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Paint Industry

An Overview

The paint industry worldwide is classified into 2 segment viz. decorative and industrial

segment in India constitutes nearly 70% of the market whereas the scenario is just the

reverse in the developed countries.

Decorative Segment is dominated by the unorganised sector which now accounts for

70% of the total paint production as against 75% three to four ago. The unorganised

sector has an advantage over the organised sector since it is fully exempted from the

20% excise duty and other government levies.



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INDUSTRY STRUCTURE

PAINT INDUSTRY PRODUCTS

Coatsil silicon based coating not only ensures that the shadesyou choose for your walls remains fresh as new for years andyears, but also ensures complete protection from the elementsof nature. This new silicone-based coating will change thefacade of Indian constructions. And bring never - before -

benefits to builders.

Marblo signifies a new dimension in the world of modernarchitecture and interior design. This unique creation bringsto your living space the soothing ambience of marbledesigned to match any decor.

Inspiring designs and colours : Walls are like a canvasthat can be painted in any number of ways for differenteffects of decor. Marblo is available in a myriad of coloursand patterns, to alter the characteristics of a room to suityour needs.



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Glasurit is a high quality 2K polyurethane refinish paintmade by BASF Germany. It offers a comprehensive rangeof products for the repair trade which allows individualbody shops to select the ideal refinishing system to makean old car look new. In India we are introducing 22 linehigh solid top coats in solid colours and 55 line high solidin metallic colours. these lines have been introduced worldwide in the second half of 97.With 22 line finish you save 30% paint with better coveringpower, better drying, better hardening, better gloss, better application and high colours accuracy i.e. better value for money.

Viper paint is the only four-in-one premium quality enamelwith imported RCR2 for super whiteness, anti-termite andflame proof properties tested to british and Americanstandards. Besides total protection and safety, it provideselegant, durable and washable finish.



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INDUSTRY PERFORMANCE

The paint industry is a raw material - intensive one with over 300 input going into the

manufacturing process. Half of these are petro based. The raw materials for paints maybe classified into 5 segment---

pigments, solvents, binders, additives and white cement/urea and account for roughly50% of total cost. Hence the industry's profit are sensitive to international price rises.When the international prices of petrochemical products comes down, the paintscompanies benefit and vice versa.

With raw material prices and tarrifs expected to come down in the next few years theorganised sector's operating profit and margins should go up substantially.Most companies are hit by the fact that they do not make the raw material themselves.

PAN which is manufactured from Ortyhoxylene and which goes into the production of paints with titanium dioxide, is only manufactured by Asian paints. The other paintmajors import their stock. Since PAN prices generally outpace international orthoxyleneprices by almost 50% paint Companies end up paying huge price when the price rise.For instance in Aug 1994 when the price of Ortyhoxylene shot up form Rs 24/ Kg to Rs35 per Kg, the Pan prices surged from Rs 38/Kg, to Rs77/Kg.

The paint industry is a raw material - intensive one with over 300 input going into themanufacturing process. Half of these are petro based. The raw materials for paints maybe classified into 5 segment---

pigments, solvents, binders, additives and white cement/urea and account for roughly50% of total cost. Hence the industry's profit are sensitive to international price rises.When the international prices of petrochemical products comes down, the paintscompanies benefit and vice versa.

With raw material prices and tarrifs expected to come down in the next few years theorganised sector's operating profit and margins should go up substantially.Most companies are hit by the fact that they do not make the raw material themselves.PAN which is manufactured from Ortyhoxylene and which goes into the production of paints with titanium dioxide, is only manufactured by Asian paints. The other paintmajors import their stock. Since PAN prices generally outpace international orthoxylene

prices by almost 50% paint Companies end up paying huge price when the price rise.For instance in Aug 1994 when the price of Ortyhoxylene shot up form Rs 24/ Kg to Rs35 per Kg, the Pan prices surged from Rs 38/Kg, to Rs77/Kg.



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PRODUCTION

This is because of the longer processing time required in the paint industry when paint

is manufactured in smaller batches the production falls. Most of the plant operate at50% capacity with the exception of Berger paints which manages a capacity utilisationof around 70%. The main reason for this is that it has strong presence in the premiumenamel and emulsion segment and does not switch between decorative and industrialpaint like the other manufactures.

