asian-paints-1221382558044949-9

A PROJECT REPORT ONASIAN PAINTS LIMITED

SUBMITTED TO PROF.N.RAJKUMARDEAN, IBAT SCHOOL OF MANAGEMENT

BHUBANESWAR

SUBMITTED BY—

1. DIANA SAHU (71)2. PUSPANJALI KAR (90)

3. SASWATO BHATTACHARJEE (98)4. SIBASIS MOHANTY (107)

MBA-ISECTION B, GROUP NO-3

1

ACKNOWLEDGEMENT:

A successful project can never be prepared by the singular efforts but I also

demands the help and guardianship of some conversant person who under pin

actively or passively in the completion of a successful project.

Our project on “ASIAN PAINTS LTD” would not have taken the

present form in the absence of the invaluable guidance, inspiration and cooperation

from many people.

We take this opportunity to express our deep gratitude to Prof.

N. Rajkumar, Dean, IBAT school of management, Bhubaneswar who have given

us the opportunity to present this project and continuously monitored us to perform

well.

In this context we would like to express our gratitude and

thankfulness to Prof. G.K.Murty for providing us with his advise and support

through our project session.

We also express our thanks to Sakti Hardware, Damana,

Chandrasekharpur, Bhubaneswar for providing us with valuable data.

We are deeply indebted to the Director ,faculty members of our

institute, IBAT school of management, Bhubaneswar for helping us with their

support and guidance that help a lot in successfully completing this project.

Finally we express our cordial thanks to our parents, friends for their

unmatched support , guidance and love throughout the project preparation.

1.Daina Sahu (71)

2.Puspanjali Kar (90)

3. Saswato Bhattacharjee (98)

4. Sibasis Mohanty (107)

Section B,Group No-3

2

CONTENTS

SLNO

1

COMPONENTS

Executive Summary

ITEMS COVERED PAGE NO

2 Introduction 13

Situation analysis-ICategory analysis

Sales analysisShare Price analysis

124

4Situation analysis-II

Competitor analysisCustomer analysis

Assumptions of planning

579

5

Marketing objectives

Corporate objectiveDivisional objectiveMarketing objectivesProgramme objectives

11121314

6Marketing strategy-I

Strategy alternativesCompetitor strategy

1617

7

Marketing strategy-II

Positioning strategyCustomer segmentation

and TargetingCore strategy

20

2225

8Financial Documents

Control Strategy

Sales forecasts budgetsProfitability forecast

budgets

40

44

46

3

9

Marketing Programme

PricingProductBrand

PromotionDistribution

ServiceResearch

27 29 32 33 36 37 38

10

9 46

EXECUTIVE SUMMARY

Asian Paints is India's largest paint company and the third largest paint company in Asia

today, with a turnover of Rs 30.2 billion (around USD 680 million). The company has an

enviable reputation in the corporate world for professionalism, fast track growth, and

building shareholder equity. Asian Paints operates in 22 countries and has 30 paint

manufacturing facilities in the world servicing consumers in over 65 countries. Besides

Asian Paints, the group operates around the world through its subsidiaries Berger

International Limited, Apco Coatings, SCIB Paints.

The Company's paint business in India consists of Decorative, Industrial &

Automotive coatings. During the fiscal year ended March 31, 2006, paints accounted for

79.1% of the Company's sales. Decorative paints include wall finishes for interior and

exterior use, enamels, wood finishes and ancillary products, such as primers and putties.

Industrial Coatings comprise high performance coatings, powder coatings and auto

refinish coatings. The automotive coating segments are catered to by the joint venture

Asian PPG Industries Ltd. The Company also has chemicals businesses consisting of

phthalic anhydride and pentaerythritol manufactured at Ankleshwar, Gujarat and

Cuddalore, Tamil Nadu, respectively.

The Indian paint market is highly saturated with many paint companies with

varieties of product. Kansai Nerolac paints Ltd. Berger paints India Ltd. ICI India Ltd.

Shalimar Paint Ltd, Snowcem India Ltd are the main competitors of Asian Paints. Among

them Nerolac Paints have a very good market share in the Industrial Paint segment.

Asian Paints adopted some marketing objectives & strategies. Asian paint is

ready to achieve its corporate objective by taking care of the Customers, Employees,

Brand image, Dealer Vendor relationship & technology.Company’s three divisions are

not equally performing well.So it has different objective & planning to gain the top most

position in the Indian paint market. Asian Paints has different marketing strategy for the

urban as well as the rural market in India.

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The company always maintaining some alternate strategy & keeping in track

with the strategy maintaining by its competitor. In decorative sector company is strong

enough, but it need to take care of the Industrial sector so as to increase the overall sales.

Considering the pricing strategy of Asian paints, company has several priced

products. It starts from very low end to the premium level. Asian paints Colour World

concept helped the consumer to choose the colour combination & other appropriates

according to their wish from a very wide range of product. Company’s famous logo

GATTU helped it overcome while entering into the rural market, as visualization has its

own effect. Other than this Asian Paints is using its website as a very good medium to

reach the high/upper middle class consumers. With these tools company is expecting to

generate much more revenue than the earlier years.

Asian paints wonderful promotional strategy helped the company to extend its

business in several other countries with success. A very attractive distribution policies &

proper distribution channel with more than 15000 dealers helped Asian paints to spread

its business in more than 3500 big & small cities in India.

The company used to maintain a very strong market research cell, which helps

them to take care of the consumers need & intensify their R&D accordingly. Asian Paints

approaches the environment issue from the perspective of waste minimization and

conservation of resources. Thus, the continued attempt is to reuse, recycle and eliminate

waste, which results in less and less waste being generated.

Asian Paints, took a huge stride towards promoting the cause of total water

management by giving Mumbai (and neighboring districts like Thane) its first Total

Water Management (TWM) Centre, which is located in the premises of Asian Paints

manufacturing facility at Bhandup.

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INTRODUCTION :

Asian Paints Ltd. has a combined turnover of 630 million US dollars. With its

strong presence in the Indian subcontinent, south East Asia, Far East, South pacific

Caribbean, Africa & Europe. Along with Asian paints the group consists of SCIB

chemicals, Berger International & APCO coatings. Together the group has 30

manufacturing unit globally.

The company was incorporated in the year 1942 in India. Asian paints have

extensively computerized its operations in India using the cutting edge solution provided

by SAP & i2. It helped the company drive benefits of faster market analysis for better

decision making.

The product portfolio of the Asian Paints group covers a large spectrum of finish

coasts & ancillary products in decorative paints, wood finishes, automobile OEMs &

refinishes, marine & Industrial coatings.

SITUATION ANALYSIS-1

CATEGORY ANALYSIS

The different categories of Asian paints Ltd. are –

PAINT :

Company’s paint business in India consists of decorative, Industrial &

Automotive coating. In 2005-06, these accounted for 79.1% of the group sales. It is

estimated that the local market for all paints including cement paints & other powder

products manufactured by all companies big & small would have been around Rs.95

billion in 2005-06.

1) DECORATIVE PAINTS:

Decorative paints account covers almost 75% of the overall paint market in India.

In this segment Asian paint has been a leader for almost four decades. Decorative paints

include wall finishes, for interior & exterior uses, examples, wood finishes & ancillary

products such as primers, putties, etc.

