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A PROJECT REPORT
ON
THE PAINT INDUSTRY
SUBMITTED BY:-
PRASHANT KUMAR
Roll No.:511010877
FOURTH SEMESTER, SMU
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A PROJECT REPORT
Under the guidance of
Submitted by
In partial fulfillment of the requirementFor The award of the degree of
MBA
IN
MARKETING MANAGEMENT
AND
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ACKNOWLEDGMENT
An Endeavor to transform itself into success needs efforts. These efforts are
individual, standing in isolation. Such individual efforts require three things for
their further development. These three things being Reason, Rationality and Self
Esteem. The combination of these three basic traits delivers Productivity.
However, time and again this productivity requires encouragement and guidance.
This much requisite support comes in the form of Professionals furthering the
development of Amateurs.
This acknowledgement is an effort to recognize these professionals who have
made this project a combination of the three fundamental traits.
I take the opportunity to express my sincere gratitude to all those who have guided
motivated and inspired me in the completion of my project.
This project report and the learning process behind it would not have been possible
without the guidance of my Faculty Guide,. He was able to impart me with
the right approach that my report required for its successful completion.
(PRASHANT KUMAR)
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Bonafide Certificate
BONAFIDE CERTIFICATE
Certified that this project report titled THEPAINT INDUSTRYIs the bonafide work of PRASHANT KUMAR who carried out the project work
under my supervision.
SIGNATURE SIGNATURE HEAD OF THE
DEPARTMENT FACULTY IN CHARGE
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CONTENT
Acknowledgement -----------------------------------------2
Bonafide Certificate------------------------------------------3
Abstract--------------------------------------------------------5
Industry Profile-----------------------------------------------11
Introduction---------------------------------------------------25
Objective of the project------------------------------26 Limitations---------------------------------------------26
Main Text------------------------------------------------------27
Product at a glance------------------------------------28
Market survey-----------------------------------------47 Interpretation of data---------------------------------51
Market analysis-----------------------------------------------55 Porter Model ------------------------------------------------55 Growth-share Matrix----------------------------------------59 Advertising management and Sales promotion----------62
Recommendation-------------------------------------------------77
Conclusions-------------------------------------------------------81
References---------------------------------------------------------83
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ABSTRACT
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Paint: A historical background
Story of paint is considered to be as old as the history of human civilization. The
origin of paint has been traced back to the prehistoric period. The cave dwellers
those times expressed their artistic abilities by daubing colored mud on walls, of
their caves painting pictures of food giving animals as well ass their fellow men.
Primitive painting was done with different ends in view. Some was done to ensure
good fortune while some to hold evil spirits at bay or to honor the dead in theirgraves. These prehistoric paintings have been located in the caves of Altimara in
Spain and lasasue in France. These prehistoric paints were made by mixing colures
mud and water. Animal fat was used as binder. They used their fingers and sticks
as brushes. The Egyptian during 3000 BC painted their houses of tail pieces about
happening of those days. Battles, priestly rites etc. they used yellow, red, blue,
black & white colors. The tombs were supposed to have been painted to welcome
the soul when it comes back to reenter the body which was kept well protected by
secret preservatives. It was by 18th century that people realized the need for a long
lasting paint rather than frequent repainting. Paint factories started operating. Paint
was a costly product of hard labor by master craft man, who reared & mixed their
own raw
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Materials from a secret formula handed over from generation to generation, which
was now ready for the mass production stage. The 20th century revolutionized the
concept of paint & paint application. The ever increasing demand of paint
necessitated the introductions of new synthetic pigments & binders and new
application technology. Keeping in line with the development of technology in
other areas, the development of paint technology in the last quarter century also
surpassed the development in all the previous years put together. The new
technology has transformed an ancient art into a modern science.
Modern Perceptive
Modern houses are made of concrete and bricks which are porous in nature and
allow water penetrate. Concrete is highly alkaline by nature and hence protects the
reinforcement made of steel form corrosion. However carbon di-oxide from the
atmosphere reacts with the alkali in the cement forming calcium carbonate which
gradually reduces the alkalinity of concrete exposing the reinforcement to the
attack o corrosion. This cannot happen in dry conditions; but in the presence ofwater coming trough plaster the reinforcement get corroded and weaken the
structure. Since corroded material occupies more volume than the steel, they push
the plaster out culminating in cracking and flaking. The painting of an exterior wall
serves both the purpose of preventing carbon dioxide and water penetration into
the inner parts of concrete protecting the reinforcements and structure. A well
formulated paint fortified with effective biocides
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Protects the surface from the attack of micro organisms like fungi and algae
maintaining its original beauty. One important point to be remembered while
painting is that no paint file is stronger than the surface on which it is applied.
Surface defects like rising, dampness, leakages, cracks, microbial growth etc.
should be well attended to before taking up the painting job. Post painting remedial
measures are always cumbersome and do not offer permanent solutions.
Incidentally, the causes of paint failures are the factors without which life is
impossible o earth. They are the panchamahabhutas earth, water air, heat, light and
of course there are the man made hazards like industrial environment ad gasses.
Once you get on the job of painting you will realize that the time spent on thepreparation of surface is more than that required for the actual application of the
paint. In total analysis this exercise is worth while because most of the paint
failures arise from the poor surface preparation. This first step before any painting
is the thorough inspection of the building, checking for peeling paint, cracks,
leakages, rusty nail heads and microbial growth. In short the success or otherwise
of any painting job will be decided by the above factors.
