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EXPLORING GOLDEN EMPIRE A CASE STUDY ON BERGER PAINTS PAKISTAN LIMITED By ENDEAVORSNazish Pervaiz (mbt-sp12-053)Humna Ijaz (mbt-sp12-025)Nawaz Tabassum (mbt-sp12-043)Abdul Qadir(mbt-sp12-053)

SCENARIO BUILDING - BERGER PAINTS PAKISTAN LIMITED Where will you see yourself in the next 5 years in the growing but intensely competitive paint industry of Pakistan?

It was a question asked by one of the columnist of business recorder when she was conducting an interview with the CEO of the Berger paints Pakistan Ltd for her column with the name of business today published in the famous business recorder newspaper every week. It was a question that put CEO of paint organization in thinking where his company Berger paints stands today. The answer was rooted deeply in the taking glance of the Berger Empire. Fragmented deeply inside the company will give the answer that was related to the future. As one of the industry analyst once said Berger is going to hit the status of being trusted worldwide by expanding globally with its innovative technology and best ever customer oriented services.Berger paints always tried to capture trust of its wider consumer base as easily examined by the statement of the one of the senior official of the Pakistan Paint industry association as the era of fastest ever construction in the country company like Berger will find its place in the best paint and associated products provider list of the governments infrastructure departments. Lets try to answer question that is closely related to the future outlook of the Berger Paints Pakistan limited. lets start with the origin of the Berger

2HISTORY

Berger was established two centuries ago and now it has grown to become one of the worlds largest paints manufacturer. In Pakistan, history of Berger is as old as history of Pakistan. Berger started its operations in Pakistan in 1950 and was the first organized Paint Company to offer premium products through import from the United Kingdom.

Berger paints Pakistan ltd became a public limited company in 1974, when 49.38% of its shares were acquired by Pakistani investors, while the remaining 50.62% were held by U.K. parent company, Jenson & Nicholson Limited. In 1991 Slot rapid Limited, a U.K. based company with diversified business interests, acquiring control of Berger Paints Pakistan Limited by gaining 50.62% shares of the company.as the parent company wants to hold the control of the company its operations its management in order to keep its products image based on the superior quality and best in its category.

Berger established its first local manufacturing facility in Karachi in 1955. In 2006, Berger established state of the art manufacturing facility in Lahore. This plant has provided Berger an edge over its competition through enhanced production. State of the art manufacturing facility built by company was the milestone for the company and with the help of this manufacturing facility Berger was putting its steps towards leading the entire industry.

Consistent quality has always been Bergers trait. This has been the driving force in making it the leading brand name backed by premium quality across Pakistan. Berger has the most comprehensive product range for various paint market segments at different price points

Berger have tried to provide its target market an abundant choices and they were good in that by offering paints and associated products. Paint associated products were those that was used either before and after of the painting coats

Berger is also operating Resin manufacturing facility at its Lahore factory. The resin plant has high production capacity and has enabled Berger to meet its entire resin needs for the manufacturing of a wide range of quality paints. Berger was the first paint company in Pakistan to set up its own resin production facility.

HISTORY

FOUNDING PRINCIPLES OF BERGER

Berger paints started its operations when they even dont know the dimensions of the Pakistani market and they are just tried their struggle on the basis of some core founding principles . they have build their vision and mission based on those fundamentalsVISION;We will become the leading paints and associated products manufacturing and marketing company ensuring the best returns to our stakeholders and superior customer satisfactionMISSION STATEMENT We want to deliver best quality paint and associated products manufactured by using innovative ideas and advanced technological arrangements to ensure superior customer satisfaction and value while vigorously promoting and safeguarding interests of all stakeholders