There is tremendous potential for the paints manufacturers in India because as againstan average percapita consumption of paints in India is very less. Economic liberalisationis attracting international giants like BASF Germany,

Curtlauds UK and Jotun Norway. Jotun, has announced plans to set up a powder

coating plant, while International Paints UK, intends to set up a marine paints plants.Since decorative paints are a consumer product Sales are price elastic any change inthe government policy on the excise duty has a direct bearing on the sales. Over thelast 4 years, the government has reduced the excise duty from a peak of 40% tocurrent 20%.

The entire benefit of the duty reduction has been passed to the consumer which has notonly enabled this segment to come out of the recession but also enabled the organisedsector to increase its market share at the expanse of organised sector. The share of organised sector has increased from 20% To 25% as a result of reduction in exciseduty.

Distribution channel plays an important role in the industry. Awareness and perceptionof specific brand is more important than the corporate brand equity. Asian Paints, themarket leader has around 16,000 dealers in its network which are spread across thecountry. Goodlass nerolac comes second with around 9,000 dealers.



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TURNOVER

Over the next few years, the ratio of industrial paints to decorative paints is

expected to be 50:50, more in line with the global trend. Currently it is 30:70.

With the decorative segment bottoming out, companies are increasingly focusing

on industrial paints

_ Demand for paints from new housing is expected to constitute approximately 30percent of total demand; the rest comes in from repainting, mainly after themonsoon

rains and before the festive season. This is a function of disposableincome, so

improvement in rural incomes will boost the growth in the paint sector.

Lending institutions continue to make it easier for a consumer to gather up thefinances

needed to buy homes

Within the decorative coatings segment, considerable growth is being observed inthe

exterior coatings segment.

Paint manufacturers have launched premiumproducts in this category which are doing

well due to superior quality and DURABILITY



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INDUSTRY PRACTICIES

PRICINCING

y The industry is raw-material intensive. Of the 300 odd raw materials, nearly half

of them are imported petroleum products. Thus, any deficit in global oil reserves

affects the bottomline of the players.

y The major raw materials titanium dioxide, phthalic anhydride and peutarithrithol

constitute 50 per cent of the total cost. Besides, this, there are other raw

materials such as castor, linseed and soybean oils, turpentine. The raw materials

cost sums up to a whopping 70 per cent. Any increase in the prices of these raw

materials could adversely affect paint prices.

y Most of the paint majors have to import nearly 30 per cent of their raw material

requirements thus changes in import policies can affect the industry.

y The prices of packing materials such as HDPE, BOPP and tinplate have reduced

considerably. However, the decision of the Central Government to ban import of

tinplate waste could lead to a spurt in the prices of the tinplate in the near future

DISTRIBUTION

y On product lines, paints can be differentiated into decorative or architectural

paints and industrial paints. While the former caters to the housing sector, the

automotive segment is a major consumer of the latter. Decorative paints can

further be classified into premium, medium and distemper segments. Premium

decorative paints are acrylic emulsions used mostly in the metros. The medium

range consists of enamels, popular in smaller cities and towns. Distempers are

economy products demanded in the suburban and rural markets. Nearly 20 per

cent of all decorative paints sold in India are distempers and it is here that the

unorganised sector has dominance. Industrial paints include powder coatings,

high performance coating and automotive and marine paints. But two-thirds of

the industrial paints produced in the country are automotive



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. DISTRIBUTION NETWORK

Channel structure, members and their selection

Nerolac¶s strength of wide spread distribution network is its right arm in generating sales

revenue from all parts of India. Nerolac has a wide distribution network of over 11,000

dealers

They have eight Sales Divisions and each division has depots to take care of local

needs. Inall they have 66 depots.

y All this ensures complete reach in India including rural and up country market

Industry Characteristics

Four Major Players control 50% of themarket share



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_ The demand for paints is relatively priceelasticbut is linked to the industrial andeconomical growth

_ Pricing power ± The four major playershave successfully raised average prices

over the last 3 years without losing marketshare. _ The industry majors have a vastdealership network and are required tomaintain high inventory levels.

_ Global Strategic tie-up take place In technology and R & D

MARKETING MANAGEMENT

Global Information, Inc. offers market intelligence on every topic in the Paint Market,

including, but not limited to: Coating; Baryte; Paint Additives; Paint Effects.