About the Paint Industries
The paint industry is facing an upward movement and growing at a CAGR of 10%
per annum and is likely to grow at 10.5-12%. New dealers are cropping up
everywhere and this project tries to study the distribution channel followed by
Paint Industry, Analyzing the Marketing Strategy of the Giants (Asian, Nerolac,
Berger, and ICI) as well as Comparative analysis among the Major Players. Every
organization tries to increase its market share by strengthening its distribution
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Network and expanding itself to the regions where penetration is low. The project
would come out with a comparative analysis of the performance of five major paint
manufacturers and highlights the various critical success factor and key strategies
to be followed by Paint industry in the coming years to increase its customer base.
To increase the profitability and market share in a business the most important
strategic choice any company makes, is choosing the customers it wishes to do
business with. It is the choice that defines the business. It must be a conscious
choice based on the desires and values of the owners and managers of the business,
as well as the assessment of the companys strengths and weaknesses, resources
and capabilities, compared with those of competitors. It should be based on the
management vision of the potential of the company for creating and serving
markets, for exploiting its unique strengths, and for achieving substantial
profitability. And it is through Market Segmentation only a company can recognize
that customers have distinctive needs, preferences and buying patterns. It is the
process of analyzing the market in order to define, creatively, distinct groupings ofcustomers for whom the firm has the potential to offer superior value. These
different groups will respond differently to the firms product offering and product
communications.
The same thing applies for the paint business also. For a paint company the main
customers are end customers. Hence if the paint company comes to know about
their behavior pattern, needs and expectations then it will be easier for the
company to push its products in the market and generate more sales turnover and
grow. Moreover at present the Indian Decorative paint industry is riding high on
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The growth in hectic constructions in the housing segment, improving
infrastructure and increase in per capita income. The competition in the market has
considerably increased after the entry of foreign players in the Indian industrial
scenario.
So in the long run, to survive in this competition every company has to update to
the latest technology, go for diversifying itself in new markets and satisfy the
growing customer expectations.
Highlights :-
The Indian paint industry is a $ 49 billion sector.
The demand for paints is equal relative price-elastic but is linked to
the industrial economical growth.
The per capita consumption of paints in India is very low at 0.5 kg
per annum if compared with 4 kegs in the South East Asian nations
and 22 kegs in developed countries. The global average per capita
consumption is 15 kg.
In India the organized sector controls 70 percent of the total market
with the remaining 30 percent being in the hands of nearly 2000
small-scale units.
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In India the industrial paint segment accounts for 30 percent of the paint
market while the decorative paint segment accounts for 70 percent of
paints sold in India.
In most developed countries, the ratio of decorative paints and
industrial paints is around 50:50.
All the industry majors have a vast dealership network and are
required to maintain high inventory levels.
Most of the paint leaders have technical tie-ups with global paint
leaders.
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INDUSTRY
PROFILE
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Major Players:
The major players are Asian Paints, Kansai Nerolac, Berger, ICI and Shalimar.
Recently world leaders like Akzo Noble, PPG, Dupont and BASF have set up
base in India with product ranges such as auto finishes, powders and industrial
coatings. Kansai paints of Japan, which entered into collaboration with Goodlass
Nerolac in 1984, is now the holding company for Goodlass Nerolac with 72
percent equity holding. In 2006, Goodlass changed its name to Kansai Nerolac
Paints Ltd. to give it a new corporate identity. PPG has a joint venture with Asian
Paints to manufacture industrial coatings. Jenson & Nicholson and Snowcem India
are not active players because of dwindling sales in recent years.
Asian Paints India Ltd.
Asian Paints India Ltd. (APIL) has the distinction of being the market leader in the
paints industry and commands a market share of 33 per cent. It commands 38% in
the decorative paints segment and 15% share in the industrial paints segment. The
company's dominance is on account of its presence in almost all types of paints
segments such as primers, wood finishes and metal paints besides wall paints while
other players cater to niche markets, APIL sources its raw material requirements of
pthalic anhydride and pentaerythritol from its own in-house plants, which provides
it an edge over its competitors by reducing its raw material costs. The company has
a strong presence abroad with joint ventures in Fiji, Tongo, Solomon Islands,
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Nepal, Mauritius and Australia. What keeps it ahead of its contemporaries is
product innovation; for instance it was the first in the industry to tap the exterior
paints segment. It has a domestic installed capacity of 162,700 TPA for paints.
With the government planning a thrust in the housing sector, players like Asian
Paints stand to benefit, as demand for decorative paints will grow. Taking
advantage of the increase in the automatic approval of overseas investments, Asian
Paints acquired the entire paint business of Pacific Paints Co. Pty. Ltd., Australia,
for Aus$375,000.Asian Paints had also acquired the largest paint company in Sri
Lanka. Asian Paints' vision is to be among the top five decorative paints companies
in the world by 2007.
Kansai Nerolac Paints Ltd.
Kansai Nerolac Paints Ltd. [KNPL] with its two wholly owned subsidiaries
Saurashtra Paints Ltd., Ahmedabad and GNP Madras Ltd., ranks second in the
industry with 18% market share. It is recognized as the leader in the industrial
paints segment with a market share of 41 per cent. The parent holding company,Kansai Paint Company of Japan, is a world leader in paints. Having derived
maximum income in industrial paints from Maruti Udyog Ltd. (MUL) until
recently, the company has now widened its client base to include many other
automobile manufacturers like Mitsubishi Lancer, Hyundai Motors and Telco.
