ICI Paints Project

Page 1 of 24

Presented by:

Annus Azhar, Hamza Shafique, Haris Yousaf, Habiba Ahsan and Sami

Rasheed

Page 2 of 24

TABLE OF CONTENTS

Mission Statement………………………………………………….. Company Profile……………………………………………………… 1: Company Information.

1.1 Competitors………………………………………………………………………………………………. 1.2 Industry Norms…………………………………………………………………………………………..

2: Products and Services.

2.1 Paints………………………………………………………………………………………………………… 2.2 Intended Benefits……………………………………………………………………………………… 3: SWOT Analysis. 3.1 Strength…………………………………………………………………………………………………….. 3.2 Weaknesses……………………………………………………………………………………………….. 3.3 Opportunities…………………………………………………………………………………………….. 3.4 3.5

Threats………………………………………………………………………………………………………. Conclusion………………………………………………………………………………………………….

4: Sale And Profit increase methods…………………………….

5: Financial Documents and Analysis……………………………..

Page 3 of 24

Mission Statement

Our ICI Paints team intends to remain market leaders in the Paints Business. We wish to be recognized for offering the best products and excellent customer service. We will run a high quality, profitable and growth oriented business in an exciting and safe environment

Company Headquarters in Karachi

Company Profile The Company was founded in December 1926 by way of the merger of four companies —

Brunner Mond, Nobel Explosives, the United Alkali Company, and British Dyestuffs Corporation.

It established its Head Office at Milbank in London in 1928

Competing with DuPont and IG Farben, the new company produced chemicals, explosives,

fertilizers, insecticides, dyestuffs, non-ferrous metals, and paints. In its first year turnover was

£27m

Imperial Chemical Industries (ICI) is a British chemical subsidiary of a Dutch conglomerate

and one of the largest chemical producers in the world. It is based in Slough, UK. It produces

paints and specialty products (including ingredients for foods, specialty polymers, electronic

Page 4 of 24

materials, fragrances and flavors). It employs around 29,000 people and had a turnover of just

over £4.8 billion in 2006.

Imperial Chemical Industries (ICI) is a British company that enriches our everyday lives and

environment. The specialty chemical company designs, develops, and sells substances used in

the composition of sanitation products, as well as fragrances and paints. These activities are

dealt with in five entities: National Starch & Chemical produces adhesives, starch products for

the food industry and certain papers, and polymers notably for materials used in electronics.

Quest creates aromas and perfumes for care and hygiene products. Uniqema propose products

that improve the features and performance of certain consumer goods such as body creams

and lubricants. ICI Paints manufactures and sells paint (decorative and protective, for both

interior and exterior needs) under well-known brands such as Dulux, Valentine, and Glidden.

Finally, Regional & Industrial Business develops the group's activities in India, Pakistan, and

Argentina. ICI is a real emperor in specialty chemicals.

Since the beginning of 2008 we have been part of Akzo Nobel, one of the world's leading

industrial companies. We are the biggest global coatings manufacturer and the number one in

decorative paints and performance coatings, as well as being a major worldwide supplier of

specialty chemicals

“We employ around 60,000 people in more than 80 countries and are committed to

developing innovative products and cutting-edge technologies, with a heavy emphasis on

sustainability. We have the scale and expertise to deliver whatever our customers require,

wherever and whenever they need it."

As mentioned group is involved in many different businesses however I CI Paints: account for

40% of company sales.

SALES PER GEOGRAPHIC AREA

North America 33%

South America 7%

Asia Pacific 22%

Europe 34%

Page 5 of 24

Page 6 of 24

ICI Pakistan Limited ICI Pakistan Limited (Imperial Chemical Industries) is located in Karachi, Pakistan. The company is a

75.81% owned subsidiary of ICI Plc, UK. It was set up as a public limited company in Pakistan in 1952

ICI Pakistan operates a diverse portfolio of businesses.

It has sales of over Rs 50 billion, equivalent to 1 percent of the country’s GDP. With this diverse

portfolio, ICI provides services to a number of diverse industries in the Country. To name a few, they are

Textiles, Glass, Pharmaceuticals, Agriculture and Livestock, Construction, Automobiles, Chemicals,

Cement, Fertilizer, Rubber, Detergents, Footwear, Food, Beverages and Leather.

Today ICI Pakistan’s five businesses, Polyester, Soda Ash, Paints, Life Sciences and Chemicals

manufacture and sell a range of industrial a CI Pakistan is one of the largest quoted companies on the

Karachi, Lahore and Islamabad Stock Exchanges with a paid up share capital of Rs 1.39 billion.

The company has around 1,294 permanent employees and the same numbers of people provide

services through contractual arrangements and consumer product

Page 7 of 24

Management Hierarchy of ICI paint Pakistan

Page 8 of 24

Competitors:

ICI paint Pakistan is facing strong competition in Pakistan from the Following:

Direct Competitors Berger Paints

Master

Diamond

Marvell

Buxluy

Silky

Indirect Competitors Tiles Wood peeling Wallpapers Rockwall Paint Puree

Because of these competitors, ICI paint Pakistan is facing a serious problem in attracting new customers and retain their existing customer. In order to meet the competitors ICI paint Pakistan has to spent more money on advertising, promotional activities and area coverage for their customer satisfaction. Recently new competitors are coming in this industry, which is the sign of the Growth of paint industry. According to industry analysts, this tough competition, High promotion strategies and increasing trend toward paint industry are the Clear chances of the high growth in the paint industry.