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2) INDUSTRIAL COATINGS :

Industrial coatings have a moderate growth rate than decorative coating, led by

the growth in automotive original equipment sector, powder coatings & protective

coatings. Industrial coatings are classified into automotive & non-automotive coatings are

classified into automotive & non-automotive coatings. While Asian paints Industrial

coating Ltd. (APICL) services the powder coating segment, Asian paints Ltd. caters to be

remaining non-auto industrial coatings segments.

3) AUTOMOTIVE COATING:

The actual look and feel of a vehicle undergoes a sea of change over time. The paint on a

vehicle loses gloss, is subjected to a lot of wear and tear and hence starts deteriorating.

Asian Paints is not having a very good market share in this segment.

CHEMICALS :

Asian paints have chemical business consisting of Pthalic Axhydride & pentaerythritol

manufactured at Ankleswar, Gujrat & Cuddalore, Tamilnadu. During 2005-06

approximately 42% of company’s chemical was sold in-house & rest at open market.

SALES ANALYSIS :

Sales over the last 6 years (in Rs. crores)

Year 12

months

March

2001

March

2002

March

2003

March

2004

March

2005

March

2006

Gross

sales

1526.01 1662.33 1887.7 2111.08 2366.16 2807.05

Percentage

increasing

- 8.93 13.55 11.83 12.08 18.63

Net sales 1322.38 1450.71 1641.27 1841.92 2037.55 2433.37

Parentage

increase

- 9.7 13.13 12.22 10.62 19.42

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Graphical representation of net sales over the period – 2001-2006.

Results of operation :

Net sales & operating income of stand alone entity increased to Rs.24333.7

million from 20375 million showing a growth of 19.42% in the year 2005-2006 (March).

This is driven mainly on account of good paint volume sales growth of 13.8% &

price revisions effected during the year. For the group, net sales & operating income

shows an income shows an increase of 17.4% to Rs.30210 million.

Asian Paints has a steady growth over the last 6 years, so the financial condition is

very much stable & it is expected to reach at the top position in the Indian paint market.

SHARE PRICE ANALYSIS:

8

In the following share price analysis of Asian paints we have considered the

closing price of share of Friday’s for the month of May, June, July 2006.

Table showing the share price (on Fridays of May, June, July 2006)

Date 5 May 12

May

19

May

26

may

2

June

9

June

16

Jun

23

Jun

30

Jun

7

July

14

July

21

July

28

July

Closing share price (in Rs)

6487.7 637.5

5

577.2

5

553.3

0

582.

70

550.

75

566.

65

573 597.

05

581.

65

571.

85

581.

25

585.4

5

Graphical representation of share price

Discussion :

Though there is a downfall in the share price of Asian paints but it is among the

most actively traded stocks in India market. In terms of absolute daily returns the best

performer in the paint market is godless Nerolac, Where Asian paints comes at 4 th place

with a return of 17%. The least risky stock among the paint market was Asian paints with

daily volatility of returns of around 1.43%.

The investment on the stocks of Asian Paints could be a good investment option

from a medium there prospective. It is the largest player in the industry with a vital

strangle hold over the decorative segment.

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With its high level of efficiency & developed marketing infrastructure Asian

Paints is well placed in the market & have a very high growth prospect.

SITUATION ANALYSIS-2

Asian paints limited with its three business units decorative, Industrial &

International business is one of the largest paint company in India. It had a sell over 300

million litres of paint in 2005-06. Significantly the group has crossed the Rs.3000 crore

turnover mark-a preset mile stone for the company.

Here we will be analyzing three situations of the company –

(i) Competitor analysis

(ii) Customer Analysis

(iii) Assumption on planning

1) COMPETITOR ANALYSIS :

The Indian paint market is highly saturated with many paint companies with

varieties of product. Asian paints ltd, Kansai Nerolac paints Ltd. Berger paints India Ltd.

ICI India Ltd. Shalimar Paint Ltd, Snowcem India Ltd are the market leaders.

Here we are only considering the nearby competitors of Asian Paints which are

Nerolac paints Ltd, Berger paints Ltd & Indian chemical Imperial (ICI) Ltd.

SALES OF DIFFERENT COMPANIES IN THE FINANCIAL YEAR 2005-

2006

Name of the

company

Asian paints ltd Nerolac paints

ltd.

Berger paints ICI India ltd.

Net sales (in

Rs. Crore)

2433.37 1064.22 948.54 971.19

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SWOT analysis of Asian paints & its competitors :

COMPANY Asian Paints Nerolac paints Berger paints ICI paints

Strengths 1. Market leader

in overall paint

market & in

decorative paint

market in India

share 40%

2. Available in

urban & rural

area

3. High Quality

MR & MIS

4. Pricing

policy oriented

to all kinds of

customer

1. Well ahead

leader in

Industrial paint

market

2. Tie-up with

kansai paints

provides foreign

technology.

3. Main supplier

in the Indian

Industrial &

automobile

market main

client maruty

udyog

1. In the IInd

position in the

industrial paint

sector.

2. Tie up with

Herbert-

Germany

valspar of US

& Teodor NV

of Holland

1. In the

refinishing

business it has

one of the best

quality refinish

paint for cars.

2. In decorative

paints it

performance is

good

3. recently

purchased 49%

share of Quest

Int. India

limited.

Weakness 1. Industrial

paint sector

only 15% share

2. No tie up

with foreign

manufactures.

Through it has

units in several

countries.

3.Innovation in

developing new

1. Market share in

decorative paint

market is very

low.

2. Market in rural

area is poor.

3. Considering

overall paint

market Asian

paint is well

ahead of Nerolac.

1. Overall

market position

is not very

impressive.

2. Asian paints

& Nerolac

paints capturing

the market

buyer for

behind

1. Industrial

paint market

existence

almost 2-3%

2. Overall

market conduct

poor.

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product.

Opportunities

1. Acquiring/

Increasing

market share in

Industrial paint

sector.

2. Developing

market in

automobile

industry, which

accounts for

50% of

Industrial paint

market.

1. Improve its

position in

decorative paint

segment.

2. Capturing

whole industrial

paint market

1. come up

with new

innovations to

challenge Asian

paints & Berger

paints

1. Merger with

Quest will

provide to have

an experience

in foreign

market,

particularly in

UK.

Threats

1. Domination

of few foreign

countries

2. Nerolac is

advancing

rapidly in

Industrial

market

1. Asian paints is

coming up rapidly

into the industrial

paint market with

its new plants &

products

1. Asian Paints

& Nerolac

paints are well

ahead & ICI

paint is

competing

nearly

1. Berger paint

& there are few

new entrants in

the market.

2) CUSTOMER ANALYSIS :

Asian paint with its natural competitive advantage of size (Number 1 in India),

Strong brand equity & largest distribution Network has acquired the number one position

in Decorative segment in India.

There are few reasons due two which the customers in the decorative segment has

been choosing Asian Paint as their brand –

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1. As we know brand name has its own value & Asian paint is the number one in

decorative segment, so a purchaser automatically leans in purchasing it.

For example, we have two different types of paints, namely Apolite glass

Aenamel & Apolite care Emulsion, which are from Asian Paints, Nerolac paints,

Berger paints & ICI paints. Again due to the competitive market the price is very

closed for all the companies. But due to the Branch awareness of common people

they mostly tend to purchase the products from Asian paints.

2. Company have provided with different varieties of product for different income

groups. For e.g. “UTSAV” which is a low value paint, is growing at a faster rates

& penetrating with high speed at the lower income group. This policy is helping

the company to move from metros to small towns for branded products.