Significantly, the company continued to fare well despite the slowdown in the
automobile segment and with the industrial paints segment likely to witness good
growth in the medium term, KNPL appears to be in a fairly advantageous position
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And should be able to reap rich benefits in the future. Kansai Nerolac Paints
manufacturing capacity is 88,140 TPA.
Berger Paints Ltd.
A leading player in the industry, Berger Paints boasts of a market share of 15
percent. The company also has the distinction of being the third largest player in
the industry. It is predominantly engaged in the decorative paints segment, which
is responsible for two-thirds of its sales, remaining earnings come from the
industrial paints segment. Berger Paints acquired Rajdoot Paints Ltd in FY1999.
Installed capacity is 56,420 TPA. Berger has two plants located at Howrah and
Pondicherry for producing synthetic resins and paints respectively; besides these it
also owns a wholly owned subsidiary Beepee coating, a manufacturing unit in
Gujarat. The company enjoys the benefits of technical tie-ups with Valspar
Coatings, USA and Herberts, Germany for heavy-duty coatings and automotive
coatings respectively. Berger Paints is a company with fairly sound fundamentals
and a steady financial track record. In addition to increased focus on its existingindustrial paints / protective coatings business, the company has entered into a
50:50 joint venture with ICI India Ltd, exclusively for automobile and industrial
paints. Both companies will have equal representation on the board of the JV. The
automobile and industrial paints business of ICI India, along with the assets at
Rishra, exclusively used for the paints business, will be transferred to the joint
venture for an aggregate consideration of Rs.165 mn.
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ICI India Ltd.
ICI India Ltd. (ICIIL) is a part of the Imperial Chemicals Industries (ICI), UK
which is a world leader in paints. The company has diversified interests and is notpurely a paints company. Backed by a market share of 13 per cent, ICIIL is
recognized as the fourth largest paints manufacturing company. The company,
which was a leader in the premium emulsion paint market, has now lost out to
Asian Paints in the same category. The decision of the parent to invest more funds
in the company could prove extremely beneficial.
Shalimar Paints Ltd.
Shalimar Paints Limited is the oldest paint company in India, which was set in
Kolkata in 1902. Shalimar Paints are the leaders in the Aluminum Paints Category.
In the 1990s, helped by growing economy, the paint industry has recorded a
healthy growth of 12-13 % annually. This was mainly due to drastic reduction in
excise from a staggering 40% to 16%.In the budget of FY 2006-07 as well, peakcustoms duty has reduced from 15%to 12.5%.This would bring down the cost of
raw materials thereby positively impacting the profit margins of paint
manufacturers. However the growth was restricted in 2000-03 to single digits.
There was a revival in 2003-2004 with a robust growth of 13 % and moving with
the double-digit growth thereon. The industry has two market segments- industrial
and decorative paints. While the industrial paints are used for corrosion and rust tosteel structures, on vehicles, white goods and appliances, decorative paints are used
in protecting the valuable assets like buildings. The decorative paint business has a
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Share of 77 %( about Rs 3640 crores in the organized sector) in total sales. In
foreign countries 50 to 70% of the business is from the industrial segment.
The trends are likely to shift in India too but at a slower pace in favour of Industrial
paints. The per capita consumption of paint in India is 700 grams against 19 kg in
the U.S. and 2.7 kg and 5.8 kg in other develop countries like China & Brazil. As
consumption goes with affordability, the low Indian figure is not a surprise. Within
the decorative segment the share of exterior paints is 21%, interior emulsions 11%,
distempers 30%, solvent based enamel paint 36% and wood finishes 2%. The
exterior category, particularly exterior emulsions is the fastest growing segment
20% for the last 3 years. In the industrial business share of high performance
coatings 30%, powder coatings 10%, coil coatings 5%, marine coatings 5% and
automotive coatings 50%.
Organization System
Most of the organized companies have a nationwide presence with multi location
manufacturing facilities. The companies in the unorganized sector are mostly
regional spread in and around there and manufacturing facilities dealing in low
value products.
Major players have created a nationwide marketing setup with the focus on all
interior/Small markets. Not only the companies are able to establish themselves in
interior markets the demand percolated to main towns and the company could
enlist support of large customers.
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Being FERA companies and some under MRTP, most other players were not
allowed to increase the production capacities till nineties. With liberalization, these
shackles were removed and other companies have expanded.
Another winning point for the companies was strategy to focus on smaller packs
rather than focusing on larger packs. They have also been bringing new product
categories, which helped, in expanding the market. This made distribution still
more complex as precise forecasts for over 3000 stock keeping units (SKUs)
became a challenge for every organization. With the advent of color dispensing
machines supported by all paint companies and sophisticated IT enabled
distribution tools, the situation have eased considerably.
Business Re-engineering
With the industry business-becoming complex, most companies have gone into
restructuring and have used information technology as the key drivers for
reengineering. They have aligned their organized structures on the basis of
expanding business and its complexities. This was essential in order to tighten the
controls as well. Today companies have divided their sales organization into
decorative, industrial and high performance coatings. The country level
organization structure is split into zones, regions and branches. The colour
dispensing machines both computerized and manual, have transformed the
business, particularly on the manufacturing and the distribution sides. Earlier paint
companies were required to manufacture all the shades (30-50 depending on a
product line) in all the packs (5-8 packs). The demand pattern was difficult to
predict even when with the support of historical data/ trends as consumer
preference was changing first. The machines altered the production pattern from
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shades to producing bases thus providing economics of scale, reduced inventory
level and eliminated redundancy of stocks. It has cut down the new products
introduction cycle considerably. This has helped expand the range of shades for
each product category, offering a choice of shades to consumers (in hundreds). For
the retailers also, it eliminated the sale loss for want of range/desired shade. The
machines have brought a total change in the way business is transacted and
revolutionized business processes as well.