We offer market research, industry forecasts, and business analysis in the Paint Market

as well as other vertical industries. GII sells reports, databases, newsletters and annual

information services that provide the latest market data, such as industry forecasts,

projections, trends, market shares, research and development, sales and marketing

strategies, and competitive analysis. The easiest way to find out if we have the

information you need is to contact us right now. We are open 24 hours a day, 5 days aweek with multiple language support. Please see our Contact page to see which office

is open right now

The leaders in the organised paint industry are Asian Paints (India) Ltd. (APIL),

Goodlass Nerolac Paints Ltd. (GNPL), Berger Paints, Jenson & Nicholson Ltd. (J&N)

and ICI (India) Ltd.

Asian paints is the industry leader with an overall market share of 33 per cent in theorganised paint market. It has the largest distribution network among the players and its

aggressive marketing has earned it strong brand equity. The Berger Group and ICI

share the second slot in the industry with market shares of 17 per cent each. GNPL has

a market share of 15 percent in the organised sector.



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The market can be further split into decorative paints and industrial paints. The demand

for decorative paints is highly price-sensitive and also cyclical. Monsoon is a slack

season while the peak business period is Diwali festival time, when most people repaint

their houses. The industrial paints segment, on the other hand, is a high volume-low

margin business. In the decorative segment, it is the distribution network that counts

while in the industrial segment the deciding factor are technological superiority and tie-

up with automobile manufacturers for assured business.

APIL dominates the decorative segment with a 38 per cent market share. The company

has more than 15,000 retail outlets and its brands Tractor , Apcolite, Utsav , Apex and

Ace are entrenched in the market. GNPL, the number-two in the decorative segment,

with a 14 per cent market share too, has now increased its distribution network to10,700 outlets to compete with APIL effectively. Berger and ICI have 9 per cent and 8

per cent shares respectively in this segment followed by J&N and Shalimar with 1 and 6

per cent shares.

PAINT MARKET

an estimated paint market of 1600 crore with organised sector of over 64%.Organised sector is then divided into Decorative: Home furnishing comprising 65%

share and In Industrial products (General

industries/protective/automotive/marine/powder coating) comprising 35% share

MARKET SHARE

Overall

51% | Asian Paints

18% | Berger Paints

17% | Narolac paints

Decorative segment

58% | Asian Paints



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19% | Berger Paints

10% | Narolac

MARKET FEASIBILITY

The Indian paint industry is a Rs 49 billion

sector.

GDP growth is higher, the paint sector will

benefit and vice versa

Highly price sensitive & cyclical

Demand arises in Festive Season.

Change in demand patterns over the years

Involvement of the consumer.

Shift from Commodity to FMCG ± brand building.

Communication or lack of it can make or break

your brand.

Changed brand identity, online services, Inc R&D

spend.

Newest Trends ± New textures, use of bold

shades, Disney

e.g. Kansai Nerolac site: personality V/s rational

COMPETE THROUGH INNOVATION

The keystone of Kansai Nerolac's success has been its investment in technology andtheimportance given to Research and Development. The company has, over the years,set upexcellent facilities for developmental research, improving its manufacturingprocesses andcontinuously innovating on its products.The rich cumulative experience of the organization gathered over 80 years of experienceprovides a strong backbone to all kinds of decisions taken in this company.80 years oflearning in trade and market has given enough expertise to innovate and



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develop productsand services according to the changing needs and desires of customers.Nerolac paint technology cuts across all barriers; without discriminatingbetween uses orusers. The past decades have seen a meteoric rise in the fortunes of Kansai Nerolac. Today,they are the second largest paint company and a recognizedleader in their chosen fields. Thecompany was adjudged the fastest growing paint

company in the organized sector, not once.

INCREASING 5% MARKET SHARE

Strengthen communications

Multi v/s sole dealer

Training to dealers

Increase awareness (networking) amongst

interior decorators, architects, consumers,

contractors

Feedback mechanisms

FEEDBACK FROM CUSTOMERS

Customer feedback is obtained not only after servicing as mentioned earlier, but post

salestoo. There are 2 types of feedback forms customers can fill:

· A feedback to company through questionnaires and cards Direct feedback to the sales

people.All these feedback cards are sent to the corporate office of the company where

the requiredaction is taken.



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SWOT ANALYSIS

Strengths

Imp of brand image as barriers to new entrants

Good technology backup.

Weakness

Raw materials ± scarcity

Requirement of high working capital

Real estate in a depression phase.