3. In India frequency of painting has still not increased, which is once is 5 years

only. So consumers are normally changing over to the better quantity & branded

paints.

4. In 2001, Asian Paint launched a new product “Tractor Emulson”, which pulled

the customer who used distemper to move to emulation paints.

Accessibility of Asian paints to the customers :

Asian paints have started a 24 hours customer help centre at Hyderabad. It is information

to consumers to answer their needs for any query related, to their products. Through this

company is also getting a lot of data related to the customers need & appreciations of the

products.

In order to provide better consumer service, company has connected all colour

world installations with Asian Paint’s main system through software & providing

computes to dealers. This is speeding up order execution, electronic banking will speed

up recovery & money transfer.

Market Share Analysis :

The market share clearly shows that Asian paint is the leader in Indian paint industry.

The nearest competitors of Asian paints are Nerolac & Barger paints. Asian paints has the

largest sells in Decorative paints.

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Nerolac paints being widely used in Industry it has a greater share price value.

Industries like Bajaj auto limited, Maruti Udyog & many other car manufacturing

companies use Nerolac paints.

The Industrial paint are priced with premium in comparison to the decorative

paint which is mainly used in house hold decoration.

Berger paints & ICI paints are also providing a shift competition to Asian Paints

in decorative paint, but still there is no sign of threat from them.

Again in the Industrial sector Nerolac paint far ahead of all its competitor. Asian

paint presently building up a new manufacturing unit solely to produce Industrial paint.

Asian paints annually spends on an average Rs325 Cr on its selling & marketing

expenses. It givers us an idea about the effort the company put on expanding its market in

all segments.

When customers buy the products of Asian paints – As the customers normally

uses the products of Asian paints on certain occasions like. Marriage ceremony, Dewali

or any other special occasions, other than normal paint in houses, customers are very

choosy & brand specific. This appreciation by the customers helped Asian paints to

become the number one paint company in India.

3. ASSUMPTIONS OF PLANNING :

i. Though Asian paints is the largest paint company in India but in industrial

sector its performance is not satisfactory. A totally new manufacturing unit is

coming up & will start production by 2007. This will definitely through new

challenges to Nerolac paints, which is the present leader in Industrial coating

market. But before that, a proper introduction of positing very important to

sustain in market.

ii. With the advancement of technology the demand & choice of people changes

rapidly. So intensive R & d will need to be continued to continuously enhance

the quality of the product.

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iii. Internet purchasing is new becoming one of popular way to purchase. So

adequate measure will be taken to satisfy customers regarding designing of

website & providing a brief demonstration.

iv. In International market also Asian Paints has become a top paint company.

But its strategy regarding the international market must be reviewed at a

certain internal so as to maximize value.

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MARKETING OBJECTIVES

Four Marketing Objectives of Asian Paints are discussed bellow-

(i) Corporate objective

(ii) Divisional objective

(iii) Marketing Objective

(iv) Programme Objective

Corporative objective : The corporate objective of Asian Paint is as follows -“Asian

Paint has become one of the top decorative company world wide by leveraging its

expertise in the higher growth emerging market. Simultaneously, the company intends to

build long term value in the Industrial coating business through alliance with established

global partner.”

With Economic performance as objective the organization now has to develop

short-term goals to reach the overall objective. These Goals are usually functional target

such as production, Sales, new market develop, new product development and technology

up gradation, once the goal are determined the strategies can be evolved to meet the

goals. The organization is now on the way to achieve the overall objective of Economic

performance.

Steps followed by Asian paints for achieving its objective :

Asian paint is following certain steps for achieving its corporate objective. They

are as follows :

(i) Customer Asset : The settings up Asian paints colour world, a chain of state art paint

shop, is a major step towards building customer asset. At the same time company is

focusing more in rural areas than urban area and continuing to provide good and quality

service to the customer.

(ii) Technology asset : Asian paint is one of first Indian company to go hi-tech. Asian

paint has always kept its competitor at bay by constantly re-innovating its business

process and system.

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(iii) Employee Asset : Asian paint always praise its employee for its success in the

market. Company always considers employee as a biggest factor of its success.

(iv) Dealer vendor relationship : Asian paint always maintain a close relationship with its

dealers because company think that they play a major role in Asian paint recent success.

(v) Brand Asset : Although it is operating in the commodity market but still Asian paint is

investing heavily in branding. Gattu- Asian paint official mascot is very popular in India.

Divisional objective : Asian paint has following division that are as follows :

(i) Decorative segment

(ii) Industrial segment

(iii) Automotive segment

Decorative segment : Asian paint is the leader in this segment. It is ahead that its

competitor Nerolac and Berger in Decorative segment company still have certain

objective for this sector that to increase it sales and to acquire maximum position in the

market share in Indian paint market.

Objective for decorative segment :

To expanding its range in the economy segment.

To strengthen its position in the emulsion segment in both exterior and

interior emulsion.

To continue its strategy of pricing aggression and increase it sales and

to gain the market share along with a good operating margin.

To focus on the rural market as company believes as it as been its

objective since the beginning.

To focus more on adcampaign for enhancement of their sales in urban

as well as rural market.

Industrial segment : Asian paint second line of production deals with the industrial

coating. The constraint in these segment is that it is not as successful as the decorative

17

segment. In these sector it has to face a stiff competition from its nearest competitor

Nerolac and Berger Paints.

Objective for Industrial segment :

To build new infrastructure in the country for Industrial coating to increase the

production capacity.

To develop the quality of the product with a higher technological up gradation.

To increase the sales of the Industrial coating with the help of proper Ad.

campaign programme.

Automotive segment : Automotive is the third segment of the Asian paint. It is a product

which company target for the automobile market in India as well as abroad.

Objective of automotive segment :

To put emphasis on continuous improvement in quality and productivity.

To put emphasis on detect prevention

To reduce variation and wastage in the supply chain.

Marketing Objective : Asian paints the leader in Indian paint Industry has a very

strong marketing division. With more than 35% market share Asian paint is still growing

in leaps and bounce to achieve higher targets. It is changing fundamentally with two

objective in mind a huge ramp in the market share and better growth over the next three

years. Previously company used to function as undifferentiated organization. But now

they have divided it into three section each. And each section has its own independent

support system, targets and performance parameter.

Company marketing objective : As follows

Company is using PC, V-sats based line and internal mesh to become

most networked corporation in India.

Company is trying to cutdown the inventory and improve the working

capital cycle for a continuous production.

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Asian paint is highly accepted in the urban sector and now the

company is trying to access the rural market with low price product like Utsav

targeting every customer of all income level.

To enhance their marketing in rural sector a huge amount investment

is made in adcampaign and demonstration cum sales technique is going on.

To increase its sales in the urban sector Asian paints today have 30

colour world located in different cities of India where any body can have the

real taste of the colour.

Online marketing has become an integrated part of the company and

company is trying install a strong integrated for online marketing.

Asian paints international unit, which have a dedicated marketing team

is also targeting for a rapid growth in overseal market.

Asian paint is concentrating on the development of technological in

their industrial coating so that to make the product more stronger positon in

the market. And do it they are following the product with huge ad compaign.

Asian paint is now targeting to provide paint solution with insurance.

Asian paint is following unlque strategy of marketing in the rural

areas by using their official mascot. According to the company it feels that

picture are more dominant than name.

