Asian Paints

Asian Paints

Brief overview

Asian Paints is India's largest paint company and ranked among the top ten Decorative coatings companies in the world with a turnover of INR 66.80 billion. Asian Paints along with its subsidiaries have operations in 17 countries across the world with 23 paint manufacturing facilities, servicing consumers in 65 countries through Berger International, SCIB Paints – Egypt, Asian Paints, Apco Coatings and Taubmans.

i. Brief History: 1945 The Company was incorporated as a private limited company under the name of Asian Oil and Paint Company Pvt. Ltd. It was converted into an public limited company in 1973. The Company manufacture a wide range of surface coatings catering to different end-uses. It also manufactures vinyl pyridine latex used in the manufacture of rubber tyres. The company expanded its products range, developed its own technology, set up a distribution network penetrating in smaller Towns and ploughed back a large part of earnings into creation of new facilities.

1965 The name was changed from Asian Oil and Paint Company Pvt. Ltd. to Asian Paints (India) Pvt. Ltd. 1974 A major modernisation programme was undertaken to streamline the paint production facilities by improving the layout of machines, addition to balancing equipment and replacement of old machinery. The Company embarked on phased modernisation of resin manufacturing facilities as well. The Bhandup plant of the Company is reportedly the largest single paint factory in the country and one of the most up-to-date with sophisticated machinery and equipment for manufacturing a wide range of paints and other products besides adequate resin manufacturing capacity to meet its entire requirements.

1975 Bonus Equity shares issued in the prop. 1:2 in 1961, 1:3 in 1962, 1:1in 1966, 1:2 in 1969, 2:3 in 1971 and 1:2 in 1975. 1978 1,00,000 Bonus Equity shares issued in the prop. 2:3. 1982 The main objects of the public issue of capital during August,Were to fulfill the listing requirements of the Stock Exchange and to provide part of the finance for the increased operations.

1983 - Equity shares subdivided. 10,00,000 Bonus shares issued in prop. 2:5, 16,85,185 No. of Equity shares issued (prem. Rs 13 per share) through prospectus in August 1982. Out of these, 84,259 shares and 33,704 shares were reserved for preferential allotment to the employees

and to the business associates of the company respectively. 15,67,222 shares offered to the public of which 4,21,296 shares were offered to NRIs on repatriation basis. 1987

- The Company commissioned a plant for the manufacture of synthetic rubbers lattices with a capacity of 1,200 tonnes per annum. The Company received a letter of intent to manufacture 9,000 tonnes of phthalic anhydride. The project would be based on imported Van Heyden low energy process technology with engineering package from Davy McKee of Cologne, West Germany. The project was commissioned in March 1990. But, a fire accident in the succeeding month damaged a storage tank, near by pipes and support structures. The plant was repaired and restarted only in August 1990.The Company jointly with Tamil Nadu Industrial Development Corporation (TIDCO) promoted a joint sector Company under the name Pentasia Chemicals Ltd. (PCL), for the manufacture of 3,000 TPA of pentaerythritol and 1,800 TPA of sodium formate. The project commissioned in March. The 41,48,148 Bonus equity shares issued in prop. 1:2.

1998 - As at 31st March, a sum of Rs 1008 lakhs was outstanding against loans from Financial Institutions. - The new initiative to install 350 colour worlds received encouraging response and made significant contribution to performance. Three new products, NC range of wood finishes, ACE exterior emulsion and Asian wall putty were launched. - Asian Paints, the Rs.737.20 crore paints major, has launched a new marketing thrust with the introduction of a one-stop colour shop for paints complete with a software for consumers to choose and select their different shade combinations. - Asian Paints, India's No.1 Paint Company recently, launched their latest offering `Asian Paints Colour World'. - Credit Rating Information Services of India Ltd (Crisil) has Assigned a `AAA' rating to the proposed non-convertible debenture (NCD) obligation of Asian Paints Ltd (APL). - Two subsidiaries of Asian Paints - Pentasia Chemicals and Pentasia Investments - have been merged with the parent company following the approval of the Board for Industrial & Financial Reconstruction (BIFR). - Asian Paints Limited, the largest paint company in India, launched its first exclusive showroom in Mumbai.