There are around many colour-tinting machines installed at the dealers ends
including multiple machines on some counters. Also popular are the gear mixers
for 2K finishes in auto refinishes, which are installed at the dealers end and at
leading garages.
The dependence on IT has increased remarkably from corner room EDP operations
to playing a pivotal role in the way business is transacted. While Asian has
invested on i2 technology, Kansai Nerolac has backed up IBM enabled APO and
has gone for the latest 3.1 version to improve its distribution and optimize
production scheduling. Both companies are operating on ERP (SAP R3) operating
system through full connectivity across the factories and branches via V-SAT, thus
virtually working on live data for sales, accounting and purchase.
Kansai Nerolac has gone one step ahead by launching its intranet-employee portal
to capture knowledge sitting in the minds/desktops of individuals to a common
platform, which can be assessed by all employees. It has also invested in advanced
business plan performance measurement tools like balanced score cards to track,
review and align performance. Most companies in the paint industry are
functioning on multi-division models with individual functions controlled by
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business heads. Some manage their business through sub-committees. As in the
case of KNPL there are two levels of team managing/ guiding business. While all
the policy and major decisions are taken by the management committee (MC),
which reviews operation on a monthly basis there is a parallel team named
business analyst team (BAT), which analyses the business, discusses the new
initiatives, in a way working as a think tank for the company.
Asian Paints adds 25% of Storage Space for SAP Application
Database without any investment.
Challenge:-
The SAP database is in Terabytes and increasing at the rate of Gigabytes per
month. The major challenge faced was in fragmentation and the release of space
for near future. There was an inescapable need to manage the space. Any activity
to be performed had to be carried out in a very short span of time as the estimated
downtime for this project was 192 hours.
The SAP tool was not able to substantially free up space to accommodate for nearfuture growth. As a result of the space congestion, the response time had also
gradually dropped.
Issues in Brief:-
Storage Space
Database Fragmentation
Response Time to user operations
Non-availability of Downtime at a stretch
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The Solution:-
A complete study was performed of database usage, peak time, growth pattern,
object sizes, transactional and master. A project plan was created to re-organize theSAP database from back-end using export/import and object movement. The
complete action plan was implemented successfully in the TEST environment. The
same activity was planned on PRODUCTION environment with distributed
downtime.
Although the distributed downtime was scheduled for a total of 8 downtimes of 24
hours each, the entire project was complete 48 hours before the schedule. With
precise planning and control over the activity, the project was completed in 25%
less than actual downtime scheduled.
Storage Space : Released near about 1 TB of storage system which has enabled
Asian Paints to sustain with same hardware.
Database Fragmentation: Removed fragmentation from database as well as
object level fragmentation.
Response Time: Removing fragmentation and converting table spaces from
Dictionary managed to locally managed has reduced the I/O in turn improved the
response time.
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Non-availability of Downtime at a stretch : Distributed downtime was scheduled
for a total of 8 down-times of 24 hours each.
Asian Paints could enhance the performance for business users in terms of
response time as well as saved (earned) from buying additional storage capacity.
This not only increased the return on investment on the existing infrastructure but
cut down unnecessary investment on buying new hardware.
Product Culture:
Most companies have an identical range of products for the decorative. In the
industrial range is more customized and guided by the technological support
provided by the collaborators. In the case of decorative products the technology
has been more indigenously perfected over the years and the products can be
divided on the basis of interior and exterior application or in categories like water
base and solvent base. Moreover, most companies have been advertising their
products in exterior emulsions category, which has expanded the market and
triggered a shift from cement paint. While solvent-based enamels are still popular
in India, outside there is a clear shift visible from solvent to water based glossy
enamels. India will take some time before this change is accepted on account of
three hurdles currently faced on this-cost (water based is expensive), low level of
gloss in water based enamels, psychological barrier that water base cannot besuperior to solvent protecting wood or metal surfaces.
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Companies not working on operational efficiency business models have been
losing. Asian and Nerolac have been aggressively working on cutting costs/
Operating expenses. Berger has been managing well with economical yet
acceptable formulations and low operating costs. The industry is not capital
intensive and depreciation charges are not significant. Working capital
requirements are moderate. However most companies in the lower rungs are slack
on realization of debtors. Added to this has been the problem related to collection
of installments on colour dispensing machines which are mostly given on lease.
The biggest efficiency required is the physical distribution. The poor forecasts of
demand result in poor distribution. On account of this, the companies are investing
in sophisticated supply chain management tools. Margins have remained under
pressure on account of dropping prices, which has been more strategic and forced
by the market leader. Companies have been working in improving internal
efficiencies to retain profits. The pressure from original equipment manufacturers
to reduce prices has also been a cause for low profits for paint companies. Even
with the turnaround of the economy, the pressure has not relented. The customer
(retailer) has also been dictating his terms as most companies have common
counters to meet their objectives. So they have no choice but to lure more
customers through incentives. Low productivity of high cost labour in the old units
has been another problem. This in totality has increased operating pressures and
resulted in stressful working.