Opportunities

Fiscal incentives provided by Government.

Commodity to fmcgRise in disposable income

Threats

Foreign companies entering as sole players

Technology collaboration

All the paint majors have tie-ups with global paint leaders for technical know-how. AsianPaints has formed a JV with PPG Industries Inc to service the automotive OEMs.

Berger has a series of tie-ups for various purposes. It has a technical tie-up with

Herbets Gmbh of Germany in addition to its joint venture with Becker Industrifag. With

the agreement with Herbets coming to an end in 2001, Berger has now allied with the

Japanese major Nippon Paints to boost its OEM turnover since the Indian roads are

being flooded with Japanese automobiles. It also has an agreement with Orica Australia

Pvt. Ltd. to produce new generation protective coatings. The company also has tie-upswith Valspar Corp and Teodur BV for manufacturing heavy duty and powder coatings.

Incidentally, ICI makes paints with the technical support of Herbets, which has been

recently acquired by by E I Du Pont de Nemours of the US. Interestingly, Du Pont,

which is a leader in automotive coatings in the US, has a technical tie-up with Goodlass



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Nerolac for the manufacture of sophisticated coatings for the automotive sector.

Goodlass also has technical collaborations with Ashland Chemcials Inc, USA, a leader

in the petrochemical industry, Nihon Tokushu Toryo Co and Oshima Kogyo Co Ltd,

Japan.

SUPPLY CHAIN MANAGEMENT OF PAINT INDUSTRY

Supply chain management (SCM) is the process of planning, implementing and

controlling the operations of the supply chain as efficiently as possible. Supply Chain

Management spans all movement and storage of raw materials, work-in-process

inventory, and finished goods from point-of-origin to point-of-consumption. In essence,

Supply Chain Management integrates supply and demand management within and

across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperates to provide product and service offerings has been called the

Extended...

TECHNOLOGY

If the global Goliaths are foraying into the Indian paints market aggressively, the Indian

paint companies are also spreading their wings. Asian Paint exports its paints to over 15

countries. It also has joint ventures in Fiji, Tonga, Nepal, Vanuatu, Solomon Islands, Australia, Oman and Mauritius. In October 1999 it acquired 76 per cent equity stake in

Delmege Gorsyth & Co (Paints) Ltd, the second largest paint company in Sri Lanka with

a 12 per cent market share in Sri Lanka's Paint Industry. Within a short span of just five

years, the company has emerged as the number one player in these markets.

MARKET TRENDS

The recession in the construction and automobile sector had thrown in shades of grey

across the Industry spectrum, but the revival in these sectors is cause for cheer for the

paint industry as well. The balance sheets of the industry majors are now painted with

bright colours.



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Market Potential

_ Boom in Indian Housing Sector: Increasing urbanization, cheaper housing loansand a shift from semi-permanent to permanent housing structures have beendriving growth in decorative paints segment, which constitutes 70% of the $2

billion paint industry in India _ Strong Industrial growth: An average growth of about 10% in the in automobilesector which provides 50% of the revenues in the industrial paints segment.Industrial paints account for 30% of the paint industry revenue in India

_ Heavy Infrastructure Spending: New projects in roads, ports and industrialsegments increases revenues from protective coatings for civil applications androad-marking paints to all parts of the building paints sector, whether interior,

exterior, waterproofing or floor coatings.

Segments:

On product lines, paints can be differentiated into decorative or architectural paints and

industrial paints. While the former caters to the housing sector, the automotive segment

is a major consumer of the latter. Decorative paints can further be classified into

premium, medium and distemper segments. Premium decorative paints are acrylic

emulsions used mostly in the metros. The medium range consists of enamels, popular

in smaller cities and towns. Distempers are economy products demanded in the

suburban and rural markets. Nearly 20 per cent of all decorative paints sold in India are

distempers and it is here that the unorganised sector has dominance. Industrial paintsinclude powder coatings, high performance coating and automotive and marine paints.

But two-thirds of the industrial paints produced in the country are automotive paints.

Decorative and industrial paints are the segments within the sector, in a 70:30

proportion. Brand equity, a wide range of shades, distribution strength and efficient

working capital management are key success factors in the decorative paints segment.

A strong distribution network acts as an entry barrier.Within the decorative segment,

enamel is the largest sub-segment, accounting for over 50%, followed by wall finishes,

primers and wood finishes. The season for decorative paints is from October to March,

a period characterised by festivals like Diwali, and the summer, when painting is

normally carried out.