Asian paint website Asian paints com provides several information

regarding the product and various other information that is being required by

customer and dealer.

Programme Objective : Programme objective is one of the main objective of the

company. Here the company frames the strategy about the products related issue and

various other thing relating to the business. Most of the company follows the 4’P’s policy

namely price, product peace and promotion.

Product : Asian paint details with product that is (i) Decorative (ii) Industrial (iii)

Automative. In decorative segment company has a wide range of product from low price

to high price low price product like utsav which is basically targeted to the rural customer

19

and high price product Apex cefirma for exterior and interior emulsion. Asian paint

investing a huge amount of fun in R & D sector for Quality and the technological

development of product so that it compets globally.

Price : the price range of Asian paint varies according to the product. Asian paint had

always a stragegy in domination in the rural sector. The product that is supplied to the

rural area have low price range. Where as in the urban sector some of the high price

product circulates.

Place : Asian paint is available to all types of customer and the main advantage of the

Asian paint is that it is easily accessible to its customer. At present there are 20,000

dealer and a large no. of retailer. Asian paints distribution channel extends to the thirty

state of India. Asian paints is also exporting to contrites like Caribbean, Africa, Middle

east Asia and south pacific.

Promotion : Asian paint follow good promotional strategy regarding their sales of the

product. Their promotional strategy are made looking at the different category of the

product and price associated with it. In urban areas Asian paint established colour world

where the customer can enjoy the taste real colour while in rural sector it follow sales

demonstration programme along with van displaying the product of Asian paint in the

rural market. It also invest a huge amount of funds in the advertising sector for the

promotion of this product.

MARKETING STRATEGY 1

20

STRATEGY ALTERNATIVES :

The prospect of a paint company has many dependence like weather, occasions

like puja, id etc. when we consider the decorative segments. So there is always a

possibility of ups & downs in the business. Besides this there is another very important

factor i.e. the position of the competitor. Through Asian paints is the largest paint

company still under circumstances it will have to go for some strategy alternatives.

Alternatives available :

1. As Asian paints market is mainly the decorative segment so a downfall in that

market will lead the company in trouble them it immediate focus will turn to the

Industrial segment.

2. Importance on water based paints may recover a poor situation created due to

sustain poor weather condition in some region.

3. As there is every possibility that conventional coatings are likely to lose some

share – ecofriendly coasting is going to be very good alternatives.

4. With all countries in southeast Asia beginning to adhere to the ASEAN free trade

Area (AFTA) that will reduce trade barriers for paints & coatings. A reduce in

domestic market share of Asian paints then will not be a constant for growth,

became export of paints to the foreign countries will contribute a lot.

5. Increasing the product package & application oriented service will make company

different from others.

6. A strong post sales service division will be an important factor in building

customer loyalty.

7. Tie up with automobile sector with strong appearance will be effective.

8. Lastly but not the least price of oil is increasing day by day, which results to

increase the price of paints. If this can be controlled by stocking oil or directly

linking up with foreign cheap refineries so as get oil at least available price.

COMPETITOR STRATEGY :

21

In the Indian paint industry Asian paints is the leader keeping the other

competitors far behind. In terms of gross sales we can rank the competitors of

Asian paints as :

i) Nerolac paints (ii) Berger Paints (iii) ICI Paints.

In industry they are recognized as trailing firms. But with their high growth

in the industry the competitors can touch or even overtake Asian paitns, for that

the three main competitors have different strategies. Initially one common strategy

must be their mind – is to increase the market share.

Now we are considering individual strategies of the three companies.

Nerolac Paints :

Nerolac, despite a strong brand name has grossly underutilized its potential

in decorative paints. But in industrial paint sector it is far ahead of other

competitors. So, its two main targets are : -

i) to keep hold of the Industrial paint market

ii) increase the market share in Decorative paint sector.

All their business strategies mainly rounded this two issues. The different

strategies they are dealing with :

(1) They want to see high growths from decorative segments. In

Industrial sector their supply chasing demand strategy accumulated

lot of inefficiencies, so there is a scoe for cost reduction. So they

want to upgrde the equipments to improve efficiency in

manufacturing & secondly they are taking advantage of IT to

improve over all efficiencies.

(2) In decorative segment, they are logging behind the demand. So now

set up is needed as well as they are concentrating on enamels. They

are installing colour dispensing machine across the country.

22

(3) Concentration on emulsions & distempers, other words interior

paints. Distinguishing the high – low end products.

(4) They want to concentrate also on the automobile paint industry.

Here they are already established but Asian paints is also targeting

this sector heavily.

(5) Another important strategy they are considering is to involve the

vendor in their organizational process. For this they want to have

proper vendor management processes.

Berger Paints :

Berger paints is considered as the dark horse of paint industry. While company’s

main strength is in decorative sector, it has been actively pushing its presence in

the industrial paint segment. To improve its business the company have some

strategy :

i) Company is mainly spreaded in Eastern & Southern part of the

company, now it is looking for a rapid expansion at the western region

also.

ii) Recognizing the saturation of the urban market, Berger is targeting the

rural market.

iii) They are looking to export in nearby countries such as Bangladesh,

Bhutan, Nepal to boost its revenue.

iv) Within the paint industry, Industrial paint segment has a higher growth

rate. Keeping this in mind company has targeted a 15% share of

Industrial paints in the company’s product mix.

v) Berger’s performance in Automotive sector over the lst few years has

been fairly. Here also they are targeting to build up some tie-up with

automobile companies.

23

vi) Berger had ticups with Nippon paints of Japan & orica of Australia.

Here they would like to go for the branding of products through proper

advertisement compaign & with their new logo.

vii) An establishment of new plant in Russia was done in 2005, which is

expected to start production by the end of 2006. company is likely to

utilize the Russian plant to cater to the markets of CIS countries in the

future.

ICI Paints :

Within 3 years of launch of colour future from ICI it proved to define the

International interior designing trend. The company has invested a million dollars

in the R&D of the colour futures concept. Which helps to forecast the international

colour trends in paints. Though ICI is considered as the 4 th paint against in India,

but its presence & development can be a threat to the others.

As a part of its strategy ICI is taking the measures : -

(i) It is not looking at the increasing Investments but focusing on

debottenecking the capacity.

(ii) Considering the increment of channel partners.

(iii) Improving technology & offering better quality at a moderate price will

help to capture the rural market easily.

(iv) Improved service & solution to the customers.

The company is slowing penetrating to both of decorative & Industrial paint

segment.

MARKETING STRATEGY 2

POSITIONING STRATEGY OF ASIAN PAINTS LIMITED :

24

Although operating in commodity market. Asian paints have invested heavily in

branding, GATTU, the Asian paints official Mascot is a familiar icon across India. The

company recently augmented their web pressure. Their website, Asian paints.com is an

exhaustive hub of ‘Painting solutions’. The site use Maximum interactivity to enhance

user experience. There are painting lips, online shades cards, cost calculation (based on

floor area and number of rooms0 dealer locator and a short of other innovative services.

From the perceptual map we can understand that Asian paints, have wider range

of products for all type of customers consisting of different income levels. It has a

product range from Royal Emulsion, Priced 250-400 which is targeted for up market

buyers. Hpcolilen is a product which is targeted for high income and upper middle class

people. For lowers income group it has UTSAV, TRACTOR EMLSION which priced

vary from 40-100 Rupees. These products are mainly targeted to Rural customers.

