MBA Asian paints porject

A Study On Organization Structure of Asian Paints – National Traders

HISTROY

February 1, 1942

The company has come a long way since its small beginnings in 1942. It was set up as a

partnership firm by four friends who were willing to take on the world’s biggest, most famous

paint companies operating in India at that time. Over the course of 25 years, Asian Paints became

a corporate force and India's leading paints company. Driven by its strong consumer-focus and

innovative spirit, the company has been the market leader in paints since 1967. Today, it is

double the size of any other paint company in India. Asian Paints manufactures a wide range of

paints for decorative and industrial use.

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 a public limited company in 1973. The Company

manufactures a wide range of surface coatings catering to different enduses. 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.

1974

The Bhandup plant in Mumbai 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.

1985

The Company undertook to set up a third paint unit at Patancheru, a notified backward area near

Hyderabad, for the manufacture of 15,000 MT of paints and enamels.

The Company entered into a collaboration agreement with Nippon Paints Co. Ltd., Japan, to

obtain technical knowhow to manufacture powder coating and coil coatings under an exclusive

license. Necessary manufacturing facilities for the powder coatings with a capacity of 300 MT

were installed and commissioned at Kasna plant during 199293.


1996

The Company proposed to set up a fifth point manufacturing plant at Ratnagiri, Maharashtra.

During 21st February, a fire broke and in the paint manufacturing block of

Mumbai plant causing extensive damage to the materials stored in the block.

A joint venture company viz. Asian PPG Industries Pvt. Ltd. was set up along

with PPG Industries, Inc. of USA to market and/or manufacture automotive paints and certain

Industrial products as may be decided upon mutually between the partners.

1998

The new initiative to install 350 color 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 color 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 Color World’. Credit Rating Information Services of India Ltd (Crisil) has

assigned an ‘AAA’ rating to the proposed nonconvertible 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 Lank abased 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 partnership with 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 "sitinstrike".

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.

2002

Revamps its international operations, transfers 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 $3 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 capitalization of Reserves in the ratio of 1 equity

share for every 2 equity shares held on the record date Asian Paints, via its Singapore based

subsidiary Berger International inks a technology and brand licensing agreement with PT 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 kid’s.

2005

Berger Intl partners with Filipino firm Dutch Boy

Company has changed its name from Asian Paints (India) Ltd. to Asian Paints Ltd. 2006

Asian Paints APICL’s new manufacturing plant at Baddi commences commercial production

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.

2010

Berger International Ltd Singapore (BIL), a subsidiary of Asian Paints Ltd , which is a wholly

owned subsidiary of the Company. The Company's new paint plant at Rohtak in the State of

Haryana has commenced commercial production

Asian Paints Signed a MOU with Maharashtra Govt. to set up a Mega Project for manufacture of

Paints & Intermediate

2011

Asian Paints to form second Joint Venture with PPG Industries.

Asian Paints Company’s subsidiary, SCIB Chemicals SAE has temporarily restarted the

operations of its two plants in Egypt.


2012

Asian Paints Production at the Company's Plant at Rohtak, Haryana has been restarted

2013 Asian Paints completes acquisition of Sleek Group Commencement of commercial

production at new plant Asian Paints has splits its face value from Rs 10/ to 1/ 2014 Asian Paints

Ltd Enters into binding agreement with Essess India.

2013

Inspired by the success of the Stores at Mumbai and Delhi, your Company launched first ever

‘Ezycolour Store’ at Kolkata in August, 2013. This Store is a more functional version of the

‘Color Stores’ and focuses mainly on delivering a great colour consultancy experience to

customers. At the top of our retailing hierarchy, your Company increased Colour Ideas Stores to

170 by launching a record 70 new Stores during the financial year. In-store Colour Consultancy

is a key feature of these Stores which benefitted more than 80,000 customers across these Colour

Ideas Stores during 2013-14.

2014

During 2014-15, your Company took steps for setting up paint manufacturing facility and

operations as part of a greenfield foray into Indonesia. During the year, Berger International

Limited, Singapore became a wholly owned subsidiary of Asian Paints (International) Limited,

Mauritius. During the year, expansion of manufacturing capacity in Bangladesh to 24,000 KL

was completed. In Oman, project of setting up of new manufacturing facility with annual

capacity of 21,000 KL in Sohar is in the advanced stage of completion and product trials are

being taken.

2015

The expansion project at Rohtak plant in Haryana to double the capacity from the existing

2, 00,000 KL per annum to 4, 00,000 KL per annum was successfully completed this year.

During the year, a new state-of-the-art manufacturing facility was inaugurated at Sohar in Oman

with an annual capacity of 21,000 KL.


About National Traders Co – Asian Paints Distributor

National Traders Co is an established firm since 2006 in Gulbarga. And are the largest paints &

hardware distributor in North Karnataka. They have been in this business since the past 150

years we are the 5th generations continuing the same business. This outlet is new outlet at MSK

Mills Road. They distribute almost all types of paints. Currently we are dealing in Decorative

(Interior & Exterior), Industrial, NC paints & Waterproofing Products. Industrial, NC paints &

Waterproofing Products. Range of our products are Asian Paints , Sleek Modular Kitchen,

Building Hardware, Architectural Fittings, Wooden Flooring, Sanitary Ware, Tiles , Plumbing,

Modular Doors, Plywood, Laminates, Veeners Etc.

Board of Directors

Chairman Ashwin Choksi

Vice Chairman Ashwin Dani

Director

Mahendra ChoksiDipankar BasuMahendra Shah

Deepak SatwalekarSivaram

S Rama Dorai

CFO & Company Secretary Jayesh Merchant

Managing Director & CEO K B S Anand

Additional Director

M K SharmaVibha Paul Rishi

Amrita VakilAbhay Vakil

Non-Executive Director Malav Dani


NUMBER OF MANUFACTURING UNITS AND ADDRESSES

Asian Paints along with its subsidiaries has operations in 19 countries across the world and 26

paint manufacturing facilities, servicing consumers in 65 countries through Berger International,

SCIB Paints-Egypt, Asian Paints, Apco Coatings and Taubmans. We operate in 5 regions across

the world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region

through the five corporate brands. In 7 markets, we operate through our subsidiary, Berger

International Limited; in Egypt through SCIB Paints; in 5 markets in the South Pacific we

operate through Apco Coatings and in Fiji and Samoa we also operate through Taubmans.