The industrial segment pertains mainly to automobiles. In this segment, technological

competence, product range and customised solutions are of utmost importance.



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Technological strength is another entry barrier. The slowdown in the automobile sector

has affected the overall growth of the industrial segment, as the former contributes

around 50% of the latter's revenues.

Other sub-segments are marine paints, powder coatings for white goods like

refrigerators and washing machines, and industrial coatings.Within the paints sector, the

proportion of the industrial paints segment is likely to increase in the next few years and

the ratio is likely to become 50:50.

The demand for decorative paints is highly price-sensitive and also cyclical. Monsoon is

a slack season while the peak business period is Diwali festival time, when most people

repaint their houses. The industrial paints segment, on the other hand, is a high volume-

low margin business. In the decorative segment, it is the distribution network that counts

while in the industrial segment the deciding factor are technological superiority and tie-up with automobile manufacturers for assured business.

The share of industrial paints in the total paint consumption of the nation is very low

compared to global standards. It accounts for 30 per cent of the paint market with 70

per cent of paints sold in India for decorative purposes. In most developed countries,

the ratio of decorative paints vis-Ã -vis industrial paints is around 50:50. But, with the

decorative segment bottoming out, companies are increasingly focussing on industrial

paints. The future for industrial paints is bright. In the next few years, its share would go

up to 50 per cent, in line with the global trend

Sector specifics

On product lines, paints can be differentiated into decorative or architectural paints and

industrial paints. While the former caters to the housing sector, the automotive segment

is a major consumer of the latter. Decorative paints can further be classified into

premium, medium and distemper segments. Premium decorative paints are acrylic

emulsions used mostly in the metros. The medium range consists of enamels, popular

in smaller cities and towns. Distempers are economy products demanded in the

suburban and rural markets. Nearly 20 per cent of all decorative paints sold in India are



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distempers and it is here that the unorganised sector has dominance. Industrial paints

include powder coatings, high performance coating and automotive and marine paints.

But two-thirds of the industrial paints produced in the country are automotive paints.

RAW MATERIAL OF PAINT INDUSTRY

The paint industry is raw material-intensive, in terms of value and quantity of raw

materials used. Raw material costs account for around 70% of total production costs.

Imports constitute around 30% of the raw material requirements. The most critical raw

materials used are titanium dioxide (TD) (rutile and anatase grades), phthalic anhydride

(PAN) and pentaerithrithol (PENTA). Some other raw materials like castor oil, soyabean

oil, linseed oil and mineral turpentine are also used. Increasing prices of raw materials,

on the one hand, and the inability to pass on the price increases from recession and

competitive pressure, on the other, are major areas of concern. Of the 300 raw

materials (30% petro-based derivatives), nearly half of them are imported petroleum

products. Thus, any deficit in global oil reserves affects the bottomline of the players

Demand for paints comes from two broad categories:

Decoratives :

· . Decorative paint's market size stands at around Rs 32.5 Bn. Asian paints is thismarket leader in this segment· Under this segment it offers Painting Guide, Painting Solution, Paint Calculator andPaint Selector as value added decorative service.

Industrial:

Asian Paints offers 4 types of industrial coatings such as :

· P rotective Coatings - protects steel and concrete structures from the corrosive action

of harsh climates, pollution, sea spray, acids, oils and solvents.



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· R oad Markings ± are used as road markers for lane as indicator of lane separation

and also as safety markers. They include ordinary road marking paint, hot applied

retroreflective thermoplastic material and retro-reflective water borne paints.

· P owder Coatings ± is used to enhance the performance of Industrial paints.

· Floor Coatings ± such paints protects the floor surface and prevents crack formation,

insect nest formation, water seepage µThe paints sector is raw material intensive, with

over 300 raw materials (30% petrol-based derivatives) involved in the manufacturing

process. Since most of the raw materials are petroleum based (ex: Titanium Dioxide),

the industry benefits from softening crude prices.