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Some of the international players are already present in India, but mostly for
industrial coatings. They include Akzo Noble, BASF, Henkel, PPG, ICI
(decorative) and Dupont (auto refinishes). A few others are present through
collaborations like Kansai, Nippon. For decorative range of products it is difficult
for international companies to set up shop on stand alone basis because of existing
Barriers such as strong network of existing players, brand image, range of products
(Indian context) and required distribution logistics. Therefore the safer route will
be to tag along with existing companies. For industrial products, however this may
not apply and based on their tie-ups in home countries and their OEM customers,
the required range can be made and sold. There is however room for niche players,
with radical and unique range of products, properly conceived and marketed in
Indian context and supported with machines.
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INTRODUCTION
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OBJECTIVES OF PROJECT:-
To do the comparative study of the paint companies (ASIAN PAINTS,Kansai Nerolac, Berger, ICI and Shalimar.
To understand the types of paints and finishes.
To understand the Marketing and Advertising Strategy.
India's position on the global Map in terms of competitiveness.
LIMITAIONS:-
Although the project is my sincere effort to derive a comprehensive analysis out of
the data collected, it has some inherent limitations because of deviations in market
conditions:-
The implications of the analysis may not apply to every market and productbecause of variation in markets and market conditions.
Chances of biased responses from the consumers and competitors.
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MAIN TEXT
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PRODUCT AT A GLANCE:-
Paint is a mixture of four 4 elements - solvents, binders, pigments and additives.
Solvents give the paint a liquid flow while the binder binds to the surface.
Pigments impart color and opacity to the paint and the additives give it special
resistance properties.
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
tainted with bright colors.
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 unorganized sector has dominance, to make their presence felt in this
segment the paint majors are now indulging the customer in the process and
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Preparing shades according to the needs and wants of the customer, that is, the
decorative paint segment is more or less customized. 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.
Market profile :-
The leaders in the organized paint industry are as follows:
Asian Paints (India) Ltd. (APIL)
Kansai Nerolac Paints Ltd. (KNPL)
Berger Paints
ICI (India) Ltd.
Price sensitivity factors:-
Various factors that have influenced the pricing of paints are summarized below:-
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 bottom-line of the players.
The major raw materials titanium dioxide, phthalic anhydride and
eutarithrithol constitute 50 per cent of the total cost. Besides, this, there
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are other raw materials such as Astor, linseed and soybean oils,
turpentine. The raw materials cost sums up to a whopping 70 per pent.
Any increase in the prices of these raw materials would adversely affect
paint prices.
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.
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 on the prices of the
tinplate in the near future.
WHAT ARE THE TYPES OF PAINTS USED IN BUILDINGS?
For painting your home, there are basically 5 types of paints to consider:-
1. Exterior Paints,
2. Interior Paints,
3. Metal Paints,
4. Wood Finishes
5. Special Application Paints.
1) EXTERIOR PAINTS:-
When choosing exterior paints for the exterior surface/walls, look for ease of
application against weather and quality. They should be attractive yet durable31
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enough to withstand weathering. The paints for exterior surfaces (such as brick,
cement, stucco, cinder block and asbestos-cement) include the following types:
CEMENT PAINTS - These are water based paints and are applied on the outer
surface of the house. They provide a coating that assures effective, medium range
protection against the weather. They are highly water resistant and are the best
option on a newly concreted surface. Special additives equip them to stand up to
the rigours of outside exposure. Available in matt finish and a range of standard
colours, they are adequately fade-resistant. A sound application of cement paints,
after proper surface preparation, can stretch your repainting cycle to 5 years.
EXTERIOR ACRYLIC EMULSION Emulsion paints are also water based,
along with vinyl or acrylic resins added to make them hard wearing. Emulsion
paints give various degrees of sheen and are available in matt, egg shell, silk, satin
and full gloss ranges. The paints become harder wearing as the shine increases.
Special additives make them exceptionally resistant to algae, fungus, atmospheric
erosion and extremes of heat and cold and rain. Given careful and correct surface
preparation and priming, they create a tough, enduring coating with superb
adhesion and flexibility. Available in a wide range of colours, they are also fade
resistant and can last for 4-5 years.
TEXTURED PLASTER- These are also emulsion based exterior finishing coats.Textured Plasters provide even stronger protection than Emulsions, besides
unusual visual appeal. Their thick surfaces can be designer-patterned by sponging,
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stippling or patterned rollers. Washable over and over, their attractive colours and
patterns blend smartness with heavy duty protection.
2) INTERIOR PAINTS:-
DISTEMPERS - The traditional economy paints, they can produce a perfectly
satisfactory finish at reasonable cost, given proper application and workmanship.Their lifecycle is shorter than that of emulsions. Dry Distempers (which come in
powder form) and Oil Bound / Synthetic Distempers are not washable. Acrylic
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Distempers, being partly based on acrylic resins, produce greater smoothness and
wash ability. Properly maintained, they keep their good looks for 3 to 4 years.
INTERIOR EMULSIONS (PLASTIC PAINTS) - Emulsion paints have wateras a base with a fine dispersion of vinyl or acrylic resins, which on drying, create a
Remarkably tough, adherent, durable coating. Emulsion paints give various
degrees of sheen and are available in matt, egg shell, silk, satin and full gloss
ranges. These paints are harder wearing as the shine increases. Special additives inplastic emulsions give them an incomparably smooth finish, in beautiful shades
that last for years. These paints are also washable, resistant to chemicals, fungus,
and algae and easy to maintain. They are extremely durable but are not suitable for
application on external surfaces, wood and iron surfaces. They come in three
categories namely:
SILK EMULSIONS (PREMIUM ACRYLIC EMULSIONS) - They arepremium acrylic emulsions, with silky smoothness and a luxurious silk-like finish.