1999 - The company has joint venture companies in the overseas market. All these ventures are doing well and have a strong hold in their respective markets. - In its first-ever acquisition overseas, Asian Paints Ltd (APL) has acquired a 76 per cent equity stake in Sri Lanka-based Delmege Forsyth & Co (Paints) Ltd. 2000 - Asian Paints has launched two variants in polyurethane (PU) wood finish under the brand name Opal. - The Company has proposed to issue bonus shares in the ratio of three shares for every five shares held. - Asian Paints has opened a manufacturing plant in oman in partnershipwith a local company. - Asian Pains has acquired the entire paints business of Pacific Paints Company based in Australia for over Rs 1 crore. - Asian Paints has lifted the lockout at its factory in Uttar Pradesh.The Company suspended operations at Kasna in July after the workers resorted to a sit-in-strike. 2001 - Asian Paints has introduced Utsav Enamel for the festive season. - Asian Paints has appointed senior parnter of the solicitor firm Crawford Bailey & Co, R A Shah and Deputy Director, National Chemical Laboratory Dr Swaminathan Sivaram as directors on the company's board. - Asian Paints India Ltd has posted a marginal drop in net profit at Rs29.62 crore for the quarter ended September 30, 2001. 2002 -Approves voluntary delisting of shares from the following stock exchanges: 1. The Ludhiana Stock Exchange Association Ltd. 2. The Calcutta Stock Exchange Association Ltd. 3. The Stock Exchange, Ahmedabad 4. Madras Stock Exchange Ltd. 5. The Delhi Stock Exchange Association Ltd. 6. The Hyderabad Stock Exchange Ltd. 7. Vadodara Stock Exchange Ltd. -Revamps its international operations, transferres shares in its subsidiaries in Fiji, Tonga, Solomon Island, Vanuata, Australia and the Sultanate of Oman to the Mauritius based subsidiary Asian Paints International

-Executes agreement for purchase of 60% equity capital of SCIB Chemicals S.A.E., Egypt -Launches its million joint venture with Bangladesh-based Confidence Cements in which the holds 51 per cent stake -Acquires controlling stake of 50.1 per cent in Berger International,Singapore, for Rs 58 crore, appoint Jalaj Dani as CEO 2003 -Board recommends issue of bonus shares by capitalisation of Reserve in the ratio of 1 equity share for every 2 equity shares held on therecord date -Asian Paints, via its Singapore-based subsidiary – Berger International - inks a technology and brand licensing agreement withPT Abadi Coatings Solusi, an Indonesian paint company -Shareholders approve the Scheme of Arrangement proposed to be made between Pentasia Investment Ltd with Asian Paints India Ltd and the consequential reduction of share capital of Asian Paints India Ltd. -Berger International starts restructuring exercise to curtail cost -Acquires Taubmans Paints (Fiji) Ltd. through its subsidiary in Fiji, Asian Paints (South Pacific) Ltd (APSP) -Acquisition of 9.2% shares in ICI India Ltd. -Asian Paints bags Ken Sharma award 2004 -10th Asian Paints Star Screen Weekly Awards- aura of mystery -Asian Paints launches paint solutions for kids' 2005 -Berger Intl partners with Filipino firm Dutch Boy 2006 -Asian Paints - APICL's new mfg plant at Baddi commences commercial production 2008 -Asian Paints launches new campaign 2009 - Asian Paints Ltd has submitted the disclosure under Regulation 7(3) of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations,1997 to BSE

- Asian Paints Ltd has appointed Shri. S Ramadorai as an Additional Director of the Company pursuant to Section 260 of the Companies Act,1956.

ii. Challenges faced by Asian paints Highly dynamic: The paints and coatings industry is highly dynamic. It is very difficult for the company to cope up with these rapid changes.

Price sensitivity: There is Strong price sensitivity in the industry. The rising raw material prices and the resultant squeeze in profit margins are issues which the company has to deal frequently. To aggravate the situation, the cuts in price of product are being accompanied by increase in the raw material prices. Resins prices have been rising in the past few years for almost all kind of paints. Thus, the company are getting squeezed from both directions resulting in thinning of their profit margins.

Increasing demand of the buyers : The Paints are sold through direct sales as well through distributors. While architectural paints mainly follow the retail channels, industrial paints are sold directly to end-use companies. It has been observed that these buyers, both direct end-users and retail channel, are becoming increasing powerful with their growing bargaining power. The End-users are demanding higher quality paint for the same or a lower cost. The company is continuously being forced to reduce prices, and those who fail to do so are losing out to the closely fought competition.

Technological changes: Another challenge on the resin front is that the introduction of newer technologies and newer types of resins are pushing out few conventionally used resins.Government regulations : A governmental regulation against paints containing volatile organic compounds (VOC) is a major factor in throwing out certain kinds of paints from the market. This will definitely affect the resin situation in the market and would require the company to adjust accordingly.

Competitor’s actions and strategies: Companies have to be proactive and cannot sit back and wait for other companies to act. If it does not act fast then it will surely lose out in the market in the medium run, if not the short.