In Industrial segment companies position is relatively weak here Werolac paints

captured more than 50% market share. In this segment Asian paints have products like

Apcomin synthetic enamel which is used for industrial coating, and Apco synthetic

power which is used in automobile sector. In this segment also Asian paints faced stiff

competition from Berger and ICI Paints. Bajaj automobiles in the main customer of Asian

paints in automotive sector.

25

POSITIONING STRATEGY OF ASIAN PAINTS

CUSTOMER SEGMENTATION & TARGETING :

DECORATIVE PAINTS

TRACTOR EMULSION

INDUSTRIAL PAINTS

PREMIUM PRICE

UTSAV

LOWPRICELOW PRICE

ROYALE APCOMINSYNTHETICENAMEL

APCO POWDER

APEX

APCOLITE

26

Customer segmentation is the most important part of the marketing strategy of any

company. Asian paints, the market leader in the Indian paint market segmented their

products mainly in three sectors. (i) Decorative (ii) Industrial (iii) Automotive. Their

customers are all also segmented based on the usage of these products.

CUSTOMER SEGMENTATION :

Base Decorative coating Industrial coating Automotive coat

Premium Medium Popular High

performance

coating

Powder

coating

Quality

coating

Finished

coating

Buyer

ccharacteristic

Up market

buyers

achiever

quality &

fashion

Secker

High

income

group &

Upper

middle

class

Socially

conscious

Middle

class &

rural

market

mostly

low

income

group

Used by

fertilizer

petrochemicals

& atomic

energy

installations

mainly used

where to

reduce

corrosion led

losses

Used by

manufacturer

s of while

goods & other

industrial

products

Large &

small

scale car

industrial

mostly tied

up

companies

Old cars are

mainly

recoloured

Key

p purchasing

factor

Quality

surfaces

influences

Quality

surfaces

shades

Cost Quality &

utilization

power

Quality & cot Quality,

surfaced &

conting

strength

Brightness &

cost

27

Search &

Evaluation

Brand loyal Brand

loyal +

Cost +

variety

seeking

Cost Utility Variety

seeking

Brand

loyal

Cost+

variety

seeking

Purchase

Company’s

Authorised

dealer

paints the

customer

house

through

dealer

paint or

purchasing

paint com

of 1,2, 5,

10, litre

Packet

or paint

can

Company

approaches &

points directly

sold

Other

manufactures

paints can

Tie up with

the anto

company

Old vehicles

send to work

shops or

purchase

Post

P Purchase

A warranty

period for

some

years

Limited or

no

warranty

No

warranty

High scale

service of

warranty

Medium or no

warranty

Service

provided

for limited

years

Service

provided for

0-2 years.

Market

Asian paint is the market paint

leader, with more than 50% market

share. Nerolac, berger, ICI &

Shalimar are there

Nerolac is the market leader.

Asian paint have only 12%

market share. Other players –

ICI

Nerolac market leader,

50% share

Asian paint penetrating

slowly

TARGETING :

Asian paints have an unique customer targeting strategy. They used to follow V tier

customer – Target strategy.

28

Tires

Tires 1

Tire 2 Tire 4 Tire 3

Tire – 1 - In the recipient end there are strategic solution seekers. Company thinks of

cost reductions, performance & productivity improvement for client’s improving

customers & share holder profitability.

Tier –2 – Here the Customers whom can be considered as the value or brand sensitive.

Asian paints target this customers with value added VDS integration customer level

service.

Tier –3 – These part of the consumer are price sensitive. They least bothered about the

service. These are mainly middle or low income group people Asian paints have several

brand like UTSAV – to serve them.

Tier-4 Here the company targets the small manufacturing & local companies, which can

generate revenue, company utilizes its & business & telesales technology to address &

satisfy their needs.

Tier-5 – This tier is composed of specific targeted companies that although small in size,

deserve special attention because they are highly innovative in nature. Asian paints have

a good prospect over here.

CORE STRATEGY OF ASIAN PAINTS LIMITED : -

An origination like Asian paints will always restrict itself for its core strategy on

‘innovation’. For an organization like Asian paints to create a strong future, it has to bred

innovation continuously. This strategy of innovative facts will help any organization to

fulfill their commitment and integrity in dealing, with internal and external customers.

29

For this core strategy of innovation Asian paints encouraged entrepreneurship.

They also give grater autonomy to managers in their reasonability. organiation also

develop high tolerance for failures and encouraged risk taking.

Asian Paints another important core strategy is of managing people and

technology which are also the two important assets.

As it is always a people focused company its employees are the main leaders who

bring a difference to the company.

Asian paints has stressed on employee development and creating leaders of

tomorrow. It always have strong belief in individual ability and creating an environment

in which an entrepreneurial spirit in encouraged. This is why Asian paints have believed

to be a best employees for personal and personal growth.

Along with Mass customization, Asian paints has created a plat form

where Talent is shared across the organization as Manager are given in different areas of

operations. It gives Asian paints on overall good perspectives of business along with

challenges of chandelling new Ares of operations.

The second most important core strategy of Asian paints limited is its technology.

Technology includes both research and development and information technology. Asian

paints has used technology throughout its year to gain a competitive edge in the market

place today, the company has formulated the entire range of decorative coatings though

home grown technology. It has used IT as a tool to bring efficiencies and stress line

operations. This applications will continue in future and Asian paints will not hesitate in

making investment in these areas to gain advantages of the organization.

The Third but important core strategy of Asian paints. In Reconfiguration of value

chain activities :

It is a key task for Asian paints to retain competitiveness and achieve highest

value cost leveraging. Here a Question arises that as per this given requirement who were

the Key initiatives taken by Asian paints during the last 5 years in this regard.

In last 5 year, reconfiguration of value chain activities to increase competitiveness

has been one of the Major core area of Asian paints. An fact Asian paints has been drain

30

stormed as an organization with highest sales and profit figures. But most important has

been initiatives under taken in all areas of operations to increase efficiencies some of the

key initiatives undertaken are :

- Initiatives in manufacturing to reduce losses at factory.

- Sourcing efficiencies

- Surat existing assets for better productivity

- Introduction of new technology to drive efficiencies and increase productivity.

- Implementation of new supply chain solution.

- Implementation of an ERP solution.

Besides the above Asian paints have focused on continuously improving

environmental Management standards at our plants. Today all Asian Paints

manufacturing facilities are accredited with ISO 1400/ certification for environment

management standards. These systems have enable company to reduce affluent from the

manufacturing facilities. The introduction of new supply chain has transformed

management of inventory and forecasting has brought significant benefit for the

company through reduction of working capital. It has completely changed the manner of

functioning of the supply chain division.

MARKETING PROGRAMME

PRICING

Asian paints limited with its three business units decorative, industrial & International

business is one of the largest paint company in India. It has a sell over 300 million liters

31

of paints in 2005-06. Significantly the group has crossed the Rs.3000 crores turnover

mark a preset mile stone for the company.