Their very high acrylic resin content enhances durability and creates reflection and
smoothness of such a high order that dust cannot settle on it. A silk wall looks
fresh even after several years.
REGULAR EMULSIONS they produce a smooth eggshell finish, in a wide
choice of colours, and have almost the same durability as Silk. Combining silk and
regular judiciously could give your painting project just the right balance between
great looks and a long-cycle economy.
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ECONOMY EMULSIONS - offer the basic strengths of emulsion paint at
economy prices. They are still a generation ahead of Distempers on durability,
wash ability, fade-resistance and smoothness.
3) METAL PAINTS:-
Doors and windows, metal grills and furniture have a common type of paint for
coating them namely the Enamel paint. Enamel paints are not water based. In
addition wooden surfaces and furniture may be protected by synthetic transparent
finishes like PU and Melamine.
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SYNTHETIC ENAMELS - are alkyd resin based formulations that work equally
well on wood, metal and even walls. Besides a brilliant and smooth finish, they
also provide very good protection against atmospheric corrosion, including rusting.
PREMIUM ENAMELS - are extremely tough, provide long protection and
mirror-like finish. They withstand extreme climatic changes and can be used both
inside and outside.
GENERAL PURPOSE ENAMELS are also tough, provide a durable and
pleasing, though less glossy finish. They are not recommended for exterior
surfaces. Two coats of general purpose enamel give good long term protection for
hardworking surfaces where durability and economy are chiefly wanted.
4) WOOD FINISHES:-
POLYURETHANE (PU) AND MELAMINE - are the modern alternative to old-
fashioned varnishes. These are synthetic, and provide an extremely tough,
transparent protective coating. They allow the beauty of the wood grains to show
through. But unlike varnishes, they are to easy too maintained and stand up to
rigorous wear and tear, heat and liquid and stains. Available in both matt and
glossy finishes, they can be used on a wide variety of wooden surfaces includingfurniture old and new and cane.
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5) SPECIAL APPLICATION PAINTS:-
FLAT OIL PAINT FOR BATHROOMS AND KITCHENS Flat Oil Paint is
recommended over emulsion based wall paint to correct staining and flaking,
especially in Bathrooms and Kitchens. The advantage is that they can be wipeddown with a damp cloth to keep them clean. Condensation of moisture, fumes,
grease stains, etc. cause paint breakdown, flaking and mould infection.
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ANTI-TERMITE PROTECTION FOR WOOD - It is absolutely essential to
pre-treat all wooden surfaces with a transparent Melamine coating, brushed ontobare wood to guard against termites, wood borers, etc. .Its greatest advantage is
that it allows subsequent over painting with paints, synthetic finishes and polishes.
BITUMINOUS PAINT FOR WATER TANKS Concrete and galvanized iron
water tanks are susceptible to algae and fungus attack, besides corrosion. Non-
toxic Bituminous paint will keep the inside of the water tank free of algae, fungus
and corrosion.
ALUMINIUM PAINT - To protect the outside of Water Tanks use Aluminium
Paint, with reflective silver-like luster that also reduces internal temperatures.
Aluminium Paint can also be used effectively to increase the life of gas-holders in
kitchens
WHAT ARE THE TYPES OF PAINT FINISHES?
When Surface Coatings (Top coat of Paint) dry, they produce films with varying
degree of sheen. The range extends from Flat or Matt finishes which have no
sheen, through increasing degree of Luster to high gloss finishes. Based on the
reflectance level of the dried film of paint we can classify the finish in to following
four heads:
MATT: It is the kind of finish, which has the lowest level of gloss. When the gloss
on a panel painted with Matt finish paint is measured in a glossometer at 60-
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Degree angle, the reading is less than 5.
SATIN OR EGG-SHELL: This finish has silk like gloss, explains the name Satinfinish. When the gloss on a panel painted with Satin finish paint is measured in a
glossometer at 60-degree angle, the reading is 6-20.
SEMI-GLOSS: This finish has more gloss than a satin finish. When the gloss on a
panel painted with Semi-Gloss finish paint is measured in a glossometer at 60-
degree angle, the reading is 21-70.
GLOSSY: This is the finish with highest level of gloss. When the gloss on a panel
painted with a Gloss finish paint is measured in a glossometer at 60-degree angle,
the reading is more than 70.
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HOW ARE PAINTS STORED?
It is difficult to reseal the paint container and store the paint well for a long period
of time. It should be stored upside down, for a good seal. Storage should be in a
cool dry place, protected from freezing.
Interior/exterior house paint tends to separate when stored, the heavier components
settling to the bottom. Therefore, it should be mixed before use, with a flat wooden
stick or a paint mixing accessory.
HOW IS PAINT DISPOSED OFF?
LIQUID PAINT - Proper disposal of left over paint is a challenge. To dispose of
paint, one method is to dry it, either by leaving the lid off until it solidifies or by
pouring it into a disposable drying device. Once dry, the paint may be discarded
with normal trash.
WET OIL BASED PAINT should be treated as hazardous waste, and disposed
of according to local regulations.
RECYCLING PAINT - Sometimes it can be recycled: Old paint may be usable
for a primer coat or an intermediate coat, and paints of similar chemistry can be
mixed to make a larger amount of a uniform color.