Country No.

Countries Manufacturing Plants

Company Location

South Asia

1 India 8 Ankleshwar, Patancheru, Kasna, Sriperumbudur, Rohtak, Khandala, Sarigam & Taloja

2 SriLanka 1 Asian Paints

3 Nepal 2 Asian Paints

4 Bangladesh 1 Asian Paints


South East Asia

5 Singapore 1 Berger International

6 Indonesia 1 Berger International

South Pacific

7 Tonga Asian Paints

8 Fiji 1 Asian Paints & Taubmans

9 Samoa Islands 1 Taubmans

10 Vanuatu Asian Paints

11 Solomon Islands Asian Paints

Middle East

12 Oman 1 Berger International

13 Bahrain 1 Berger International


14 Dubai 1 Berger International

15 Egypt 2 SCIB Paints

Caribbean

16 Jamaica 1 Berger International

17 Barbados 1 Berger International

18 Trinidad & Tobago

1 Berger International

Africa

19 Ethiopia 3 Kadisco

Total 26


Office Addresses

Location Type Address

1 Registered office & Factory Survey No.86, plot No 1 to 4 National

Highway 8BRajkot Dist. – 360002

Gujarat –IndiaPhone : 252996,252999,666000

Fax : 252554, 666029Email :

[email protected]

2 Corporate office Jimmy Tower, Gondal Road, OppSwaminarayan gurukul,Rajkot

360002Gujarat –India

Phone: 2374991, 2374992, 2374993.Fax : 2374994Email : N.A.

mailto:[email protected]


NUMBER OF DIFFERENT DIVISIONS AND THEIR PRODUCTS

Emulsions Division

Asian Paints manufactures two types of emulsions interior and exterior with more than 1800

color shades.

Products:

Wood Finishes Division

In the wood finishes category, the high end finishes like Polyester and Polyurethane (PU) are

manufactured by Asian Paints. It also have two categories interior and exterior. It launched full

range of clear and opaque colors across different products and exclusive special effects in wood

and glass coatings. It also collaborated with Italian company for wider range of products.


Products:

Wall Coverings Division

Asian Paints with the product name as ‘Nilaya’ have range of wallpapers has one of the largest

variety compiled in partnership with the leading manufacturers in the world and comprises of

designer handcrafted range, ‘paintable’ range, thematic collections and decals. Nilaya have a

wide range of products from many design patterns offering the customer the wide range of

options to décor their homes and offices.

Products:


Paint Application Tools Division

Asian Paints had launched a range of paint application tools in collaboration with Harris Brushes

of UK in 2012-13. In 2014-15, the tools and implements portfolio was strengthened by launch of

new products. Sustained field marketing effort has resulted in the wide acceptance and good

growth in this segment. It have Rollers, Brushes and Accelerators in product varieties in this

category.

Products:


Kitchen and Bath Division

The kitchen and bath businesses have been co-branded with Asian Paints and ‘Sleek’ and another

company ‘Essess’. The “Sleek by Asian Paints” and “Ess Ess by Asian Paints” approach has

been received very positively by the existing network and consumers, as this brings the expertise

of the individual businesses together with the credibility and trust of the “asianpaints” brand.

Products:


Adhesive Division

Asian Paints have a product in this category offering customer a wide variety of adhesives based

on the material like wood, glass, stone, rubber and for general purpose.

Products:


NUMBER OF EMPLOYEES AND THEIR CADRE

Asian Paints have around total 10,000 plus employees worldwide, they operate as a team with

below cadre:

Managing Director 01

General Manager 01

Financial Manager 01

Sales Manager 01

Service Manager 01

Work Manager 01

Sales Men 03

Accountant 01

Cashier 01

supervisor 01

Mechanic 05

Employees 03


RECRUITMENT AND SELECTION PROCESS

Asian Paints promise an environment that provides a richness and variety of experience. We want

our employees to work in a space that allows learning, exploration, and contribution, and

endeavour to engage them through challenging work and meaningful conversation.

The opportunity to interact with multiple functions and disciplines will bring about functional

expertise and insights into inter-disciplinary collaborations. They reward merit, encourage

openness, and respect individual opinion.

Manpower procurement or recruitment may be defined as 'A Strategy for the acquisition,

Utilization, improvement and preservation of the human resources of an enterprise'. It is the

activity of the management, which is, aimed at coordinating the requirement for the availability

of different types of employees. This involves ensuring that the firm has enough of the right kind

of people at the right time and also adjusting the requirements to the available supply.

Recruitment is understood as the process of searching for and obtaining applicants for the

jobs, from among whom the right people can be selected.

Recruitment forms the first a stage in the process, which continues with selection and ceases with

the placement of the candidate. It is the next step in the procurement function, the first being the

manpower planning.

Recruitment makes it possible to acquire to ensure the continued operation of the organization.

Recruiting is the discovering of potential applicants for actual or anticipated organizational

vacancies. In other words, it is a 'linking activity' bringing together those with jobs and those

seeking jobs.


Recruitment has been regarded as the most important function of personal administration,

because unless the right types of people are hired even the best plans organizational carts and

control systems would not do much good. Thus, recruitment forms a means for attracting

manpower in adequate number to permit effective selection of a capable of productive work

force. It is a continuing function involving efforts to attract employees equipped with job

potential employees for jobs in an organization.

To prepare the employee, both new and old to meet the present as well as the changing

requirements of the job and the organization

To prevent obsolescence.

To impart the new entrants the basic knowledge and skill they need for an intelligent

performance of a definite job.

To prepare employees for higher level tasks.

To assist employees to function more effectively in their present positions by exposing

them to the latest concepts, information and techniques and developing the skills they

will need in their particular fields.

SOURCES OF RECRUITMENT

Before an organization activity begins recruitment applicants, it should consider the most

likely source of the type of employee. It needs some companies try to develop new sources,

while most only try to tackle the existing sources they have.

These sources accordingly may be termed as internal and external.