Page 9 of 24

INDUSTRY NORMS

MARKET TRENDS OF INDUSTRY

One of the greatest opportunities for paints producer is that now a day's people are very much conscious about the quality of the paints. They are aware of the fact that good quality paint is long lasting for their houses and businesses. Paints Producers are also investing heavy in advertisement. As a result customers are getting aware of the importance of paint and their trends are moving from Traditional white wash (KALI) to quality paints products. As producer companies of paints will more focus on the TQM; it will increase the demand of products. There is also a great opportunity for paint industry; the housing rate in Pakistan is flourishing very rapidly, especially after the Earth Quake in Pakistan. Paint Industry can target these customers

MARKET GROWTH OF INDUSTRY

There are huge opportunities for the growth of paint industry in Pakistan. And this industry also has shown very good results in last decades. But due to Economical recessions and bad political condition of Pakistan this business has declined by the 10%. The new government has increases the general sales tax from 15% to 16%. This Increase can hurt the growth of the paint industry. Recently this industry has Increase the 1% share but new government policies can again hurt this industry. The increase in tax, energy crisis in Pakistan and high prices of the decorative Paint products are major hurdles in the growth of this industry. Current Political situation of

Pakistan has also proved to be a hurdle in the development of the paint industry. Government

should focus on this Industry because it is generating lots of revenues for the country

Page 10 of 24

Following Graph shows market share of different firms in Paint Industry:

As seen from the graph ICI is the leader in paint industry followed by Berger, Master paints and other small competitors

50 million households, all over the world, use ICI paints every year.

Page 11 of 24

Page 12 of 24

Paints

Decorative o Dulux brand, o Dulux Weather shield Fresh range o Pentalite Classic o Dulux Odorless range o Dulux Wood care range

Refinish & Industrial Automotive ICI business boasts a host of world renowned brands in its product portfolio, including

Sikkens, International, Interpon, Palbond, Fine Cleaners, DynaCoat ICI Industrial Coatings and ICI Auto Paints.

REASONS FOR THIS COMPANY’S SELECTION

ICI Pakistan is one of the leading paint companies of the Pakistan (accounting for 1% of

country’s GDP).It enjoys the trust of both the people and the government. Pakistan’s economy

greatly benefits from the Technology that ICI Paints brings in its field. Despite being the leader

in the paint industry, the company operates ethically and professionally. The company knows

its position in the community that is why it is spending its resources for the betterment of the

community. Company is actively involved in giving out to the community in its role of

“Corporate Social Responsibility”, especially in the field of Health, Education, training, etc. With

its diverse portfolio ICI is providing training to large number of employees which they can use to

enrich their jobs and can use that training for the rest of the lives. Also huge foreign exchange is

earned by selling ICI paints.ICI has promoted competition in the paints market which has set the

standards in the industry of supplying quality paint at affordable prices.

Keeping in view these factors ICI has been chosen to represent Paint Industry of Pakistan

Page 13 of 24

SWOT Analysis

The overall evaluation of a company’s strength, weaknesses, opportunities and threats is called SWOT analysis. It involves monitoring the external and internal marketing environment. External environment includes opportunities and threats, whereas internal environment includes strength and weaknesses. ICI paint is setting up new corporate identity as a result of dynamic changes in paint industry. The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of situations in business and organizations. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats.

Page 14 of 24

Strengths The major strength of ICI’s paint Pakistan is affiliation with ICI Global Network and its

latest technology.

Another strength is large amount of color and latest color scheme

Quality of its product is also major strength because ICI paint is providing high range of products.

ICI paints covers almost all major markets of Pakistan

Weaknesses Promotion: Promotion is most important tool is order to attract customer to your

product but this factor forms significant part of ICI’s costs

Price factor: Price factor is another weakness of ICI paint because its competitors are offering fewer prices and other attractive incentives to their customers so it has to give weight to this factor.

.

Page 15 of 24

Opportunities

Increase Promotion: ICI paint has opportunity to increase its promotion in order to interact with people and to increase their sales volume and it should invest in order to make their new products familiar to customers.

Increase market: ICI paint can increase its coverage through the country in order make its product available in areas not reached before.

Decrease Price: ICI paint can increase its sales by Decreasing its prices of its products and it is a great opportunity for it to expand its market.

Threats Increasing competition: The competition is increasing in this industry; many niches are

present in the market and will likely be filled by competitors ICI paint has to take this factor into account.

Political Instability: It is another major threat for all the industries present in Pakistani market. Now a day’s political instability in our country as at its peak and this factor will influence all the businesses including that of ICI Paints.

Conclusion of SWOT ANAYLSIS: Since ICI paint has decent strengths and opportunities in the market, its market share is increasing and it is expanding its network rapidly, so the situation tells us that ICI paint is adopting and implementing on Sustenance and Growth Strategy.