PRODUCT RANGE

· Asian Paints Premium Emulsion

· Asian Paints Interior Wall Finish Lustre· Asian Paints Ace Exterior Emulsion

· Asian Paints Apcolite Clear Synthetic Varnish

· Asian Paints Touchwood

· Asian Paints Utsav Enamel

· APEX ULTIMA

· With 7 year warranty

New Opportunities for Foreign Paint Companies

International retailers had until January 2006 been able to operate in India onlythrough

franchise arrangements with local partners

_ The Indian Government passed a regulation in January 2006 allowing entry of

foreign single retail brands without the need for franchise arrangement.

_ Starting February 2006, foreign single retail brands are allowed to: _ Open their own stores in India, or

_ Own up to 51% of local joint ventures

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Highlights

y The Indian paint industry is a Rs 49 billion sector.

y The demand for paints is relatively price-elastic but is linked to the industrial and

economical growth.

y The per capita consumption of paints in India is very low at 0.5 kg per annum if

compared with 4 kgs in the South East Asian nations and 22 kgs in developed

countries. The global average per capita consumption is 15 kg.

y In India the organised sector controls 70 percent of the total market with the

remaining 30 percent being in the hands of nearly 2000 small-scale units.

y In India the industrial paint segment accounts for 30 percent of the paint market

while the decorative paint segment accounts for 70 per cent of paints sold inIndia.

y In most developed countries, the ratio of decorative paints vis-Ã -vis industrial

paints is around 50:50.

y All the industry majors have a vast dealership network and are required to

maintain high inventory levels.

y most of the paint leaders have technical tie-ups with global paint leader



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TOP TEN COMPANIES OF PAINT INDUSTRY

Artilin Paints India Limited

Artilin Paints India Limited is the sole authorized distributor in India and Nepal for the functional paints manufactured with unique technology by ARTILIN S.A,France. Artilin Paints India Limited is promoted by experts in the manufactureand concept selling of building materials

Acro Paints Ltd

Acro Paints Ltd. isa multi product company with a glorious track record of over 3decades. The highly innovative product range includes Acrylic Emulsion paintsfor exteriors & interiors, Synthetic Enarmels, Primers, Premium Cement Paints,complete range of Decorative & Protective Paints, high performance coatings &specialized paints as per IS/BS/ASTM etc.

Advance Paints

Advance Paints belongs to a family knit of "SHETH's" & part of GALIAKOTWALA GROUP. Galiakotwala group was born in the year 1923 withbusiness of trading in Hardwares. The group further developed adding itsbusiness into Manufacturing of Containers, Manufacturing of Paints, Propertydevelopers, trading of raw cotton (domestic & International), Dealing inenvironment control equipments, Dealing in BPL Cellular phones.

Agsar Paints Pvt. Ltd.

Agsar Paints Pvt. Ltd. - Manufacturer of decorative and industrial paintsincluding cement paints, enamel paints, distempers and epoxy paints.

Anupam Enterprises.

Anupam Enterprises - Manufacturers of paints & coatings, primers, enamels,lacquers, wood coatings, chlorinated rubber, two-component epoxies andpolyurethane coatings & linings and industrial coatings.

Asian Paints

Asian Paints is India's largest paint company and ranks among the top tendecorative coatings companies in the world today, with a turnover of Rs.22.6billion (around USD 513 million).

Asian Paints (India) Limited.

Asian Paints (India) Limited - Engaged in manufacturing and exporting of decorative paints, emulsion paints, protective coatings, industrial paints andautomotive paints.

Auto-Coat Systems India

Our dedicated 15 years of proven track record & total 30 years experience inpromoting modern technology in product coating at All India Level.



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Autocoat Engineering (I) Pvt. Ltd.

³Product Coating & Metal finishing plants and equipment company´ in thecountry. The company have designed and supplied over 200 plants. Wedistribute our success to a business philosophy that stresses on technicalexcellences, ethics and committed customer service.

Berger Paints

Being an ISO 9001 company its quality products have attained instantrecognition, worldwide, and continues to meet quality requirements that aredemanded today even in the domestic market. The Country's third largest paintmanufacturer, with its Headquarters in Calcutta, BERGER controls a distributionnetwork comprising of 66 stock points spread across the country.

MAJOR PLAYERS OF PAINT INDUSTRY

ASIAN PAINTS

NEROLAC PAINTS

BEREVER PAINTS

Asian Paints

Asian Paints, established in 1942, is India's largest paint company and the third largest

paintcompany in Asia. It has a turnover of Rs 30.2 billion (around USD 680

million)Thecompany operates in 21 countries and has 29 paint

manufacturingfactories servicing 65countries.