INERNAL SOURCES

These include personal already on the pay roll of and organization, i.e. its present

working force. Whenever any vacancy occurs, somebody from within the organization is

upgraded, transferred, promoted or sometimes demoted. This source also includes personal who

were once on pay role of the company but who plan to return of whom the company would like

to receive, such as those on leave of absence, those who quit voluntarily or those on production

layoff or even those who are trainees in the organization.


This source is used by many organizations, but a surprising number ignore this source,

especially for middle management jobs.

EXTERNAL SOURCES

These sources lie outside the organization. They are

1. New entrants to the labor force, i.e. mostly young experience, potential employees and

college students.

2. Unemployed with a range of skills and abilities.

3. Retired experienced persons.

4. Others not in labors force, such as married women, persons, from minority groups.

5. Private employment agencies or consultants.

6. Professional associations.

7. Education and training institutions.

METHODS OF RECRUITMENT

There are basically three methods of recruitment. Direct, indirect and third party

Method.

Direct Method:

This includes sending traveling recruiters to educational and professional institutions,

employee's contacts with public and manned exhibits other direct methods include sending

recruiters to conventions and seminars, settings up exhibits at fairs, and using mobile office to

go to the desired centers.

Indirect Method:

It mostly involves advertising in newspapers, on the radio, in trade and professional

journals, technical magazine broaches. Some organizations often place what is referred to as a

blind advertisement. One in which there is no identification of the organization, respondents are

asked to reply to a 'post office box number'.


Third Party Method

These include the use of private employment agencies employee referrals, voluntary

organizations, state agencies, placement offices of schools, colleges and professional

associations, recruiting firms, management consulting firms, indoctrination seminars for college

professors, friends relatives, computer data banks etc.

SELECTION

Selection is the process of ascertaining the qualification experience, skill, knowledge etc.

of an applicant with a view to appraise his/her suitability to a job.

Selection Procedure:

Although an effective recruitment program can provide us numerous job applications,

there still remains a crucial problem of selection of the most suitable human resources with a

view to placing them in vacant positions in the enterprise.

Selection standards and personal qualities of a candidate determine whether or not he is

placed on a job. An effective selection program is a nonrandom process because those selected

have been chosen on the basis of the assumption that they are more likely to be better employees

than those who have been rejected. Then the next problem is the next problem is the assignment

of jobs to the newly selected individuals.


ESSENTIALS OF SELECTION PROCEDURE

The selection procedure adopted by an organization is mostly tailor made to meet its

particular needs; the thoroughness of the procedure depends upon three factors.

First: the nature of selection, weather tautly of safe because a faulty selection affects not only

the training period that may be needed, but also results in heavy expenditure on the new

employee and the loss that may be incurred by the organization in case the job occupant fails on

his job.

Second: The policy of the company and the attitude of the management. As a practice some

companies usually hire more than the actual number needed with a view to removing the unfit

persons from the jobs.

Third: The length of the probationary or the trial period. The longer the period, the greater the

uncertainty in the minds of the selected candidates about his future.

To prepare the employee, both new and old to meet the present as well as the changing

requirements of the job and the organization.

Selection through Job portals and Asian Paints Career Portal

The company updates for vacant openings in the Job portals such as www.naukri.com and

www.monster.com and also in their website under career section

https://www.asianpaints.com/more/careers.html based on the skillsets of the candidate they get

shortlisted if they find suitable for the job description. Then the process goes through following:

1. Written Test: Online test on subject matters

2. Group Discussions: 20 minutes group discussion on business case study

3. Face to Face Panel interview: 3-4 panellists will judge for soft skills mainly for

communication skills / behaviour /composure /leadership skills/initiative

/aggression /team spirit /creativeness.

https://www.asianpaints.com/more/careers.html

http://www.monster.com/

http://www.naukri.com/


Selection through Campus

Asian Paints also visits various colleges across country to recruit the fresher employees, they

also have summer internships. Summer internship program has been a long-standing tradition

and an important way for them to select their next generation of achievers. Interns find

themselves learning under esteemed seniors – many of whom are B-School alumni themselves.

They conduct frequent reviews to track progress.

ORGANIZATION STRUCTURE


COMPANY TURNOVER/ SALES / PROFIT

Overview of Company’s financial performance for FY 2014-2015

Net revenue from operations on standalone basis increased to Rs. 11,648.83 crores as against Rs.

10,418.78 crores in the previous year – a growth of 11.8%. The performance for the current year

is after considering results of bath business acquired in June, 2014.

Cost of goods sold as a percentage to net revenue from operations decreased to 55.3% as against

57.0% in the previous year. The decrease is on account of reduction in key raw material prices,

specifically in the second half of the year, on the back of significant drop in crude prices.

Employee cost as a percentage to net revenue from operations increased to 5.2% (Rs. 606.94

crores) as against 4.6% (Rs. 482.43 crores) in the previous year. The increase is mainly on

account of falling bond yields during the year which adversely impacted the provision for

retirement benefits.


Other expenses as a percentage to net revenue from operations increased to 22.2% (Rs. 2,591.52

crores) as against 21.3% (Rs. 2,219.13 crores) in the previous year. The Company was carrying a

provision of Rs. 14.04 crores in respect of the diminution in carrying value of its investment in

Asian Paints (International) Limited (APIL), Mauritius in the earlier years. Based on the

assessment of the fair value of the investment in APIL as at 31st March, 2015, the aforesaid

provision for diminution has been reversed in the current year. The same is included in

"Exceptional items" in the Statement of Profit and Loss. The details of "Exceptional items" are

given in Note 51 to the Standalone Financial Statements and Note 28 to the Consolidated

Financial Statements.

The Profit After Tax for the current year is Rs. 1,327.40 crores as against Rs. 1,169.06 crores in

the previous year - a growth of 13.5%. The growth in profit is mainly driven by softening of

input prices during the second half of the year.

On a consolidated basis, your Company achieved net revenue of Rs.14,182.81 crores as against

Rs. 12,714.81 crores - a growth of 11.5%. Net profit after minority interest for the group for the

current year is Rs. 1,395.15 crores as against Rs. 1,218.81 crores in the previous year – a growth

of 14.5%.


Consolidated financial statement for previous ten years:


PRODUCT LINE LENGTH / WIDTH / DEPTH

These terms all relate to a business that sells products, and describes the organization of those

products for marketing purposes.