Berger paints Pakistan started working in the time when there were few companies of paint manufacturing . firstly Berger decided to target only those who are need of paint just for the case of decorating their houses, offices, buildings. in their decorative paint market they tried to focus for the individual consumers as well as companies, institutions who were in need of paint just for making their properties more attractive.After that Berger started their operations in the industrial sectors. Berger started to provide paints to the different industries like housing industry, automotive industry, construction industry, and printing industry. with the passage of time Berger also started to provide paint to the government. Like armed forces, aviation, ports and shipping, educational institutions and health institutions. Berger broadly have segmented its markets broadly on two benefits that will sought all of clients of the Berger. first was any person and organization who are in need of paints and varnishes either for decorative purpose and second one was who need paint products for the protective purpose. Berger have positioned itself in the market as the premium brand they have made their image in the mind of the consumer as the trusted brand in the paint industry. in all its advertising Berger have focused a premium lifestyle of its consumers. in all its ads Berger have shown their spirit for the luxury lifestyle. Berger started its ad campaign as jeenay kay rang. this promotional campaign was providing consumer with the touch of luxury and stylish lifestyle with the lot of colors.

TACTICAL GROUND ON WHICH BERGER PLAYED SO FAR

Berger first started to manufacture only paint but after that they were very much interested to in other complementary paint products. they started manufacturing adhesives, protective varnishes, powder protective coatings and oil based name with the name of enamel paints. after building its headquarter in Lahore company further established its state of art manufacturing facility in Raiwind Lahore. Berger started its operations in almost all big cities of Pakistan. Berger have developed its network through exclusive dealerships in the cities like Lahore, Karachi, Gujranwala, Rahim , Yar khan, Multan, Peshawar, Faisalabad and Hyderabad .Berger than decided to export its paint in the neighboring countries. in 2007 Berger started to export its paint products to Afghanistan. Berger wants itself to be global specially by reaching neighboring country markets.Berger business divisions are working day and night to incorporate corporate level tactic it means that in order to expand and survive on the basis of growth Berger is trying to incorporate element of uniqueness in all its business divisions which further insert that unique elements in their products. so products of Berger will provide ultimately unique performance in the market to all of its client.

TACTICAL GROUND ON WHICH BERGER PLAYED SO FAR

BOARD OF DIRECTORS- WHO IS ON THE BOARD Total seven members in the board categorized as3-independent directorsMr. Hamid Masood SohailMr. Shahzad M. HussainMr. Zafar Osmain3-non executives directorsMr. Maqbool H.H. RahimtoolaMr. Muhammad NaseemMr. Ilyas Sharif1- executive directorDr.Mahmood Ahmad

BOD PROFILE DR. MAHMOOD AHMED,MBBS from Army Medical College.Business Management courses form Pakistan like CEO courses form PIM.Served in the Pakistan Army Medical Corps. Leading the paint business under the brand name of Berger Paints in Pakistan.MR. H. MASOOD SOHAIL, B.Sc. (Hons.) University Karachi,BSE and MSE (Mechanical) Degree from the University of Michigan, USA. Director and Chairman Audit Committee of the Board of Saif Energy Ltd, Islamabad, Director and Chairman Audit Committee of the Board of Berger Paints Pakistan LtdMR. MUHAMMAD NASEEM,A fellow member of ICAEW-Institute of Chartered Accountants of England and Wales, Masters of Commerce from University of Punjab. Leading the paint business under the brand name of Berger Paints in PakistanMR. SHAHZAD M. HUSAIN, Masters in Law, International Relations. Worked for Citibank for 20 years and Supervised Corporate/Wholesale Banking. He has previously served on the board of Citicorp Investment Bank Ltd, Central Depository Co. Ltd, PICIC and PIA worked with law firm in England.MR. ZAFAR AZIZ OSMANI, Partner at People Perfect Advisory Chief Operating Officer at Karachi Electric Supply CO Head of Human Resources at Habib Bank Limited. Worked with management consulting firm in the Middle East ..