Products and its price ranges :

The various products and its price ranges are as follows :

Product Price range

Exterior:-

Asian Paints Apex Price of 20 lts. Range from

Rs.3142.00 – 3328.00

Asian Paints Ace Price of 20 lts. Ranges from Rs.1761.00

Rs. 2059.00

Asian Paints Tractor Emulsion Price of 20 lts. Ranges from Rs.1435.00 –

Rs. 2047.00

Asian Paints Super Decoplast Plastic

Emulsion Paints

Price of 20 Ltd. ranges from Rs.2239.00 –

Rs.2544.00

Asian Paints Interior Wall Finish – Matt

(White)

Price of 20 lts. Is Rs. 2244.00

Asian Paints Interior Wall Finish – Luster

(White)

Price of 20 lts. Is Rs.2311.00

Product Price range

Asian Paints Tractor Synthetic Distemper Its price ranges from Rs.690 to 757

Wall Finishes It range from Rs.4638- Rs,4975

Asian Paints Royale The price for 20 lts. Ranges from Rs.4638-

Rs.4975.

32

Asian Paints Premium Emulsion Range of 20 lts of this product ranges from

Rs.2648-Rs.3118

Enamels

Asian Paints Apcoute Premium Gloss

Enamel

For 20 lts the range varies from Rs.2068 to

Rs.2350.

Asian Paints Gattu Synthetic Enamel For 20 lts the range varies from Rs. 1458 to

Rs.1836

Asian Paints Utsav Enamel For 20 lts the range varies from Rs.1425 to

Rs.1652.

Stainer, Aluminium Paints & Others

Stainers

Apcolite Universal Stainers For per bottle in plastic bottle of 200ml the

price ranges from Rs.41-Rs.77.

Utsav Stainer For per boltle in plastic bottle of 20 ml its

price is Rs.34.

Asian Paints Wood Stains For per bottle in plastic bottle of 5 lts the

range varies from Rs.1000-Rs.1250.

Aluminium Paints (Asian paints 3

mangoes Aluminium)

For 20 lts its price is Rs.2593

Effect of price on future:

In the present economic situation, the GDP growth is expected at 6% for cude oil price

are soaring. Industrial sector has declined at a low rate with continuous slowdown

increment sector. There is depreciation in rupee.

33

Despite such discouraging macroeconomics it is creditable that Asian paints has posted

very good result.

Asian Paints is trying desperately to keep the same price overcoming the constraints.

PRODUCT

Asian paint produces a wide range of products which have more than 1100

shades. Their product were targeted to the different segment of the society. The cost of

the produce of Asian paint varies according different income level of the consumer.

Company follows the principle providing the customer different kind of products and

different price. In company’s Decorative premium sector company have products like

Asian paint Royals and Asian paint Emulsion. The cost of these product is Rs.275 and the

latter Rs. 201 where the product like GATTU and Utsav-family product are targeted to

lower income segment people the cost varies from Rs.15 – Rs. 20.

Products of Asian paints in decorative segment :

As Asian Paint is the leader in the decorative segment in the Indian paint market it

has wide variety of product. The products are :

(i) Asian Paints Royale

(ii) Asian Paints Premium Emulsion

(iii) Asian Paints Apcolite Premium Enamel

(iv) Asian Paints Gattu Synthetic

(v) Asian Paints Utsav Enamel

(vi) Asian Paints Trator Acylic Distemper

(vii) Asian Paint Utsav Acrylic Distemper

(viii) Asian Paint Apex

(ix) Asian Paint Ace

(x) Asian Paints Tractor Synthetic Distemper.

34

Asian Paints Royale : This product of Asian paint is targeted to higher income group and

customer of urban area. The product contains different shades and price of each shade

very. E.g. Regal white

Asian Paints Emulsion : it is another product which is targeted to urban area. It is high

price premium product. The shades are white, palm group and base.

Asian Paints Gattu synthetic : It is a product which is targeted customer of reral area. It

price varies Rs.15 to Rs.120 and it has different shades like white, Aquamarine, Azure

Blue and etc.

Asain Paints Utsav Paint : it is product which is targeted to lower income people as well

as rural customer. The various shades were Adyrey, back\, white, super white and etc.

Asian Paints Apex : This product is one of the major product of the saian paints as this

product is targeted to middle class people and avg income level. These paint have wider

range of shades such as classic white, blue ice, Alliance, Antique white, sweet time and

etc. The price varies from Rs.180-Rs. 115.

Products of Asian Paints in Industrial sector : it is the second category of the product that

Asian paint produces. In this segment Asian Paints targets to industry where the paint are

used for protective coatings of the machinery. Road mapping and various other industrial

uses. In these segment the product are normally sold at the premium price. Asian paint in

these sector is behind its competitor Nerolac. Now Asian Paints is trying a lot to improve

the product technology and by bringing new product in this sector to compete with its

competitor. The products are

(i) Apcomin Synthetic Enamel

(ii) Apcomin Synthetic Powder

(iii) Stainer

(iv) Premium surface & fillers

These products are based on high technological products and are used for asset

(Machinery, tools, equipments) coloring and upcoming synthetic powder is used as

lubricating agent in the machinery. Premium surface and fillers and strainers are used in

for road marking and various other tings in the Industrial sector.

35

Product for automotive sector : This is the third category of product which is produced by

Asian paint. These segment is slowly being emerging great user of paint in the Indian

market previously automotive company used to import the product from other country.

But now some companies like Asian paint, nerolac, Berger have their products in this

segment. This sector is emerging market in India.

Products : The products of Asian paint in this segment are

(1) Allumium Paint

(2) Fibre Paint

(3) Apcolite Hammertone finish

Basically the product in this segment are new but the product are in the great

demand automotive vehicles in India. The product are available in different colour

basically they are used for colouring the vehicles and the spare parts.

Product life cycle : Product life cycle suggests the different stages that a product

undergoes during its life cycle Introduction stage: In these stage the product are

introduced to the market.

(i) Growth state – In growth stage the product gens the memeenturn an grows

rapidly in these stage.

(ii) Maturity : In these stage the product attains the saturation level it reaches its

maximum point and from that point it starts downfall.

(iii) Decline stage : In these stage product slowly goes downward in to the slope

because of low demand and various other things. It end stage of a product.

BRAND

a brand is a name, term, sign, symbol, design or a combination of all which is build

intended to identify products or services of a company to differentiate it from its

36

competitor. Asian paints, the largest paint company in India have established its position

as a great brand. Asian paints promise to deliver consistently a specific set of features,

benefits & services to buyers.

Asian paints as a brand name is very much attached with allits products. What evr

may be the product, like ultima, Emulsion, wall finish lustce, Apcolite premium in the

urban area or the UTSAV at the rural area, the brand name is directly attached.

The brand name Asian paints brings to the mind of people certain attributes lie –

wonderful coloring, royal treatment, 1000’s of colour combinations, pricing not an

important factor of concern as the company provides products for all category of

consumers. Post purchase service is also an important issue related to brand name.

Asian paints Brand extension policies helped them to reduce the effective cost of

launching new colours products in new form, with new name. Line Extension technique

of branding helped them to go with new forms like – Asian paints UTSAV Enamel,

Asian Paints Tractor Emulsion, Asian paints Royal.

Company’s universal logo “GATTU’ which is not going to be a logo anymore,

helped Asian paints to promote its products in through out India, particularly in rural

areas it got the most popularity.

Asian paints is using its website as a very strong mode for the promotion of

Brand. The wonderful information related to pre-painting & after sales services helped

the company to build its unique brand. The on-line services, colour world &

Advertisements also helped to build the Brand of Asian paints.