1. LINE: The term "product line" includes all the different things the company is selling in a

particular category. Put them all together and you have the "line." It might be a long line, or a

short one.

2. WIDTH: How many different "lines" the company produces. Some companies may sell many

different "categories" of items. Some may not.

3. LENGTH: This refers to products that are sold that are similar to each-other, but not bundled

together and sold as one. For example, car wash, car polish, car air fresheners that are sold

individually and not as a package. They would be part of the same line. A long line means

many different, related products to sell.

4. DEPTH: Think of this like subcategories. If a company sells face soap, it may have 5 different

formulas depending on skin type.

5. BUNDLING: Though you didn't ask, this a piece of the puzzle, too. This is putting related

products together and selling them as one thing. They don't count as individual products, but one

bundled entity.

Diagrammatic representation of Asian paints – Product line Length/ Width/ Depth:



MARKET SHARE AND COMPETITIORS

The national branded players such as Berger Paints, Kansai Nerolac and Akzo Nobel have

stepped up efforts in the decorative segment, especially the premium end, to shore up earnings.

Asian Paints has had a clear head start over its peers.

The company's strong brand equity, robust distribution network of over 30,000 dealers (double

of that of Berger's 15,000) and operational efficiencies are the key differentiators that protect its

position.

With a market share of more than 40 per cent, Asian Paints remains the undisputed leader. While

market share gains appear to be difficult from here on, analysts believe, the company will not

face difficulty in maintaining its position.

The gap between Asian Paints and the next competitor, Berger Paints (with an estimated market

share of 17 per cent), is large enough to not be bridged anytime soon.

Asian Paints has been marketing its premium-end decorative paints, such as Royale Play and

stenciled wall-painting, for a few years now, ahead of competition.


SWOT Analysis

Strengths 1. The largest paint company in India and third largest company in Asia

2. They have over 50% of market share and are clear leaders decorative paints and are strong competitors to Kansai Nerolac Paints to be leaders in Industrial paints and coatings.

3. They operate in 17 countries and have 24 manufacturing facilities providing service to 65 countries all over the world.

4. Asian paints has strong international presence with its four 4 subsidiaries; Berger International Limited, Apco Coatings, SCIB Paints and Taubmans.5. Most renowned brand in Indian Paint Industry & its strong customer focus and innovative-spirit has made it market leader since 1968.6. Superior technologies deployed to achieve maintain the competitive edge for eg. Supply chain management system that integrates plants, regional distribution centers, outside processing centers etc. hence they


have strongest supply chain system with

7. They have maintained their brand name and increased awareness by unique ways of advertising and roping in celebrities like Saif Ali Khan.

8. The company has strong financials.

Weaknesses

1. Limited market share in industrial paints segment with Kansai Nerolac and Akzonobel giving stiff competition.2.In decorative paints Industry Customer tastes and perceptions change very fast and products may become obsolete with change in trends, hence production planning and inventory problem.

Opportunities

1. Big an international standard paint company it should look for more opportunities abroad2. There is a good scope for growth especially in industrial paints category3. Needs to have more focus on Automobile industry in industrial paints segment

4. Competitors are going for Hi-tech process and Asian paints with good financial and intellectual capital can go for hi-tech.

Threats

1. Growth prone to slowdown effects2.Stringent Government rules and regulations regarding the quality of products and manufacturing facilities as Environment policies are given more emphasis3.Raw material scarcity and volatility in prices.

Competition

Competitors

1. Jenson & Nicolson India Limited.2. Kansai Nerolac Paints3. Akzonobel

4. Sherwin-Williams

5. Nippon Paint

6. PPG Industries

7. Berger Paints


MARKETING / SALES PROCEDURE / STRATEGY

Marketing:

Product in the Marketing mix of Asian paints

Asian Paints manufactures as well as markets decorative and industrial coatings and it provides solutions and services for home paintings. All the products of Asian Paints are of acrylic type with properties such as washable, long-lasting, leak proof and sunlight protected. Some of the main products of the company are as follows

Industrial coatings include Road markings, floor coatings and protective coatings.

Decorative paints include metal surface paints, wood surface paints, exterior wall paints and interior wall paints.

Ancillaries include wood primer, exterior wall putty, wall primer and acrylic wall putty.

Asian paints Royale – An interesting offering by Asian paints where they decorate your house with colors and Asian paints direct painters are involved in the process.

Along with the above paints, Asian Paints has been in the market of automotive paints. It is a joint venture with another company called PPG industries under the name PPG Asian Paints. The products include the manufacturing of plastic coatings and body coatings.Place in the Marketing mix of Asian paints

Asian Paints has spread its operations across the globe in at least seventeen countries. In every country, it has set up manufacturing facilities and in eleven out of the seventeen, it has become the number one paint manufacturer.

Place in the Marketing mix of Asian paints

Asian Paints has spread its operations across the globe in at least seventeen countries. In every country, it has set up manufacturing facilities and in eleven out of the seventeen, it has become the number one paint manufacturer.The operations of Asian Paints are held through a network of five regions worldwide via, Caribbean region, Middle East region, South Pacific region, South-East Asia and South Asia. A massive research and development center has been opened in India.The company has a manpower that is dedicated and well-organized and it enables the company to harness all the available information and technology solutions in order to increase the


operations efficiently. Asian Paints has sidestepped the segment of bulk buyer and has gone directly to the individual customer.At first, it concentrated on the semi-urban and rural areas and later on the urban areas. After entering the retail market, it initiated an open-door policy for the dealers and started a nationwide marketing and distribution. It has 6 manufacturing locations and 70 sales branches, 15,000 dealers and numerous warehouses. This intricate network along with sales managers, the executives and the sales team handle all steps of manufacturing and distribution.Price in the Marketing mix of Asian paints

In order to implement a balanced pricing policy Asian Paints has been keeping a close watch on the markets. The pricing decisions lean heavily on raw materials, petro-products, taxes, excise duty and various other factors. Even the increase or decrease in the competitor’s prices affects a brand heavily. That is why constant watch and periodical evaluation of its pricing strategy has become necessary for a high-profile company like Asian Paints.Asian Paints has kept a very flexible pricing policy. It has created various sub brands for the various sections of the society. The price range is kept according to the properties of every brand. All the products are of very fine quality with some ad-on features with them. The strategy has been kept of value based pricing policy with prices going up and down as per market situation.Promotions in the Marketing mix of Asian paints