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Colour is the most powerful decorating element in our homes. Colours evoke
emotions in us and affect us in ways that we are not even aware of. It has been
scientifically confirmed that colours affect our mood, health, happiness in different
ways. When choosing colours for your House, it is best that you make the decision
instead of trusting someone else because you will be the ones who eat and sleep,
entertain, play and rejuvenate in the spaces. Since there are hundreds of options inpaint colours, it may seem to be a difficult task. But just as you coordinate colours
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Everyday in what you wear, you can choose colours of your choice for your rooms.
But before that, an understanding of colour and its basics can really be helpful.
COMMON PAINT DEFECTS AND REMEDIES:-
Many problems can occur after painting. Sometimes, they occur simultaneously
during painting. Understanding the causes of some of these defects can make the
paint job easier. Here are some common paint defects and their solutions:
Blistering: Blistering or Swelling of paint is caused due to the trapping of air,
moisture or solvent between the surface and the paint film. The solution- Remove
any unstable paint films and allow the wall to dry thoroughly. Then repaint with a
recommended paint. Avoid painting under direct sunlight.
Bittiness: Bittiness is caused by dirt from the atmosphere or the surface or from
brushes that are inadequately cleaned or due to bits of dried-up paint that gets
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Stirred in. The Solution- Use clean brushes and paint on clean surface and strain
the paint through a cloth before use.
Algae/Fungus growth: Algae and fungus can grow when the surface is
continually damp and dirty. Insufficient fungicide/ algaecide in the paint can also
worsen the situation. The Solution - Remove algae / fungus by high-pressure
washing. Wash again to remove any residue and allow the wall to dry before
applying with recommended paint.
Brush marks: Brush marks are caused due to under-thinning of paints or due to
poor application of the final coat of paint or due to poor quality brush. The
Solution- Ensure paint of the right viscosity is applied using a good brush.
Chipping: Chipping of paint film is due to excessive use of putty or due to very
thick coat of paint or defective surfaces. The Solution-Regulate the use of putty
and paint.
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Chalking: Chalking occurs when ultraviolet rays cause the paint binder to
disintegrate. It can happen when interior paints are used for exterior surfaces. Thesolution- Remove any unstable paint films. Allow the wall to dry thoroughly, and
repaint with a recommended paint. Make sure the paint is not adulterated with
foreign materials.
Cissing: Cissing or tiny craters are caused by oily or greasy surface/due to water
based paints being applied over glossy or smooth enamel paints. The Solution-
Clean the surface thoroughly with soap solution and water. Roughen the enamelpaint with Sandpaper or use a barrier coat of matt primer.
Efflorescence: Efforescence or formation of white powdery deposit on walls after
painting is caused due to salts present in the building material like brick and
mortar, which surface later on. The Solution- Give a long time gap between
plastering and painting (about 6 months including one monsoon) Use paint with a
porous film like emulsions and distempers.
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Loss of gloss: Loss of gloss is caused due to poor surface preparation or due to
presence of oil or due to over thinning of paint. The Solution- Clean surfacethoroughly and take all recommended steps for surface preparation.
Discolouration: After paint is applied, it may fade or discolour. This is caused by
particles in the wall reacting with the paint when it is drying. Discolouration could
also be caused by water seepage, or by contaminants in metal or wood. The
Solution- Repair water seepage. Make sure the surface is dry before painting and
apply an alkaline-resistant or oil-based paint.
Flaking: Flaking-off of paint film is due to improper application of primer coat
over putty, and not being completely covered. It can be due to application of paint
on insufficiently dry surfaces. It can also be due to shrinkage or expansion of a
surface causing the paint film to move. The Solution- Ensure that there are no
gaps in covering putty with primer coat. Also ensure that the surface is dry and
clean.
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Patchiness: Patchiness or uneven finish is caused due to the highly absorbent
nature of the surface. The Solution- Apply an extra coat of primer or use well-sealer.
Peeling: Peeling is caused by moisture on the wall, poor surface preparation or
using an incorrect painting system. This defect happens on walls as well as wood
or metal surfaces.
The solution for Walls -Check and repair water seepage. Ensure walls are dry
before painting. Use an alkali-resistant basecoat or sealer. Patch surface defects
with putty.
The solution for Wood - Prime wood before painting, sand surface and clean off
dust.
The solution for Metal - Remove all paint from metal before re-painting. Prime
surface and re-coat with suitable paint.
Sagging: Sagging happens when the paint droops downward after being applied on
the surface. It is caused by the pigment separating from the paint and settling at the
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Bottom of the container and comes as a result of insufficient stirring or shaking
during storage or storing for too long or under too much heat or faulty thinning.The Solution- Avoid storing in hot locations for long periods. Store in accordance
with the manufacturers recommendations. Thin only with appropriate
recommended thinners.
Wrinkling: Wrinkling happens when the paint forms film-like undulating waves.
Applying too much paint or drying during high temperatures or painting on atopcoat before the undercoat is dry can cause this defect to happen. The Solution-
Avoid applying too much paint. Make sure no paint accumulates around bolts,
rivets, etc. Wait until each coat dries before you re-coat.
Slow drying: Non-drying or slow drying of paint film is caused due to humidity,
poor air circulation, low temperature or presence of oil or grease on the surface or
due to alkalinity of the surface. The Solution- Reduce the impact of atmospheric
conditions to the extent possible; Scrub oil or grease off with a rag soaked in white
spirit and wash with water and soap.