Substitutes: There is an increasing demand for more trendy and easy-to-use alternatives to paints. Colourful patterned wallpapers and wall panelling are being preferred by some for architectural use instead of regular emulsion paints. In terms of industrial use, the use of coatings for office equipment is decreasing significantly. Equipment suppliers prefer to use metallic finishes and oxidation process to give a more matt and sleek look to the equipment. Also, these metallic options are considered more hassle-free as there are no issues of paint chipping, re-painting etc.

iii. The products launched in the Indian market :

The following are some of the products launched in the Indian market:

a. Ancillaries

Wall Primer WT

Description: Asian Paints Deco-Prime Wall Primer (WT) can be used as primer for painting of water-based wall finishes such sa distempers & plastic emulsion paints. Its special features are easy brushing, excellent covering, alkali resistance, quick drying & good sealing properties. It is specially fortified with fungicides.

Wall Primer ST

Description: Asian Paints Deco-Prime Wall Primer (ST) is suitable for use as primerfor masonary topcoats like distempers, emulsions,lustre & matt wall finishes.It helps in providing a suitable surface for applicationof subsequent coats of putty & finish paint.It seta fast,has good sealing properties,good resistance to wall alkalinity, moisture & fungus.

Acrylic Wall Putty

Description:Asian Paints Acrylic Wall Putty is water_based putty.It is one of the best product of its kind available in the market.It provides a very strong durable

foundation & brings out the best performance from the finish paints.both in looks & durability.

Exterior Wall PuttyDescription: Asian Paints Exterior Wall putty is a specially designed product based on white cement, redispersible polymer & functional additives for application on exterior rough plasters to give a smooth finish.

Wood Primer

Description: Asian Paints Wood Primer is specially formulated to protect wood. It has an excellent sealing & filling properties which protects wood from swelling due to absorption moisture. Wood Primer penetrates wood fibre & gives excellent adhesion to substrates & also serves as a sound base for application of undercoats & finishing coats. It also protects the finish coat from exudation of resinous matter oozing out from wood.

Exterior Wall Primer

Description: Asian Paints Exterior Primer is water-based wall coating suitable for application on exteriors as an undercoat to exterior emulsions. It has a good opacity & whiteness, which helps improve the appearance of the emulsion top coat. Exterior Wall Primers does not chalk & can be applied on freshly plastered surfaces that are adequately cured. It does not require any water curing.

b. Decorative products :

I. Exterior walls

Product Name: Asian Paints Apex UltimaDescription:Asian Paints Apex Ultima Advanced Anti Algal Weather Proof Emulsion is a water-based,modified acrylic, anti algal, high performance exterior wall finish. It incorporates the latest state-of-the-art technology to provide long-lasting exterior performance even in the most extreme tropical conditions of india. Its unique advanced anti algal chemistry ensures that exterior walls are provided with power-packed resistance aganist algae and fungi growth. Its has very good dirt pick up resistance and dirt cleaning propertiesCost Range: PremiumFinish: Rich SheenAvailability: Across all Colour World Dealers.

Product Name: Asian Paints Apex

Description: Apex Weatherproof Exterior Emulsion is a water-based 100% acrylic, exterior wall finish. A high performance, long-lasting exterior paint specially formulated to withstand extreme tropical conditions of high rainfall, humidity and heat, Apex provides excellent resistance against the growth of algae and fungi on the walls. It offers excellent protection against alkali and UV degradation too.

Cost Range: Mid-Range

Finish: Rich Sheen

Availability: Across all Colour World Dealers.

Product Name: Asian Paints Duracast Rough Tex

Description:Asian Paints Duracast Rough Tex an exterior finish composedof high quality exterior durable acrylic modified resin specially designed as an intermeditate coating.its unique texture pattern has an distinctive appeal.

Cost Range: Premium

Finish: Rich Sheen

Availability: Available through Asian Paints Project Sales Only.

Product Name: Asian Paints Duracast Rough Tex

Description:Asian Paints Duracast Rough Tex an exterior finish composedof high quality exterior durable acrylic modified resin specially designed as an intermeditate coating.its unique texture pattern has an distinctive appeal.

Cost Range: Premium

Finish: Rich Sheen

Availability: Available through Asian Paints Project Sales Only.

Product Name: Asian Paints Apex Dholpur Tex

Description: Cost Range: Premium Finish: Rich Sheen Availability: Across all Colour World Dealers.

Product Name: Asian Paints Duracast Swirltex

Description: Cost Range: Premium Finish: Rich Sheen Availability: Across all Colour World Dealers

II. Interior paints

Distempers

Distempers offer strong performance to the interior wall surface in terms of protection and adhesion. Tractor Acrylic Distemper, with better durability, is one of the best performing distemper made by Asian Paints.

