Case Study -
Asian Paints
Story
Asian Paints International - Set up in
1999.
Examining Internal Business Division
Fast growth - 23 countries.
Profitable since 2004 but individual
markets in the red.
IB ROCE <10% (25% DOMESTIC)
IB will not receive financial subsidies
from parent company.
Asian Paints History
1942 - Mumbai
Market leader since 1967.
1998 Aim - Top 5 in the world.
Expansion to Sri Lanka, JVs, Berger
JV,
Globalization
Acquisition of Berger International in
2002.
21 subsidaries in 2005.
Derisking approach to globalization
Questions
1) How would IB contribute
to APL's vision over next 3
years?
2) Which products,
categories and markets to
grow?
3) How to balance today's
performance with
tomorrows potential and
vice versa?
4) How to leverage APLs
history?
Key
Players
Jalaj Dani - President
International (Asian Plants
Limited)
DATA
ROCE - Return on Capital Employed.
Global Paints ROCE - 10 to 20%
Paint Industry :
1500 manufactures.
Decorative and Industrial paints.
83 Billion in 2007 - Growth rate of 5%.
Rapid gains in emerging markets.
Top 10 players - 51% in 2004.
Private Labling a new phenomenon.
Major paint manufactures focused on core
segements - Cost advantage to be major
player.
Room for smaller players in niche market -
product differentiation to be market leader.
Price based
important.
competition/Brand Equity
New trends for consumers.
Not capital intensive but working capital
intensive (50% of sales - cost of raw
materials_

Strategy
Matrix - Size of economy, Size of Paint
Market, Nature of Competition and
Investment Potential.
GDP Growth potential of 6%+, limited
competition and market that could
provide the opportunity for APL to be top
3 in five years.
Emerging markets - similar to India, less
expensive to buy leading player and no
single MNC across all emerging markets.
Localized manufacturing.
Growth through JVs.
Market segementation - leadership
markets, growth markets and turnaround
markets.
India
9% growth last decade. 13 to 15% next
decade.
IB Structure - Global, Regional and Local.
Leverage expertise at global level,
syngerize operations at regional level and
empower decisions at local level.
5) All India Distribution network -
Competitive Advantage strong relationships, exclusivity
(important in the space)
1) Customer needs identification.
Identify gaps. Grow in segments. All
6) Best talent hired.
price points covered. Higher quality
paints. Innovations such as Colour
7) Strong brand equity.
World tinting system, Helplines,
Home solutions and Kids World.
2) Mainframe computer + satellite.
IT for demand forecasting, inventory
management and lower working
capital costs.
3) Larger scale - distribution,
marketing, manufacturing and
sourcing advantages.
4) R&D investments.
Danis Action Plan
Consolidation plan for IB.
Issues of Micro management.
Global branding.
Management of indivduals - Future
Leaders