Berger is the most trusted name in quality paint The company has built this proud reputation by not compromising on quality standardsBerger has efficient logistic systems through which it deliver paint products to dealer of Berger paints who supplies quality paint in all major cities of Pakistan. To be the leading paint manufacturer Berger has to supply its products timely in the market which is done through its logistic partners which is M/S Pak logistics systems. But still Berger is not extensively distributing its products to rural

Pakistan Berger was the first to start its own resin manufacturing plant to meet their resin needs. As said by one of the CEO of the Berger paints : We reduced the time for our month-end account closes by 70% and increase staff efficiency by up to 25%, enabling us to become more responsive and improve customer service by 20%

To timely deliver its product to its customers Berger has efficient sales personnel who efficiently its product to the distributors and to the wide network of the dealers.

Berger Paints has been a leader in Innovation and Customer Care in the Paint Industry. Berger always prefer how to give value to its customers its free color advisory service through which customers get advice on color selection

BERGER EMPIRE-THE INSIDE STORY

BERGER EMPIRE-THE INSIDE STORY

ERP systems delivered an integrated system that reduced the month-end account closing time from seven days to two days, slashed staff-process time by 25%, and decreased inventory by 11%, ultimately enabling the company to produce paint products in a timely manner and improve time-to-market. IT head of the Berger paint said that Previously, our systems were not integrated, and we had to collect data from different modules and locations, taking two to three days to compile, verify, and submit regulatory reports. Now it takes under a minute to generate the report, and only a few hours to verify data before submittingNow in organizations people are consider as the key resource of the organization. Berger uses retina recognition device for employees attendance to increase the element of punctuality in themAcross all layers in the organization, Berger is promoting a culture of acknowledging talent, nurturing potential and encouraging initiatives. Berger is maintaining an enabling environment with fairness and equal opportunity and freedom to perform and excel.

. Berger is performing its operations transparently, Berger acquire its material from foreign suppliers. Berger has distribution rights of CROMAX, formerly known as DuPont for Pakistans vehicle refinish paint segment. They acquire material through the competitive market prices by taking quotations from the market. Company sometimes goes for the tender which is solicited in the newspaper and then go for the competitive bidding.

Berger has entered into a number of technical collaboration arrangements with leading international manufacturers. These include the largest paint company in Japan, which enables Berger to develop Automotive, Vehicle Refinishes a Japanese chemical company, for Bumper Paints; , Malaysia for Road & Runway Markings and Asian Paints for Decorative Paints.

BERGER EMPIRE-THE INSIDE STORY

COMPETITIVE LANDSCAPE OF BERGER PAINTS PAKISTAN LIMITED

Berger is working in the very intense rivalry. In the Pakistani paint market Berger is facing competition from the international players who are interested to invest in the paint market of Pakistan.

Many players have already entered in the market. Japanese companies are imposing threat to the company like Berger as these companies are now looking their avenues in the market of Pakistan because of the large infrastructure projects.

Multinational paint companies are opening their manufacturing facilities in the country because the cost of investment is very much low, labor is very cheap here and Pakistan regulatory framework is not imposing too much harsh restrictions to the new entrants.

Berger paints Pakistan is facing many challenges from its competitors. With the very diverse product range changing cultural trends like of the population is providing a way for the multinational companies to take advantage of the facts.

Now people are more sensitive towards price, quality, texture, color range, environment friendliness of the paints. All the paint manufacturing companies are trying to capture biggest market of the customers by providing them exactly what they are really want.

Paint manufacturing companies are working on the basis of getting advantage by providing their consumers with the superior value by fulfilling their needs through utilizing their core competence and their sustainable competitive advantages

Paint manufacturing companies are now not only portray themselves as purely paint manufacturing companies but they making their images in the minds of the consumers as the complete solution providers. They are offering services like the color consultancy, consumer feedback, consumer complaint hotlines, paint tutorials, online chatting with the paint experts

If we talk about the market share of the Berger so Berger is having market share of 20% of the total paint market and ICI is holding market share of about 25%. This is clearly shown that the Berger paints Pakistan limited is currently hold the status of the second biggest player in the Pakistani market and ICI paints is major dominant player in the industry. So Berger paints Pakistan and ICI is considered as the major players to holding the markets maximum share. The graphical presentation shows the market share of the various paint manufacturing companies