PROMOTION

Asian paints the market leader of the decorative segment in the paint market of

the India. As it is not for behind in the other tow section that is industrial coating and

37

automotive coating. In achieve the current position a lot things are being done by the

Asian paints. The promotion strategy of Asian paints is bringing a lot of positive output

to the company. Company is using different techniques such ad. Compaign, sales

promotion, personal selling, driect marketing and public relation.

Promotion strategy :

Direct response marketing : Asian paints is using V-sts based in the and 24 hours online

customer help line service open. In enable the customer to interact with the company

and know the details about the product, pricing and many things related to the company.

Asian paints is dominating the television advertisemnt by increasing other ad

campaign cost over 50% from next year. A total amount of 85 crores is spent ont eh ad

campaign by asian paint. With huge ad campaign support behind the product the

company is able to making a brand name in the mind of customer. Their particular ad

campaign ‘Mera Walla Blue” “har ghar kuch kehta hia” are being liked by the customer.

Online marketing for urban customer : Asian paint online marketing system is helping

company in lot of ways many customer all the necessary information to the customer. It

is an unique way of promotion.

Colour world : Asian paint had established 30 colur world thorugh out the country giving

the people real taste of colur. The punchline for the colour world is “Jjahan Milen world

ke saare colour”

Promoting in different cities : Asian paint have large area of Network of distribution. It

has almost retail outlets through out the country situated in the different city of India. All

the customer could easily access the product of Asian paint anywhere and any time.

Promotional strategy followed by Asian paints in rural market

On of thing which is contributing to the profit of Asian paint is that its entry to the

rural market. As Asian paint gets an competitive advantage from its competitor in this

sector. As Nerolac and Berger were only targeting the urban customer.

First of al Asian paint is bring different low cost product like Utsav group in the

rural market.

38

There packaging very from 200gm to 1 kg \and prices are also relatively low.

To enhance their sales in the rural market they are spending a huge amount of

money in ad campaigns.

In rural areas they follow sales demonstration programme where they demonstrate

their different product where a large no. of discount is given on the product, lucky

coupons, free gifts are given to the customer.

Moving vans are being employed to sell their product in different village.

Promotion in international arena

Asian paint is taking we from the domestic market and promoting its product in the

international market with establishing colour world in those place particularly Caribbean,

Africa Middle east Asia and south pacific. A huge amount fund is invested adcapaign for

these product in the international market.

Promotion through Ad campaign : Asian paint has different brands over 1100 shades

targeting different segments. The company decide to promote all the brand under one

name of “Asian paint’ This was a advantage for Asian paint in the Low involvement

segment as the people asked the paint by brand.

Target Audience : The primary target audience for all of the brands marketing and

communication activities has been the adult male who is the primary decision maker.

However female members of the house play an important role in selecting a shade so a

large number of ad are done keeping in mind that thing..

The non-sue of caps in the headline as in the original ad “Asian Paint” logo which

is sin similar font, the design is meant for better readability and structure of colour

used.

The company mascot “Gattu” an impish boy with the paint tin and the brush, is

most popular and easily reconciled and is one of the ideal mascot.

Sates promotion : Asian paint uses it sale promotion as key ingredient in its marketing

campaign. It consist of various incentive designed to stimulate faster or greater purchase

of their products.

39

Giving discount to the dealer ; Asian paint gives certain amount of discount to the dealer

if he increases the sales of the company product.

Specialty advertising : Giving Asian paint T-shirt, Caps and other small things to painter

for their advertisement.

Trade show : Asian paint always open its stall in the Industry trade so that it products

would be promoted globally.

Consumer preference : The customer of Asian vary from a period to a big industry in

order to enhance it sales it gives price discount on bulk amount of purchase. The

company give coupons inside the paint pack so that could be taken by the customer as a

gift from the company. Asian paint always try to improve the packaging of the product. If

the product would be fancy and stylish then it would increase the sales of the products.

As industrial coating is one of tis major product the company uses the name of the

company it supply the paint for its promotion.

The promotional strategy adopted by Asian is quite unique apart from having such

good strategy the company is using high profile brand ambassador like Akshay Khanna,

Saif Alikhan” to promote their product in the paint market. Promotional strategy of Asian

paint is always aimed looking at customer and this needs and for this strategy company is

enjoying the No 1 Position in the Indian paint market.

DISTRIBUTION

Asian paints have an extensive distribution channel through out the country. It

used to maintain unique channel from the manufacturer to the customer. Distribution

system at Asian paints : -

1. Multiplant Distribution setup.

Neither geographic nor product specific.

Offers flexibility & variable cost advantages

2. Servicing has been key competitive advantage.

40

3. Around 15000 dealers serviced from around 85 sales location.

4. Role of distribution department is to ensure timely product availability at these

locations at minimum cost.

The company ahs 4 manufacturing facilities & more than 2800 stock keeping units

(SKUs) These are supported by 6 regional distribution centers, which cater 55 deposits.

Each depot is having branch manager for supervision over more than 15000 dealers in

more than 3500 small & big cities in India.

Asian paint implemented & concisely improving its IT systems over the years. It

has already linked all sites & Depots through V-SAT technology, which helps them to

monitor constantly & has given benefits in streamlining the distribution channel.

Asian paints also implemented 12 solutions to increase its networkings &

solutions, which is a very good replacement of ERP.

SERVICE

Asian paints is India’s largest paint company & the third largest paint company of

Asia today , has an enviable reputtion in corporate & society level for its wonderful

serving.

Asian paints have three different segments : (i) Decorative paints (ii) Industrial &

(iii) Automotive paints.

Its service strategy is also different according to these segments.

(i) Decorative paints :

41

Asian paints some solutions – which actually offer a hastle free painting

experiences to the consumer is presently available in 11 different cities in India. It is

particularly meant for premium consumers. In this case painting is done by experienced,

trained applicators & according to the wish & choice of customer in presence of him.

Here time bound completions of the job is assured.

In the website of Asian paints (www.asianpaint.com) all the details related to the

availability of the above facility & the help desk is designed to provide the customer

ample choices.

Asian paints clour world is the unique paint shop of Asian paint available through

out the India, where consumer can directly see the different paint combinations through

software & chose accordingly.

In all t here cases Asian paints also provide warranty for their products & for

home solutions free after paint services to the consumer, if anything wrong happens with

the paint.

For the rural areas, where the most popular product UTSAV, dominate the

market, Asian paint used to organize rallys, car or van advertisement of their product &

make aware the people about their services.

ii) Industrial paint :

here the products are tested under extreme conditions to ensure their durability &

how they can withstand different climatic changes. As corporate level the main consumer

here Asian paint used to provide importance in servicing this sector too. Its website gives

all the product details. It provides technical details regarding the uses of the paint.

Coating specification, health & safety are also given importance as a part of services.

iii) Automotive coatings :

In this segment Asian paints is improving its market share with high speed. Here

the vehicles ultimately goes to the consumer, so Asian paints used to provide direct

consumer service, private cars, motor bikes & MUV (Multi usage vehicles) vehicle

manufactures are directly provided with the post paint service.

42

Asian paint have implemented is solutions. Which helped them to overcome the

homegrown supply chain, which had certain drawbacks, in terms of customer service.

The is solution helped them to continuously monitor the changing needs of the market

place & serve the customers accordingly.

In future so as to become open of largest paint company in the world Asian paints

is also taking care of the services they provide. They want to have more feedback from

the customers through their website & colour world. It is now turning its helpline into an

integral part of its operations. Roughly 75 lakh rupees is considered as the annual service

cost. Quality service is the future mothe of the company.