The company operates several subsidaries such as Berger International Limited, Apco

Coatings, SCIB Paints and Taubmans. The company manufactures paints for

decorative,industrial, and motor applicationsThe history of AP dates

backto1942.Itwastarted by four entrepreneurs, ChampaklalChoksey, Chimanlal

Choksi,Suryakant Dani and Arvind Vakil, as a partnership firm formanufacturing paints,



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in a garage rented for Rs 75 a month. In 1945, the partnership firmwas turned into a

private limited company named Asian Oil & Paint Co. Pvt. Ltd. And in the

same year, its turnover touched Rs0.35million.

In the 1940s, it was largely multinational companies such as British Paints and Jenson

&Nicholson that dominated the Indian paints market. In order to increase revenue, AP

concentrated on the smaller towns ignored by multinationals. In 1954, Asian

Paintsasked thefamous cartoonist R.K. Laxman to create a mascot for the company,

and from his pen wasborn ± Gattu ± which emerged as one of India¶s most

memorablemascots (Refer Figure I).However, AP¶s market research found out that inrural India, farmers who wished to paintPAINT SECTOR- ASIAN PAINTS &

NerolacPaintsIIPM SALES & DISTRIBUTION MANAGEMENT PROJECT

the horns of their bullocks preferred to buy paint in small packs. Soon AP came out

with50-ml packs, which became very popularAsian Paints Limited ("Asian Paints") is

transforming itself to become a major world player

in the decorative paints business with particular focus on emerging markets following its

acquisitions of controlling stakes in Berger International Limited ("Berger International")

ofSingapore and SCIB Chemical S.A.E. ("SCIB") of Egypt. The total investment

madebythecompany in both these acquisitions amount to around US$ 16.8 million

(S$29.6 million).Asian Paints announced that it would focus on emerging markets of the

world for growthand also that Berger International will be the main growth driver for

Asian Paintsinternational operations Focusing on the aspect of increasing shareholder

value in BergerInternational, Mr. Dani said: "In Berger International, Asian Paints will

focus to increaseshareholder value by further improving the supply chain management



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in the subsidiaries(Asian Paints supply chain management is considered the best in

India servicing around14,500 dealers directly from 70 sales locations and manufacturing

over 2,500 stock-keepingunits (SKUs).The success of AP has been attributed to its

customer-centric approach and aggressivemarketing initiatives, which had changed

theway industry, functioned.AP wanted to be one of the top five companies in the global

paints industry by 2007. Inorder to achieve this goal, it focused on three main areas -

building the AP brand in terms ofa new product portfolio, changing its logo and

packaging. The new AP was expected to beeven more customer-friendly and service-

oriented. In order to keep its prices low, AP had tokeep its production costs low. So itundertook backward integration to reduce productioncosts. In 1987, it entered into joint

venture with Tamil Nadu Industrial DevelopmentCorporation (TIDCO) - Pentasia

Chemicals Ltd, for the manufacture of pentaerythritol andsodium formate - two

important intermediates for manufacturing paints.PAINT SECTOR- ASIAN PAINTS &

Nerolac Paints.

BALANCE SHEET



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NEROLAC PAINTS LIMITED

They embarked their journey in 1920 as Gahagan Paints and Varnish Co. Ltd. at

LowerParelin Bombay. In 1930, three British companies merged to formulate Lead

IndustriesGroupLtd. In 1933, Lead Industries Group Ltd. acquired entire share capital of

Gahagan Paints in1933 and thus, Goodlass Wall (India) Ltd. was born.

Subsequently, by 1946, Goodlass Wall (India) Ltd. was known as

GoodlassWallPvt.Ltd.In1957, Goodlass Wall Pvt. Ltd. grew popular as Goodlass

Nerolac Paints (Pvt.) Ltd. Also, itwent public in the same year and established itself

asGoodlass Nerolac Paints Ltd.In 1976, Goodlass Nerolac Paints Ltd.

becameapartofthe Tata Forbes Group on acquisitionof a part of the foreign

shareholdings by Forbes Gokak.In 1983, Goodlass Nerolac Paints Ltd.

strengtheneditself by entering in technicalcollaboration agreements with Kansai

PaintCo. Ltd., Japan and Nihon Tokushu Toryo Co.Ltd., Japan.