Page 16 of 24

How ICI Paints Can Increase Its Sale and Profits? Sales can be increased by following:-

1- Increasing market share ICI paint should try to capture the urban as well as remote area market. To get more market share it needs qualitative products with innovation styles and aggressive market activities to create awareness among public regarding their products (focusing on Total Quality Management).ICI Paint has to provide more values to its consumers and more facilities to their customers at their doorstep by increasing their dealers. One way of increasing dealers is to give out more licenses or by opening up more Company Operated Outlets. Another way of effectively increasing market share is to identify NICHE Markets (markets not yet catered for) and then selling goods in those markets. One way of going at it can be by launching new brands also can be an effective tool here. Increased market share means more sales and revenue.

2- Promotion “Promotion means an activity that communicates the merits of the product and persuades target customers to buy it”. Good Promotion always plays an important role in the success of

any product. A good product can fail if not properly promoted. Differentiation strategy can be used, in that strategy the company makes its products or services differ to the other companies. This creates Brand Loyalty so that customers keep buying ICI’s products. One way of promoting the product is in the moral way is Corporate Social Responsibility (CSR).This can improve the company’s image and increase its sale at the same time. Promotion makes the demand for the product Price Inelastic which will allow ICI to increase its price without losing many customers. The Increase in revenue is more than enough to outset any decrease resulting from few loss in customer numbers. This leads to more profits then before

Page 17 of 24

ICI paints can use following advertising strategies:

Electronic and print media should be used to promote ICI’s products.

3- Reducing costs ICI Paint has to consider its cost to improve its profitability ratio. As the profitability ratio will increase, ICI Paint can become stronger and invest more. This investment can be used to improve the technology. This can lead to improvement in quality of paints this will ensure high demand from consumers. Also new technology is helpful in cutting down costs. Machines can replace labor so operational expenses can be reduced.

Profit=Sales-Expenses Once expenses are reduced it can clearly be seen from above equation that profits will increase. The results can be breakthrough products that respond to new and anticipated demands, as well as more efficient manufacturing processes that cut down on delivery time, costs and taking the company’s sales and profits to an all time high and at the same time satisfying all the stakeholders of the company.

• to inform customers about new productsInformative

• to convince customers to buy existing productsPersuasive

• to remind customers of existing products

Reminder

Page 18 of 24

FINANCIAL DOCUMENTS AND ANALYSIS

Page 19 of 24

Page 20 of 24

Continued

Page 21 of 24

Ratio

Ratios 2006 2007

1 Current Ratio 1.29 1.45 2 Quick Ratio 0.83 0.98 3 Gross Profit Margin 29.41% 29.84% Net Profit Margin 6.60% 6.87% Earnings Per Share 10.49 12.86 5 Average Collection Period 21 days 25 days Inventory Turnover Ratio(times) 5.074 6.25

Interpretation of Ratios The Liquidity Position of the Company is good Because Assets are more than Liabilities.

Company's Current Assets are more than current Liabilities which is not risky and company may

not be solvent in the short run. There is an upward trend in Quick Ratio Which Shows good

performance so 2007 year is considered best for both Current and Quick Ratio. Inventory

Turnover is worse in 2007 As compared to 2006 because spending on manufacturing has

increased where as sales are not fast enough. The time to realize receivables has increased

which means we are getting our amounts late (Ratio5).

Page 22 of 24

Overall Performance of the Company

Calculations (2007 Ratios)

Current Ratio:- Current Assets/Current Liabilities

9058107/6276103 = 1.443

Quick Ratio:-Current Assets-Stock/Current Liabilities

9058107-2916816/6176103 = 0.98

Average Collection Period:-Account Receivable/Average sales per day

1707953/(25973009/360) = 25 days

Inventory Turnover(times):-Cost of Goods Sold/Inventory

18223615/2916816 = 6025

Following figure compares financial ratio of ICI with that of industry and then evaluation is

given on these ratios

Ratios 2007 2006 Industry Avg Evaluation

Current Ratio 1.443 1.29 1.21 Good

Quick Ratio 0.98 0.83 0.80 Good

Inventory Turnover (Days)

58 71 35 Good

Average Collection Period (Days)

25 21 23 OK

Total Assets Turnover

1.381 1.3 0.7 Poor

Debt Ratio 1.8% 1.7% 4.30% Good

Page 23 of 24

Gross Profit Margin

29.84% 29.41% 19.70% Good

Net Profit Margin

6.87% 6.60% 6.90% Poor

Earnings per Share

12.86 10.49 14.97 OK

Return on Investment

9.5% 8.6% 5.05% Poor

Return on equity 15.66% 14.20% 14.70% OK

Price/Earnings ratio

0.7776 0.9533 9.51 Poor

Financial Analysis Company has low external debt which means that company can borrow easily. Company is

attractive to investors as they see their funds safe and company’s future less risky. There is

significant Difference in Gross and Net Profit Margin Ratios (23%) which shows company’s

expenses are high, these expenses should be kept in check so that more profit can be earned.

Earnings per Share shows answer of 12.86 which means on average a shareholder earned

Rs.12.86 on a company’s share

Page 24 of 24