The mascot for Asian Paints is Gattu and the cartoonist R.K Laxman created it in the year 1954. Gattu, who had an endearing appearance with his hair locks dangling over his right eye, became a very popular figure. After reigning for more than four decades, it was phased out in a rebranding initiative in the year 2002.Even the logo was changed to display an upmarket and contemporary look that denoted technology and sophistication. All the promotional activities of Asian Paints are based on the fact that the company is all about the family and its members along with their homes, which are a reflection of each other.The slogan “Har Ghar Kuch Kehta Hai” is a prime example of the fact that the brand is trying to connect with the emotions of the people. The famous actor pair of brother and sister Saif Ali Khan and Soha Ali Khan have been endorsing its brand Royale. Actor Akshay Khanna has also been a part of the promotional activities. Currently Deepika Padukone has taken over the brand endorsement. The promotions also include incentives to the painters, distribution of t-shirts and caps and added privileges to its members.


Finally, the best brand element for the brand is its wide distribution network, the quality of its

products and its repeated marketing communications which keep reminding the end customer

that Asian paints is the best paints brand out there.

Sales Procedure:

Asian adopted the new digital transformation to achieve the best sales procedure by investing in

the implementation of best ERP system.

The company started an initiative in 2000s to reduce debt and improve their internal efficiencies.

They decided to implement an enterprise-wide ERP and Advanced Supply Chain Management

System. This further helped them in creating an enterprise-wide platform that was the basis for

further improvements in sales and customer processes. This initiative also liberated working

capital that helped fund acquisitions in emerging markets. The organization also linked sub-

contractors and suppliers on a B2B portal that helped to further improve their efficiencies.

Finally, in 2013, the firm invested in a CRM system.

Real Transformation

There was another transformation initiated by the firm in 2010. They now centralized their order

taking process into a single corporate call centre. This change helped them to improve their

operational efficiencies while sustaining their growth. In customer-facing processes, this move

also encouraged retailers to place their orders through the call centre where they would now

receive a more consistent service level than they could through the firm’s 100 local depots.

Moreover, the centralized data process also facilitated delivery of products to large institutional

customer job sites, giving their customers a capability, which their competitors couldn’t provide.


Result of this transformation

One of the biggest changes that was noticed after centralising order taking process was the way

in which the sales people interacted with the retailers. The sales team was now liberated from

those annoying order collection processes and focussed more on building stronger relationships.

Furthermore, in order to ensure a more meaningful interaction between the sales team and the

retailer, the company provided the sales people with vital customer data in the field using mobile

devices. A rollout of tablet devices, which is currently underway, will further mobile-enable the

sales staff.

Digital transformation extended to internal production processes

Asian paint witnesses a high growth in paint demand, which further creates a need for new

manufacturing plants in every three years. Looking at the scale and size of these plants, the firm

has now begun to focus on creating highly automated plants.

This automation has helped the organization to achieve greater scalability, quality and stronger

safety and environmental protections. These new plants are fully integrated from an information

management perspective. Data from shop floor systems and automated warehouses are linked

seamlessly to the ERP which has helped the firm to sustain the firm’s operational efficiencies.

New Service Strategy

In India, the company has now started to sell services instead of products. They now offer

service of painted wall rather than selling a can of paint. This service strategy has benefitted

beyond new revenues.

Selling services helps the organization to ensure that their high end products are applied

properly, which further helps in improving customer satisfaction. Moreover, selling services also


helps the firm to get closer to the end-customer, understand core customer choices and also

launch high-end texture finishes.

Another advantage of having a contractor in a client’s house helps to yield information for the

marketing staff as they can understand the customer preferences as well as potential demands.

Gaining better knowledge of end-customer preferences is a high priority for the company, since

its business model – operating largely through retailers – means that customer involvement has

been traditionally very low.

Corporate growth as well as new technology demands has increased the challenges of digital

governance.

Asian Paints is in the first year of a new portfolio planning process. Mr. Manish Choksi, CIO &

Chief Strategy shared, “we have enjoyed great equality with the business because we have

delivered solutions. But seeing so many projects coming at us, we felt that now we need to

establish processes to match expectations and resources whilst taking on innovative projects.

The company’s investment in strong IT capabilities, combined with organizational and process

changes intended to leverage those investments. This will serve as a foundation upon which the

organization can continuously envision and implement new forms of digital transformation.

Marketing Strategy:

"Asian Paints aims to become one of the top five Decorative coatings companies world-wide by leveraging its expertise in the higher growth emerging markets. Simultaneously, the company intends to build long term value in the Industrial coatings business through alliances with established global partners."

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

(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.

(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:

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 ad campaign 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 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 objectives are as follows:

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 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 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.

Volumes and Profits:

Indian paint industry is less than Â½ of the size of the Chinese paint industry by volume and less than 1/5 of the size of the US paint Industry by volume.

In terms of Per capita consumption, the Indian paint industry lags behind the Pakistan and Sri Lankan markets also.

Product:

Paint

Asian paint details with product that is

(i) Decorative (ii) Industrial (iii)Automative.

The product that this project will deal with will exclusively be decorative pains.

Decorative Paints includes the following categories of product

EXTERIOR WALLS:

Asian Paints offers a range of emulsion paints for your exterior walls such as ACE, Apex, Apex Ultima, Apex Duracast and more, based on the specific demand of surface area.


INTERIOR WALLS:

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.

Enamels

Enamels is a premium brand from Asian Paints, it is superior in terms of performance and gives that Perfect Finish for the walls.

Market Size:

The market size of the Indian paints sector has been pegged at Rs 170 bn in value terms and is very fragmented. The per capita consumption of paints in India stands at 0.5 kg per annum as compared to 1.6 kgs in China and 22 kgs in the developed economies. India's share in the world paint market is just 0.6%.

The unorganised sector controls around 35% of the paint market, with the organised sector accounting for the balance. In the unorganised segment, there are about 2,000 units having small and medium sized paints manufacturing plants. Top organised players include Asian Paints (30% market share), Kansai Nerolac (20% market share), Berger Paints (19% market share) and ICI (12% market share).