RESEARCH

Asian paints, the largest paint company of India have a very strong research

methodology. There are two ways they follow : - (i) Market Research (ii) Research &

Development of the products according to customers need & choices.

(i) Market Research :

Asian paints used to hold a very strong market research team. The colour worlds

available throughout India is also keeping the consumer databases & their feed backs.

There are three important respect which came out.

(i) Consumer presences

(ii) Increasing global competition

(iii) Rapidly disappearing completive advantages.

The market research suggests company need to improve its presence in Industrial

sector. Products related to surface coatings & Intermediates need to be modified. UTSAV

range of products achieved a great success in rural market in this area Asian paint need to

take the competitive advantage.

(ii) Research & Developments :

Asian paints have invested 140.54 million Rs. In 2005-06 in the R & D sector,

Which gives an idea about the company’s paid interest in R & D.

The various sector where company is taking care of are –

43

(i) Development of analytical test methods, characterization technique & application

techniques essential for product development, bench marketing & customer servicing.

(ii) Up gradation of products & processes to reduce environmental & safety concerns.

(iii) As the price of crude oil is increasing day by day. Asian paints is looking for

identification of alternate & new raw materials for the products.

(iv) Quality improvement, cost benefits, supply chain flexibility & crisis management are

also the matter of concern.

Future planning :

Asian paints is growing rapidly throughout the world. In international market company is

planning to introduce new & attractive products though its subsidiaries, like Berger, Apco

coating etc. In Jamaica & Fuji company’s market is yet not satisfactory, which is also a

matter of concern. In domestic market company will concentrate on development of

new products/ product systems. With improved supply chain management.

Asian paints is looking to invest approximately Rs.160 million in R & D in 2006-

2007 financial years. Quality control system will be upgraded & implementation of in

solution will be helpful to grow.

FINANCIAL DOCUMENTS

Asian paints, one of the leading paint company in Indian market, consists of three

different segment. Decorative, industrial & automotive company presently standing in a

very good position as per as the competitors are concern with more than 50% market

share. Company has some planning to increase its overall sales for the financial year

2006-07.

SALES FORECASTS BUDGET OF ASIAN PAINTS : -

44

Paints is a product which is not used in daily life FMCG. Its purchase is mainly

based on the requirement of the consumer. Natural factors, festivals are some factor

which effect the sales.

To increase the sales company is looking at the following factors : -

(i) Product Style (ii) Quality (iii) Pricing (iv) Raw material supply (v)

Distribution system (vi) Promotional activity.

Table showing the previous 6 years data : -

Rs. – Crore

Year Advertising &

marketing Exp.

Gross sales Net profit (PAT)

March 2001

2002

2003

2004

2005

2006

176.26

192.49

216.58

249.29

269.15

323.58

1526.01

1662.33

1887.7

211.08

2366.16

2807.85

105.58

114.31

142.01

147.79

173.43

186.78

Now, to forecast the sales for the year 2006-07 we can use the regression analysis

method. The sales for the previous years are increasing in manner & the growth rate

follows a certain trend. So we are using last sqnare method.

Years X Sales (Y) XY X2

2001

2002

2003

2004

205

2006

1

2

3

4

5

6

1526

1662

1888

2111

2366

2807

1526

3324

5664

8444

11830

16842

1

4

9

16

25

36

45

x =21 y=12360 xy=47630 x2=91

Formula = y = xa + bx

xy = ax + bx2

putting the values –

(12360 = 6a + 21b) x 21 ==> 259560 = 126 a + 441b

(47630 = 21a + 91b) x 6 ==> 285780 = 126a+546 b

solving we get a = 1186.05

b = 249.7

y = 1186.05 + 249.7 x

for the year 2007; x = 7.

Y = 2934

Now, Gross sales (estimated / forecasted) of Asian paints for FY 2006-07 in 2934 Cr.

(approx).

Relation – Gross sales & Advertisement & marketing cost :

Gross sales of a company is strongly effected by the advertisement expanses

incurred.

The advertisement & marketing expanses a percentage of the Gross sales for 2001

- 2006 in as follows :

Rs. In crores :

Year Gross sales AD & Mar. Ex. %

2001 1526 176.26 11.55

46

2002

2003

2004

2005

2006

1662

1888

2111

2366

2807

192.5

216.5

249.29

269.15

323.6

11.58

11.46

11.80

11.37

11.52

The above table shows that Gross sales & Ad & marketing expenses of Asian paints have

a certain trend. Ad. & Marketing expenses is almost 11.5% of the gross sales.

For the year – 2006-07 – Gross sales = 2934 Cr. (Approx)

Advertisement expenses = 2934 x 1158 = 340 Cr (approx)

Graph showing the % relation of Gross sales & Ad ex.

47

Effect of union Budget 2006-07 of sales :

For the paint sector the union Budget 2006-07 have two import ant implications.

(i) Reduction in Peak customs duty, lead to reduction in customs duty on most of

the inputs from 15% to 12.5%.

(ii) CVD of 4% has been imposed accorss the board of tall the imports to

compensate for the sales Tax/ VAT in the domestic market. Full credit of this

duty will be allowed to manufactures of excisable goods.

The budget has a positive outlook & Asian paints is expected to be benefited from it

in terms of sales. Though it has a force casted sales of 2935 core company is expected

to increase it. Certain unidable impacts like increase of price of crude oil, non-

availability of raw material, are certain barriers. Asian paints have achieved a gross

sale of Rs.603.33 in Q1 of Ry06-07. The Q2 is the prime season of the company as it

is the occasion period. Here company is expected to increase its sales volume

tremendously.

PROFITABILITY FORECAST BUDGET OF ASIAN PAINTS :-

48

Profitability of a company for any particular financial year is mainly calculated

based on the two factors – (i) Total Income (ii) PBDIT

Where total income is the addition of gross sales & other source of income &

PBDIT is profit before depreciation & Income Tax.

Table showing – Total income & DBDIT for 2001-2006

Rs. In crore .

Year Total income PBDIT Profitability

2001

2002

2003

2004

2005

2006

1543.85

1635.5

1928.31

2131.04

2462.1

2830.11

208.55

236.15

287.98

292.33

325.66

390.61

0.14

0.14

0.15

0.14

0.13

0.14

WHERE PROFITABILITY = PBDIT

Total Income

Now, to forecast the profitability of FY 2006-07 we need to forecast the Total income &

the PBDIT of the year.

For this we use the regression analysis method by regression analysis of the total

Income & forecasting it for FY2006-07 we get the amount o be Rs.2999 crore (approx).

Now, PBDIT is measure of profit made by a company for any financial year.

Though actual profit or PAT is different, but PBDIT gives us a measure of the

profitability.

Now, PBDIT of Asian paints for the last 5 years is shown in the above diagram,

as it is to some extent linear increment, we can consider regression analysis method to

forecast the PBDIT for Fy 2006-07.

49

By forecasting we get – PBDIT for Fy – 2006-07 = 408.48 crore

Now, we have profitability = PBDIT/ Total income

For Fy-2006 –07 as per our forecasting

Is concerned profitability = 408.48/2999 = 01362

Now in percentage term for forecasted profitability of Asian paints for fy-2006-07 is

13.62%

YEAR WISE PROFITABILITY GRAPH

50