Emulsions

Interior emulsions are advanced water based paints with better quality and shade range. Adhesion to wall surface, anti fungal properties and durability is more in emulsions. Check out products range for more information.

Enamels

It is a premium brand from Asian Paints, it is superior in terms of performance and gives you that Perfect Finish for your walls. Apart from the above features which emulsions offers, Asian Paints also has an exclusive product range in special effects finishes. You can check our Royale Play products for more information

III. METAL SURFACES

Suitable for metal surfaces, this enamel product brings a suitable effect. With different surface preparation and undercoat system, read the directions for usage carefully before application.

IV. WOOD SURFACES

Clear Finish

Clear Finishes act as protective coatings providing a high degree of resistance from water, dirt, grime, chemicals and abrasion, along with enhancing the natural beauty of the wood.

Opaque FinishWood Palette, the range of opaque wood finishes from Asian Paints brings you a high gloss, tough scratch proof coloured wood finish that brings new style and sophistication that’s beautiful and stays that way under heavy usage

EnamelsThese are essentially enamel paints suitable for wood surfaces. With different surface preparation and undercoat system, read the directions for usage carefully before application.

c. Automotive

2k Nexa autocolour

2K Nexa Autocolor® works in partnership with its customers to improve the profitability and well being of their businesses.Valued by body repair shops, dealers and industry influencers in over 140 countries, Nexa Autocolor brand is a market leader in markets including the UK, Spain, France, Malaysia, China, Brazil, and Argentina. It’s no different in India ! The Nexa Autocolor brand, a leader internationally in the refinish market, has a history of more than 100 years experience in the paint industry. This experience has enabled us to gain a thorough understanding of our customers’ needs and the issues our customers face on a daily basis. Technical and training teams of PPG collaborate globally to develop innovative products, processes and programs to help our customers continually improve the efficiency and profitability of their business. Manufactured at PPG’s plant in Stowmarket, England, Nexa Autocolor stands for innovation in paint chemistry and leads the industry with products such as Aquabase, the first waterborne basecoat.

Deltron

A premium 2-pack polyurethane based automotive refinishing system. It comes as a fully integrated package of products, right from bare metal pretreatment to plastic component systems through to polishing and finishing compounds. It is available in more than 40000 shades. Its comprehensive range takes care of all kinds of painting needs. Deltron is available on a mixing system with a range of tinters, which when mixed together in different proportions offer a wide variety of shades to the customer. These tinters are mounted on a mixing rack that is installed at the shops of each Deltron dealer

Delfleet

The latest advance in fleet coatings technology. Delfleet is PPG's premium paint system for meeting the demanding needs and exacting specifications of OEM commercial vehicle manufacturers and fleet maintenance operations.Incorporating the very latest fleet coatings technology, this premier fleet coatings system is supported by one of the most comprehensive colour-matching systems in the industry. Whether it is superior chemical resistance or top-of-the-line gloss and durability, customers seeking a paint system configured to very specific performance needs will find that Delfleet offers a wide selection of topcoats, clearcoats and primers to choose from. Moreover, painters will find that a Delfleet system is easy to apply and achieves exceptional colour match

d. Industrial

Protective CoatingsProtecting industrial assets is increasingly becoming critical owing to rising asset costs, harsh weather conditions and mounting chemical pollution. Therefore asset owners are looking at specialised protective coatings specific to their requirements. We perceive this to be just the right environment for Asian Paints to demonstrate its growing technical strength.Protective Coatings from Asian paints offer a choice of high-performance, heavy-duty coatings, designed to protect assets against the specific corrosive environment they are exposed to. Asian Paints Protective Coatings are tested under extreme conditions to ensure that they are durable and can withstand the vagaries of the different climatic conditions. Today the range of coatings find use across diverse industries such as nuclear, thermal or hydel power plants, chemical, petrochemical or fertilizer plants, refineries, sugar, pulp and paper industry, offshore structures, pharmaceuticals etc.

Floor Coatings

Concrete floors represent a significant investment for any industry. Despite this, it is often the most neglected and abused part of the structure. Apart from the mechanical abuse, spillages of various kinds of chemicals also occur often weakening the reinforcement and concrete surface. The need to protect the surface with a suitable coating is quite obviously there.