Decoratives: Major segments in decoratives include exterior wall paints, interior wall paints, wood finishes and enamel and ancillary products such as primers, putties etc. Decorative paints account for over 75% of the overall paint market in India. Asian Paints is the market leader in this segment. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (September-December) is significant, as compared to other periods. This segment is price sensitive and is a higher margin business as compared to industrial segment.


Industrial: Three main segments of the industrial sector include automotive coatings, powder coatings and protective coatings. Kansai Nerolac is the market leader in this segment. User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment.

Customer Retention

Asian Paints Limited, India's largest paint company, has a reputation for professionalism and fast-track growth.

Customers are at the core of all Asian Paints business activities. A simple but unbeatable concept of "going where the customer is" drives all its major initiatives.

The company has an enviable reputation in the corporate world for professionalism, fast-track growth and customer-centricity.

The Key Challenges addressed by the company are:

A Fresh Approach to the Customer Experience

Develop a direct link to the customer

Standardize sales delivery processes used by Asian Paints

Institute an online ordering and accounting system for providers

Implement a real-time reporting system for employees and business partner

Intermediary Retention

Industry is characterized by the presence of intermediaries who have a very high influencing power on the purchase decisions of the consumer, especially in the urban areas.

Using these intermediaries for initiating demand: The intermediaries (the painters, contractors, designers, decorators etc.) are used as a marketing arm of the company Occupy part of the intermediary space and try to sideline other intermediaries: Asian Paints has opened a service arm, which provides the services provided by the existing intermediaries in the market. Being present in different seditions of the value delivery system and having a strong brand equity in the Paints market would give AP the credibility to operate a strong service arm. The service based strategy of AP could have two different approaches


AP could try to reduce the power of the intermediary by increasing the Pull for the product. The role of the influencer could be drastically reduced by increasing the power of the end-consumer. AP can achieve this by establishing a strong brand name for its brands.

Marketing strategy: Key to success

The decorative paints segment displays some of the classic attributes of FMCG products.

Since the user-base has no geographical boundaries, a company's ability to penetrate new

markets and improve product awareness would be the key to maintaining market share. The

future prospects, thus, depend on the marketing and distribution strategy plays a crucial role in

future prospects.

Distribution is where Asian Paints is strongly placed. Its dealer network of 14,500 is the largest.

It is closely followed by Goodlass Nerolac with 11,000 dealers. Berger Paints and ICI (India) are

way behind in terms of market reach. Another major marketing strategy is offering value-added

services to consumers. For instance, colour vending machines have been used with great success.

Companies that have the ability to provide more choice to the consumers, without significantly

impacting the expense budget, are likely to attract more customers.

The product reach also depends on the level and depth of the companies' promotional activity.

For the paints industry, however, what matters more is the brand rather than the product.

Therefore, the level of ad-spend by the companies should give an idea of the brand-building

effort. For instance, Asian Paints registered the highest increase in ad spending (31 per cent

growth) in the year ended March 2000 compared to March 1999. Berger Paints recorded a 22 per

cent growth. Goodlass growth declined by around 2 per cent, while that of ICI India slipped 30

per cent. But whether the ad-spend has helped the company in 2000 is a moot point.

The sales generated for every rupee of expenditure should give us an indication of the

effectiveness of the ad-spend. For every Rs 1 crore spent on advertising, Goodlass Nerolac

managed to generate sales volumes of Rs 54 crore, Rs 8 crore more that it managed in 1999.

Surprisingly, both Asian Paints and Berger Paints recorded a reduction in sales generated as a

ratio of spending on advertisement. Asian Paints managed to generate Rs 38 crore in 2000


compared to Rs 42 crore in 1999. Similarly, Berger Paints generated Rs 48.50 crore in 2000

against Rs 50 crore in 1999.

VITAL INFORMATION SPECIFIC TO PAINT INDUSTRY

The major change that has taken place in the coatings industry during the last 40 years has been

the adoption of new coating technologies. Until the early 1970s, most of the coatings were

conventional low-solids, solvent-based formulations; waterborne (latex) paints, used in

architectural applications, accounted for 30–35% of the total. In the late 1970s, however,

impending government regulations on air pollution control focusing on industrial coating

operations stimulated the development of low-solvent and solventless coatings that could reduce

the emission of volatile organic compounds (VOCs). Energy conservation and rising solvent

costs were also contributing factors. These new coating technologies include waterborne


(thermosetting emulsion, colloidal dispersion, water-soluble) coatings, high-solids coatings, two-

component systems, powder coatings, and radiation-curable coatings.

Coatings provide two primary functions—decoration and protection—that are of considerable

economic importance. About 45% of the coatings produced worldwide are used to decorate and

protect new construction as well as to maintain existing structures, including residential homes

and apartments, public buildings, and plants and factories (referred to as architectural or

decorative coatings or simply, "paints"). Another 40% of the coatings are used to decorate and/or

protect industrial products (called "product finishes"). Without coatings, product lives might be

shortened drastically and many products would not even be marketable. Most of the remaining

coatings, called "special purpose," are used for miscellaneous applications such as traffic paints,

vehicle refinishing, high-performance coatings for industrial plants and equipment, and

protection of marine structures and vessels. These are usually applied outdoors in ambient

conditions.

The following pie chart shows world production of paints and coatings:

The paints and coatings industry in the United States, Western Europe, and Japan is mature and

generally correlates with the health of the economy, especially housing, construction, and

transportation. Overall demand from 2014 to 2019 will increase at average annual rates of 3% in

the United States and 1.5–2.5% in Western Europe. In Japan, however, consumption of paints

and coatings will experience relatively slow growth during this period (0.5%), as a result of no

growth in major markets such as automotive OEM, machinery, and appliances.

In the emergent countries of the world, coatings are growing at a much faster rate. The best

prospects for growth are in Asia Pacific (4–5% growth per year in the near future), Eastern


Europe (6%), and Latin America (8%). Total global growth should be about 6% per year.

Growth of coatings is expected to continue at 8% per year in China, 11% in India and 4–5% in

Indonesia. Growth in value terms will be even higher because of the increased production of

relatively higher-valued coatings. Most of the major multinational paint producers, including

PPG, Akzo Nobel, Kansai Paint, Nippon Paint, BASF, Axalta (formerly DuPont), Chugoku

Marine Paint, Valspar, Sherwin-Williams, and Hempel, have production in China. The

multinational producers should gain even more presence in the developing world as living

standards increase and per capita consumption of coatings rises.

