design.
This also considered has safe from health norms

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FORMAT: 32
Map the business on the Strategy Clock

Kansai Nerolac Paints Limited

 Kansai had launched products such as lead free paint. It is now in the process of
rolling a low or VOC paints they are designed to perform like conventional paints
without the harmful ingredient.

FORMAT: 33
What are the issues that the company is facing that needs to be attended to?
Around one-third of Kansai Nerolac Paints’ business comes from automobile sector and its
around 60% market share which forms 45% of its revenue in this segment. There is news that
the domestic auto market is forcing automakers to cut production due to decline in demand.
Maruti Suzuki India Ltd is company’s biggest client is cutting production in March 2019
which affected the Kansai Nerolac paints.
KNPL volumes grew in the high double digits. The growth was largely by decorative paint.
The industrial segment including automotive is weak making it difficult to take price hikes.
The impact on revenue growth can be offset to some extent if the decorative paint business
maintains its profit.

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FORMAT: 34
What is the Generic Strategy/ strategy clock position the business should strive to
achieve in the future?
Low market share:
At present the company is facing poor demand in automotive sector due to the decrease in the
cost of production of Maruti (investor of Nerolac). The company earns more than 40 per cent
revenue from industrial sector due to this problem, it faced 5 per cent decline in volumes so
the company has to focus on this segment so that they can increase the market share in
future

FORMAT: 35
What functional strategies should the firm adopt to match the generic strategy
proposed?
Marketing strategy:
Kansai Nerolac should concentrate on marketing strategy, since it focusing on also coating
technical services and health and safety services for industries. Another line of product
offering in online category is Paint calculator which helps users to estimate the price
depending on their customized requirement of the project. Paint your home app, colour picker
app and the online colour palettes are also offered. They have to concentrate more on the
marketing campaign as they are trying to recycle the paints where the people were urged to
donate leftover paints and used them to paint structures which were in need of renovation.

FORMAT: 36
Map M&As/ joint ventures/ collaborative/ partnerships/ outsourcing that the firm has
undertaken to strengthen the competitive position in the past
 In April 2018, our KNPL acquired 100% equity shareholding in Marpol Private
Limited, Goa (“Marpol”), one of the leading companies in powder coating business,
for an aggregate consideration of Rs.34.12 Crores.
 In the month of April 2019, the Company acquired 100% equity shareholding in
Perma Construction Aids Private Limited (“Perma”), which manufactures and sells
construction chemicals, for an aggregate consideration of Rs.29.10 Crores.

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FORMAT: 37
Suggest what to do using Ansoff’s Matrix for future direction
Existing New

Market Penetration Product Development

Existing
M
A
R
K
E
T
Market Development Diversification
New

PRODUCTS

Kansai Nerolac Paint’s value for the customers was built through innovative package (size),
distribution, and communication. There is a heightened need to ensure that organization has the
right mix of products, operations, technologies and services to balance risk and capitalize on
growth opportunities. Digitalization has strongly emerged as a tool to achieve desired business
results with the ability to drive organization wide process optimization and change.
With increasing volume in chosen segments KNPL has maintained its leading position in the
OEM business catering to segments like fans, drums and barrels. With their dominant position
they diversified in product range as also market and geographic segment.

1. They diversified into manufacturing raw materials for paints. KNPL uses raw materials
which are heavy metal free in over 90% of its production.
2. Product diversification also included industrial paints. Now with a large market share,
they have strong distribution network.
Embracing the need to make the growth momentum sustainable, KNPL has invested in setting up 3
green field state of the art plants. And the technology as a key driving force for innovation in
businesses. The paint industry is in growth stage in India as construction activity has a high
priority. KNPL has been able to not just maintain its leadership but has also seen an increase in its
market share.

FORMAT: 38
What M&As, collaborative tie-ups do you propose for the future to consolidate the
generic strategy/ new position on the strategy clock you are proposing
There is a lot of competition in the market and to overcome it and also have a competitive
advantage we suggest Kansai Nerolac to tie up with Berger Paints. By this they can

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increase the market share and brand image. Also there will be effective utilization of cash and
technology from Nerolac. They can increase their supply chain and avoid the competition
from the other company.

FORMAT: 39
Undertake a forced field analysis for option you are proposing
Forces for change Forces against change

-Impact on demand -Change due to decrease in production of

there is a upward revision in prices during Client Company
festival seasons and on rainy seasons no Maruti Suzuki India Ltd is company’s
demand so, demand is likely to hit biggest client is cutting production in March
2019 which affected the Kansai Nerolac
-Technological change paints. So there is a decrease in sale of
KNPL offers differentiated products with a automotive paints
focus on being eco-friendly and healthy. It
comes up with newer technology every year - Change due to change in price of crude oil
l For the paint company, costs have been rising
massively over last month due to increase in
crude oil because of water scarcity, this leads
to change in raw material price. Commodity
price increases leads to increase in final price
of product

FORMAT: 40
How can forces against the business be reduced/ neutralized
As Kansai Nerolac ltd. has the highest revenue from industrial paints segment and Maruti
Suzuki is their main client now Maruti Suzuki is cutting down its production it has led to 5%
decrease in Kansai Nerolac,s market share. The company should give more emphasis on its
interior painting, Home and office product sector. As industrial paintings sector is not
performing up to the mark. Also the new acquisitions might help the company to get
company a little chance to comeback. But the company must wait for some times as Maruti
Suzuki has announced it will stop manufacturing diesel vehicles but they would look to give
more emphasis on CNG vehicles in future and if Knasai Nerolac remains as their client they
could gain advantage in coming years.
As far as scarcity of water and increased prices in crude oil is concerned R&D should come
up with new technology in order to reduce the cost of production. They should use water and
oil in efficient way in order to reduce wastage. As in the coming days there is chance for
decrease in the prices of crude oil company’s R&D should come up with temporary solution
to this problem

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FORMAT: 41
Do a “Suitability, Acceptability, Feasibility” analysis for the option you have chosen

Suitability: Kansai Paints Limited has always been the vanguard of positive change on a
global scale. They are the champions of innovation, creativity and adaptability.

Acceptability: The products of Kansai Nerolac ltd are accepted by many of the peoples of
India. KNPL has continued its legacy of providing high quality, cost effective, and
sustainable solutions to its automotive customers so they have been awarded as “Best
Supplier” by Honda Motorcycle & Scooters India.

Feasibility: Kansai Nerolac has very good market flexibility which introduces around 5-6
variety of paint to market in a year in this year they introduced (New Products – Wonder
wood Gloria, Impressions Ultra HD, Nero fix Adhesive). It also has very well research and
development team.
Kansai Nerolac is also in export business. It exports its product to Nepal and also other Asian
Continent. It has potential in foreign markets. So, Nerolac is considered to be a feasible
business.

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