An increasing awareness of the limitations/drawbacks of concrete flooring is now resulting in wider acceptance of floor coatings. Limitations include the accumulation of dust due to the formation of laitance and difficulty encountered during cleaning owing to surface texture. Furthermore, the presence of cracks and surface porosity allows various oils to seep in, resulting in unappealing patches. Weakening of the reinforcement and concrete surface due to chemical spillage and the possibilities of microbial growth are other significant drawbacks.

Road Markings

Road markings are the silent custodians of road safety in this era of four and six lane highways. Markings signify the delineation of traffic path and the lateral clearance from traffic hazard for the safe, smooth and orderly movement of traffic. Apart from traffic guidance, they also serve as a tool for controlling, warning and providing information to road users.Though the cost of road markings is fractional in comparison to the cost of the road, its importance is indisputable. Often a key parameter used to judge the road quality is the quality of the installed road marking.Asian paints commands market leadership in the field of thermoplastic road markings.Asian Paints offers a variety of road markings. These include hot applied retroreflective thermoplastic material, fast drying highly durable 100% acrylic retro-reflective water borne paints and conventional water / solvent based road marking paints.

THE FOLLOWING ARE THE MAJOR COMPETITORS OF ASIAN PAINTS:

GOODLASS NEROLAC

Goodlass Nerolac Paints Ltd. [GNPL] with its two wholly owned subsidiaries Saurashtra Paints Ltd., Ahmedabad and GNP Madras Ltd., ranks second in the industry . The company has a tie up with Kansai Paint Company of Japan, a world leader in paints, which holds 65 per cent stake in GNPL. Having derived maximum income in industrial paints from Maruti Udyog Ltd. (MUL) until recently, the company has now widened its client base to include many other automobile manufacturers like Mitsubishi Lancer, Hyundai Motors and Telco.

ICI INDIA

ICI India Ltd. (ICIIL) is a part of the Imperial Chemicals Industries (ICI), UK .The company has diversified interests and is not purely a paints company. ICIIL is recognised as the fourth largest paints manufacturing company. The company, which was a leader in the premium emulsion paint market, has now lost out to Asian Paints in the same category.

BERGER PAINTS

Berger Paints India or Berger Paints India Ltd. or Berger Paints is an India-based paint manufacturing company. It is a 70 year old company and is India's 3rd largest paint manufacturer and second largest decorative paint player. The company is headquartered at Kolkata In Decorative Paints, Berger has paints and paint systems for every application - interior, exterior, every surface, concrete, plaster, metal and wood - as well as special applications like water storage, etc.Berger acrylic brands like Luxol Silk and Rangoli for interiors, and Weather coat for exteriors are quality leaders in technology and represent decor statements that redefined the premium category. Luxol Hi-Gloss is the national hallmark for excellence in paint enamel.

Defend

Consists of rural and urban market in which AP is playing. They are a target to many global companies which are playing in Indian market via

Indian arm of their operation like ICI has berger etc

Deepen

Industrial segment of Indian paint industry where AP has a week presence. It has a presence in the automotive segment but ranks a poor second. It needs to form alliances with foreign players to enter into this segment. It can also look for tie ups with the company, which has tie ups with those companies

whose daughter arm is operating in India to lock the account. Its move of taking over haucoplast is on one step in this direction. Their tie up with

PPG has given them good presence in the automotive segment, capturing clients like Santro, GM , Ford etc

Discover

This forms the basis of fast growth. AP has identified opportunities abroad in developing countries similar to India To enter into these countries they adopted the presence of acquisition.

Develop

Paint industry is primarily a product oriented industry up till now. Huge potential exist in the service side also. Introduction of the colour world, providing services in the painting and interior

decoration etc are steps taken to acquire the whole chain and becoming the full service provider.

Need to ensure value adding services are possible. This can be integrated to provide an umbrella service.

Constant reminders to the customers to repaint or upgrade.

Pre reform Strategies:

The following are some of the pre reform strategies:

Distribution was one of the main strategies of Asian Paints before 1990.

They started advertisement and promotional expenditure in the 1980’s.

1982-86 is regarded as years of excellence for Asian Paints as they followed strategy of moving closer to the customer.

Asian Paints have been launching rural market initiatives since 1960’s.

Asian paints adopted backward integration strategy in 1980’s.

Asian Paints used modern manufacturing facility with the manufacturing of paints in Patancheru in 1985.

Differentiation strategy was also adopted by the Asian Paints for a shorter period.

Post reform strategies

AP has acquired a short term competitive advantages by using its distribution strength and logistical efficiency in order to raise the cost of doing business for all its competitors to attain this advantage.

AP has established such extensive network that getting incremental advantage would be very difficult.

Futuristic approach and gaining competitive advantage through channel control or occupying mind space.

Asian Paints strategy for acquiring high product demand in