COMPETITIVE LANDSCAPE OF BERGER PAINTS PAKISTAN LIMITED

14GRAPHICAL REPRESENTATION OF MARKET SHARE B/W ICI AND BERGER RIVALS COMPANIES IN THE PAINT INDUSTRY RIVALRY AMONG COMPETITORS RIVALRY IS STRONG AS MANY INCUMBENTS AND POTENTIAL COMPETITORS EXIST IN THE MARKET ASAKZONOBELMASTER PAINTSICINIPPONBRIGHTO PAINTSKANSAI PAINTSHAPPILAC PAINTSBLACK HORSE PAINTDIAMOND PAINTS ALLIED PAINT PRODUCTSATLAS PAINTS JOTUN PAINTS

1- decorative paint division2- automotive paint division3- general industrial finishes4- powder coatings5- vehicle refinishes6-road safety 7- construction chemicals8- printing inks9- adhesives

BERGER PAINTS BUSINESS DIVISONS

BIRDS EYE VIEW OF LUCRATIVE PAINT INDUSTRY OF PAKISTAN

The paint industry in Pakistan operates both in the organized as well as the unorganizedsectors. There are around 22 paint producing units in organized sector and twomultinational companies also in the organized sector which includes Akzonobel, ICI, Master Paints, Nippon, Brighto Paints, Kansai Paints, Happilac Paints, Black Horse Paint, Diamond Paints , Allied Paint Products, Atlas Paints , Jotun Paints .There are great opportunities to grow in paint industry because of the expansions of building, manufacturing and construction projects. Pakistans chemical industry is also boosting up which will benefit the paint producers which use chemical as a raw material for paint manufacturing will be produced or manufactured locally.

CHALLENGES FACED BY BERGER PAINTS

Unorganized paint sector ( Tax evading paint companies) is affecting badly the paint manufacturers, they are selling paint at low prices than the higher quality branded paints.Energy crisis are affecting adversely the manufacturing sector.Inflation rate is increasing which shows a sign of risk to the economy ultimately posing risk to the manufacturing companies.law and order conditions are also not stable which affects the businessThe main ecological concerns arising from paint manufacturing are the use of organic solvents and inorganic pigments, and the disposal of hazardous chemical wastes which is problematic for the businesses

CURRENT PERFORMANCE INDICATORS OF BERGER PAINTS

market share..........up to 20%( according to business recorder dec.03/2013)dividend per share.......................Rs. 1earning per share................................ Rs 5.36BOD ...........................7foreign share......................52.052local share............................47.94ROI..10.17%According to annual report of FY 2014

CURRENT FINANCIAL PERFORMANCE OF BERGER PAINTS- HIGHLIGHTS Total Net Assets = 958,150000Turnover =4,500,893000Gross Profit = 1,089,122000Operating profit = 198,607000Profit after taxation =97,508000 with the passage of time company is going towards success

Berger is working in the environment where unorganized paint sector is flourishing very rapidly . Berger is also taking notice of the fact that Pakistan is a land of opportunity. Pakistani market is known as emerging market which provides many investment opportunities to investors besides poor law and order situation and threat of terrorism. Berger future perspective is closely related to the fact that how company will efficiently avert all of its internal and external threats. efficiently manages and enhance its core strengths, how much rapidly grasp the opportunities from the external environment and try to avail them. last but not the least will be the factor that to what extend company will remove all of its weaknesses.

DESTINY OF BERGER

DESTINY OF BERGER

Berger is premier paint which targets the urban market. future operations will include focusing for the rural base of the country in the future the company will try its luck in the rural paint markets of the country for that Berger will have to scan its internal external future environment ,company's strength, its financial resources, its sales force volume, future industry trends, economic and political condition of the country and in last cultural trends within the society so that in future the entire empire of Berger is standing on the for front of innovative technologies meeting latest consumer demands. the whole and unified picture of prevailing and future position the company will enable the CEO to give an answer of significant questions related to position of company in the next five years.