One new area of interest is nanotechnology, with tens of thousands of patents issued already just

for the coatings industry. Very small ceramic or metallic particles can be added to paint

formulations to modify specific properties (e.g., scratch, mar, wear, corrosion, and UV

resistance) in highly specialized applications. The average size of nano particles is 10–70

nanometers, consisting of less than 6.5 million atoms. At these sizes, the ratio of surface area to

mass becomes significant, giving the particles unique properties. For example, at 2 nanometers,

the conductivity of metal particles changes and at 20 nanometers, the transparency of ceramic

particles changes. At 20 nanometers, particles of gold turn red and their plasticity disappears.

Some of the futuristic applications are nanotubes for electrically conductive coatings and to

increase the speed of reaction of thermosetting resins; organosilane dendrimer coatings;

buckyball coatings for machine parts; and metals for conductive coatings in inks. The technology

is mainly limited to highly specialized applications because of the high cost per unit volume

needed to reduce the size of particles and the need to add surface modifiers to keep the particles

from agglomerating. Recent research efforts have been focused primarily on functionalizing the

particle surface of the nano particles to make them more compatible with the coating resin

systems, so that easy dispersion, low viscosity, and covalent bonding between the particles and

resins are achieved.

Through the next five years, air pollution regulations will continue to be a driving force behind

the adoption of new coating technologies. Despite the relatively slow growth in demand

anticipated for coatings overall, waterborne and high-solids coatings, powders, UV curables, and

two-component systems appear to have good growth prospects.


In general, environmental regulations are becoming more stringent in all regions to limit

emissions of volatile organic compounds (VOCs) and hazardous air pollutants (HAPs), not only

in the industrialized world, but also in developing countries like China.

INDIAN COATINGS INDUSTRY – ARCHITECTURAL

MARKET: Architectural coatings constitute 70% by value and 77% by volumes • TECHNOLOGY: There has been a recent shift towards water-based coatings in the recent past, and the current split between water-based systems and solvent-based systems stands at about 50:50 today, with water-based systems easily outgrowing solventbased systems. Designer finishes are fast gaining popularity and prominence. • SALES: The mode of sale for architectural coatings is predominantly distributor-driven or through hardware stores. Institutional sales are a small fraction driven by the organized construction segment. The DIY segment is non-existent. Point-of-sale tinting is becoming increasingly popular, though. Over 22,000 installations, making it the most in the world.

PRODUCT:

INDIAN COATINGS INDUSTRY – ARCHITECTURAL

PLAYERS: Organized sector contributes 58%. The top players are Asian Paints, Berger Paints, Kansai Nerolac Paints, Akzo Nobel (ICI Paints) and Shalimar Paints • APPLICATION: Still rely on unskilled applicators with low sophistication in application equipment. Growing usage of spray guns is a recent trend. • GROWTH-DRIVERS: – 100% FDI in construction – Change in


culture tending towards nuclear families – Simultaneous upgradation of major cities, satellite towns and rural areas – Easy availability of home loans at affordable rates – Thrust on non-residential sector as well – Government-driven housing schemes

The Rs 40,600-crore Indian paint industry is likely to see a 20 per cent compounded annual growth rate until 2016, says a study by business chamber Assocham.

This is due to increasing demand from retail consumers, on rapid urbanisation, and development of rural markets. The industry will reach the level of Rs 62,000 crore in the next two years, it said. A rise in disposable income of the average middle class coupled with increasing investment on education, urbanisation, development of the rural market and various launches of many innovative products will be major drivers, it said. India is the second largest consumer of paint in Asia.

“The Indian paint industry has seen a gradual shift in the preferences of people from the traditional whitewash to higher quality paints like emulsions and enamel paints,” said D S Rawat, secretary-general, Assocham.

The rural market grew 20 per cent in 2013-14. Rural India’s incremental consumption expenditure is growing well. And, the rural sector has a major share of thedecorative paints segment. Thus, any benefit to the rural sector’s disposable income is directly correlated to the paint industry’s growth.

Besides, decorative paints are marketing well, backed by large advertisement campaigns and dealership networks. In FY14, per capita consumption of paint increased to a little over four kg, of which the decorative segment contributed 73 per cent at Rs 29,638 crore. The remaining Rs 10,962 crore was contributed by the industrial segment.

“Demands for decorative paints arise from household paintings, architectural and other display products. The demand for paint increases during festive seasons as compared to other periods,” said Rawat.

The decorative paint market has been further segmented into emulsions, enamel, distemper and cement paints. Industrial paints are segmented into automotive coating, high performance coating, powder coating and coil coating.


The unorganised sector has around 35 per cent of the paint market. In the unorganised segment, there are about 2,500 units.

Primary Reasons for the Growth of Decorative Paint Industry in India

The Indian paint and coatings industry was riding high on the growth in the Indian automobile industry, new construction in the housing segment and improving infrastructure throughout the country. Thus, there has been a higher growth of emulsion paints for interiors vise-versa distempers. There is increasing use of economy emulsion in place of lower-priced distempers. Similar is the trend for exteriors where emulsion-based coatings are now preferred against conventional cement-based coatings. In spite of economic slowdown, the Indian paint industry is growing though at a slower rate. It has tremendous potential for growth in the coming years. The decorative segment has outpaced the industrial segment in growth rate but the industrial segment has the greater potential for growth, as and when the automobile industry business improves. The players with aggressive marketing strategies and comprehensive product portfolios will grow at a faster rate. The emerging trends in technology and marketing indicate that the industry is likely to consolidate in the coming years with industry leaders improving their market share. Consumers are looking forward to new product launches some for application in special areas. Companies are increasing the value-added services available to customers by offering a variety of finishes through specialized and trained applicators, well supported by back end support of specialized service. Moreover, consumers are continuously looking for better products, more and more consumers are switching to marginally higher-priced emulsions where they get more durable and better-looking finishes in a wider range of colours. Disposable income plays a critical role in the decorative paint market. Thus, increase in people’s income will help the industry to grow. Moreover, the rural sector has a major share of the decorative paints segment. Thus, any benefit to the rural sector for improving the dispensable income is directly corelated to the growth of the paint industry. Besides, decorative paints are marketing savvy products backed by large advertisement campaigns and dealership networks. Huge investments required in setting up a vast marketing and dealership network, to advertise and develop a brand over a period of time will also help the industry to reach new heights. The supporting speculations for infrastructure, commercial and industrial consumers are like increased repainting activity, globalisation resulting in mega projects managed by international consultants, Boom in the Indian Housing Sector, increasing urbanisation, Shift from semi-permanent to permanent housing structures. In a similar way strong industrial growth and heavy infrastructure spending,


new projects pertaining to roads, ports and industrial segments is a positive sign for encouraging industrial coat segments.