In 1986, Goodlass Nerolac Paints Ltd. turned into a joint venture of the Tata Forbes and

theKansai Paint Co. Ltd., with the latter acquiring 36% of its share capital.

In 1999, Kansai Paint Company Ltd., Japan took over the entire stake of Tata Forbesgroupand thus GNP became a wholly owned subsidiary of Kansai Paint Company Ltd.

In 2006, on the 11th of July, Goodlass Nerolac Paints Ltd. name has been changed to

KansaiNerolac Paints Ltd.During the journey of continuous performance excellence,

they have entered in to muchtechnical collaboration with other industry leaders such as

E.I. Du-Pont de Nemours &Company Inc., USA and Oshima Kogya Company Ltd.,

Japan for our different products.Our incessant journey of successes will go on

backed by our present human asset of over 2000

PAINT SECTOR- ASIAN PAINTS & Nerolac Paints

IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT

Nerolac is carrying on strong since 1920. Following are its strengths that have kept this

company in good faith. Nerolac is a company with very clear and well-defined vision and

very strong values. Clarity of vision and strong foundation of cultural values have always



25

kept this company in good stead. Its ethical conduct has always guarded it against any

possible traps and pit falls.We have made sure that the distribution hurdles and the

climatic vagrancies do not affect thequality of our services. This same commitment will

ensure that Kansai Nerolac will marchtowards its centennial year, fully dedicated and

invigorated, in step with the exciting wave ofindustrialization and modernization

pervading through the new Ind

BEVERAG PAINT

PROFILE

Though man has made and used paints timelessly, chemically formulated paints first

appeared in the 18th century in Europe. Among the first to manufacture chemical paint



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was a German colour chemist, Lewis Berger in 1760 who entered paint business in

London manufacturing dry colours using a secret process that every designer and

household coveted.

Usage: paint, today, is an axis that cuts across polymer chemistry, aerodynamics,

oenology, metallurgy, ecology, architecture and engineering touching almost every point

of modern science and technology.

From interior and exterior walls of our home , to furniture, to white goods, to any

industrial structure, any manufacturing or domestic equipments, any automobile, to any

protective coatings for plant and machinery, dams and bridges, offshore oil rigs and

even the numerous traffic signs that direct our way, hence we can view the diversity of

paints.

Conclusion

The industrial paints are slated to grow at an annual rate of 10 to 12 per cent per annum

for the next few years. The industrial paint manufacturers would benefit from the burst in

the passenger car sales. The two-wheeler industry has also registered a good show in

the current year. The commercial vehicles segment, a star performer last year with 33



27

per cent growth, is expected to average a growth of only 15 per cent this year. However,

the raising titanium dioxide prices and the negligible growth in agriculture this year, will

play spoilsport. Considering the past trend, the paint industry is expected to show at

least twice the growth of Indian GDP in the ensuing years. The reduction of excise

duties from a high of 40 per cent to 16 per cent in the last five years, has made the

numerous small-scale units unviable, as they no longer have a price advantage over the

organised sector. This has helped the organised paint Industry a lot. The industry is in a

consolidation phase and only those Indian paint companies with a strong technical

alliance, better distribution network and an ability to compete in the global markets

would emerge victorious in the paint war.

Berger has a series of tie-ups for various purposes:

Joint venture with Becker Industrifag.

Berger allied with the Japanese major Nippon Paints to boost its OEM turnover

Agreement with Orica Australia Pvt. Ltd. to produce new generation protectivecoatings.

Tie-ups with Valspar Corp and Teodur BV for manufacturing heavy duty and powder coatings.



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SUGGESTIONS

Introducing Water ± based Paints.

Repositioning of existing Brands in Rural Market.

Broadening of Distribution Network.

Adding more choices for shade effects and textures.

Enhancing Better Quality at a reasonable price

Demand will be generated through the new constructions coming in housing andindustries.

Celebrity endorsement too can help to create a pull factor in luxury paints

Complete house solutions too can give a meta market comfort to a customer

To generate product awareness

Give an incentive to influencer to push/suggest product

To initiate trial for first time user

To explore alliances with worldwide paint majors to tap vast potential of the segment

Leverage the recent acquisition to be a strong player in the industrial coatingsbusiness

To expand and become the leading player in international emerging markets

Mass production and economies of scale should be used to reach international pricetrend

Care should be taken while purchase of raw material as price trend in oil industry

paint industry in indi1

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