Changing Marketing Practices

The decorative paints industry, one of the main two categories (the other being industrial paints), constitutes a significant part of the total paint market in India, and been making rapid strides too. There is a great silver lining for the industry. With the boom in the construction industry, the demand for decorative paint is growing approximately at 17-18 per cent per annum. This figure sounds challenging, but this is the fact. Currently, two types of demand are witnessed in decorative paints sector - from new projects and recoating.

Factors Influencing Buying Behaviour of Consumers

As a consumer product that is being sold to a young, increasingly more affluent customer, key success factors in decorative paints are as below: •Brand: Paints are becoming a high involvement purchase for the end use consumer, hence the brand plays a key role in determining his choice, both for new construction and repainting activities •Product portfolio: It is essential for paints companies to have a judicious mix of targeted products for its core customer along with a complete product portfolio across product categories and price points for the entire customer universe •Distribution: Sales of decorative paints requires extensive dealer networks, especially in the rural and semi-urban markets; hence a strong supply chain and pan-India distribution presence is essential

Challenges Faced by the Paint Industry

Some of the prominent challenges for Indian paint industry are: · Seasonal Demand: Paint

Industry is a seasonal industry. The demand shoots up during the Diwali season or other festive

seasons and it will be low in the rainy season. · Inventory Management at Dealer Level: The

product differentiation is minimal in paint industry. The very close substitutes are readily

available (e.g. ICI Dulux can be a very close substitute for Asian Paints Royale). Hence the

inventory management at the dealer level is of a prime importance. It is also important for brand

visibility and occupying the shelf space. · Distribution Costs: Distribution costs are important for

a lower price product like Distemper. The Distemper is a stiff paint and is sold on weight basis. It

is called as the “Bread and Butter” of the paint industry as the consumption is highest for this

product. Hence, the cost associated with distribution of it is of prime importance. · Shade


Offerings: As the shades offered by the paints companies are very high in number, (e.g. Asian

paints offers more than 1200 own shades), the problem of distribution becomes very significant.

The demand for a particular shade may peak up suddenly in a particular region. The annum in

US. This shows the lower penetration of the paint industry in the country. The paint companies

have to educate the customers that they should go for the repainting of their houses frequently.

This is a very unique feature of the industry that the Indian people will go for repainting either

for some festival such as Diwali or occasions like Marriage or when the repainting is absolutely

unavoidable. · Competition from the Unorganised Players: A critical challenge in the paints

industry was the competition from the unorganised players; who were not liable for excise as

well as other taxes. Reduction of excise duties over the last few years, from 40per cent to the

present level of 12per cent, has helped to create a level playing field between the unorganised

and organised segments. inventory management at the distributor and dealer level is of great

importance. · Low Per Capita Consumption: As mentioned earlier, the per capita paint

consumption in India is in one of the lowest. It stands at mere 815 gms per person per annum as

compared to the 25 kg per person per annum in US. This shows the lower penetration of the

paint industry in the country. The paint companies have to educate the customers that they

should go for the repainting of their houses frequently. This is a very unique feature of the

industry that the Indian people will go for repainting either for some festival such as Diwali or

occasions like Marriage or when the repainting is absolutely unavoidable. · Competition from the

Unorganised Players: A critical challenge in the paints industry was the competition from the

unorganised players; who were not liable for excise as well as other taxes. Reduction of excise

duties over the last few years, from 40per cent to the present level of 12per cent, has helped to

create a level playing field between the unorganised and organised segments.

Future Outlook for the Paint Industry

Companies are unanimous in saying that the future of the industry is bright. The Indian paint

industry has grown by 1.5-2 times of India’s GDP growth on a year-on-year basis. With the

revival and upswing of economic activities in the country, the paint industry is expected to

witness double digit growth in the current fiscal. Many feel that the growth has just begun, and

the demand will rise in 2015. The per capita consumption of paint in India is estimated to be

more than 800 grams compared to 10 kg in other Asian countries, and above 20 kg in the


developed countries. Against the backdrop of a rapidly changing scenario, even if the per capita

consumption is 2.5 kg, which in all probability is likely to happen in the coming five years, the

industry should witness 100 per cent growth - from approximately `. 25,000 crore to `. 50,000

crore by 2015. Further, the market share of SMEs will remain approximately 50 per cent, as the

customers are gradually recognizing their quality. The prospect of the industry further brightens

with setting up of shops by prospective global paint manufacturers in India. The outlook is

promising, and the industry is estimated to grow by 15 per cent on an annual basis. Prediction of

normal monsoon has provided further momentum to the sector. The industry should continue to

grow handsomely, as the monsoon is projected to be normal, and GDP is being projected to grow

in touching 8 per cent in the coming months. However, there exists a risk factor due to sharp

increase in raw material prices from the beginning of the current financial year. This could affect

the margins of paint companies substantially. Going by the current trend and customers’ attitude,

the future augurs well for the industry. What is positive for the industry is that today people in

rural India also feels it a necessity rather than a luxury to paint their houses every year, which is

indeed a significant change of thought.


BIBLIOGRAPHY

Annual Reports of Asian Paints

Websites:

https://www.asianpaints.com

http://www.nationaltradersco.in/

https://www.asianpaints.com/content/dam/asianpaints/website/secondarynavigation/

investors/financial-results-2/2014/annual-report-14-15.pdf

https://www.asianpaints.com/content/dam/asianpaints/website/secondary-navigation/

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https://www.asianpaints.com/content/dam/asianpaints/website/secondary-navigation/about-us/corporate-citizenship/BR%20Report%20FY%202014-15.pdf

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