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Many people find the technical terms associated with Paint and other protective
coatings difficult to understand. I have explained these terms here in easy-to-
understand language.
MARKET SURVEY:-
Current Trends
The industry is riding high on growth in the automobile industry, hectic
constructions in the housing segments, improving infrastructure and overall
increases in the per capita income of the middle class. Thirty percent of the paint
business is contributed by painting of new construction area. GDP growth
projections of 8.5% in the current year mean a growth of 10.5-12% in paint
business. The growth will be 11-12% in the industrials and 10-11% in the
decorative. The automobile industry has been doing remarkably well and will
benefit the market leader in the segment Kansai Nerolac. As for the future outlook,
the industry has predicted a CAGR of 12% for the next five years from the last
Year growth levels of 27.4% for cars, 8.9 % in two-wheelers and equally
encouraging current year trends. The housing industry is likely to do well in
current year as well with last year growth rate being around 50%. Taking the
continuing feel good factor for the overall economy as well as one safely looks at10-12%growth rate for the paint industry in the next five years.
Consumers can look forward to new products getting launched-some for
application for special areas. Companies will be offering value addition to
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customers by offering a variety of finishes through specialized and trained
applicators. There will be more options like range of colour/finishes (clear) for
wood applications through the tinting machines. The trend for water-based coating
is likely to set in both for industrial and decorative applications. India is still away
from the do-it-yourself concept as cheap labour is still available. Exclusive retail
chain stores sponsored/ run by paint companies will become a reality. The industry
has progressed well and is likely to be influenced by changing global scenario.
New technologies, new innovative products, new associations, consolidation of
industry and poor performers getting out of the scene will characterize future
development. Ultimately there will be only four or five key players operating in themarket.
The company wise trend in Market Share shows that Asian Paints are the leaders in
the decorative segment by a market share of 38%, followed by Kansai Nerolac
Paints with a market share of 14%.
Market Share of Five Major Paint Companies
Company Overall
Decorativ
e Industrial
Asian Paints 33% 38% 15%
Kansai Nerolac
Paints 19.30% 14% 41%
Berger Paints 15% 10% 10%
ICI Paints 13% 9% 9%
Shalimar Paints 5% 8% 8%
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Asian paints are the industry leader with an overall market share of 33 per cent in
the organized paint market. It has the largest distribution network among theplayers 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. KNPL has a market share of 5 percent in the organized sector.
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. KNPL, the number-two in the
decorative segment, with a 14 per cent market share too, has now increased its
distribution network to 10,700 outlets to compete with APIL effectively. Berger
and ICI have 10 per cent and 9 per cent shares respectively in this segment
followed by Shalimar with 8 per cent shares.
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
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with 70 per cent of paints sold in India for decorative purposes. In most developed
countries, the ratio of decorative paints vis- -vis industrial paints is around 0:50.But, with the decorative segment bottoming out, companies are increasingly
focusing 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.
KNPL dominates the industrial paints segment with 41 per cent market share. It
has a lion's share of 70 per cent in the OEM passenger car segment, 40 per cent
share of two wheeler OEM market and 0 per cent of commercial vehicle OEM
market. It supplies 70 per cent of the paint requirement of Maruti, India's largest
passenger car manufacturer, besides supplying to other customers like Telco,
Toyota, Hindustan Motors, Hero Honda, TVS-Suzuki, Mahindra & Mahindra,
Ashok Leyland, Ford India, PAL Peugeot and Bajaj Auto. KNPL also controls 20
per cent of the consumer durables segment with clients like Whirlpool and Godrej.
The company is also venturing into new areas like painting of plastic, coil coatings
and cans. APIL, the leader in decorative paints, ranks a poor second after Kansai
Nerolac in the industrial segment with a 15 per cent market share. But with its joint
venture Asian-PPG Industries, the company is aggressively targeting the
automobile sector. It has now emerged as a 100 per cent OEM supplier to Daewoo,
Hyundai, Ford and General Motors and is all set to ride on the automobile boom.
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Berger and ICI are the other players in the sector with 10 per cent and 9 per cent
shares respectively. Shalimar too, has an 8 per cent share.
INTERPETATION OF DATA/FINDINGS:-
Sector Wise Consumption of Industrial Paints
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MARKET SHARE
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Asian Paints is India's largest paint company and the third largest paint company in
Asia today. The company has an enviable reputation in the corporate world forprofessionalism, fast track growth, and building shareholder equity. Asian Paints
operates in 21 countries and has 29 paint manufacturing facilities in the world
servicing consumers in over 65 countries.
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MARKET ANANLYSIS
Porters model:-
To understand the competitive landscape of the paint market better, it can be useful
to employ Michael Porter's model of market competition. In this model, one can
analyze the paint market from 4 key angles: the buyers, raw material suppliers,potential new entrants and threats from substitute products being introduced into
the market.
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Buyers becoming stronger
Paints are sold through direct sales as well through distributors. While architectural
paints mainly follow the retail channels, industrial paints are sold directly to end-
use companies. It has been observed that these buyers, both direct end-users and
retail channel, are becoming increasing powerful with their growing bargaining
power. End-users are demanding higher quality paint for the same or a lower cost.
Paint manufacturers are continuously being forced to reduce prices, and those who
fail to do so are losing out to the closely fought competition. .
High raw material prices squeezing paint supplier's margin
Resins prices have been rising in the past few years for almost all kind of paints.
Thus, paint companies are getting squeezed from both directions resulting in
thinning of their profit margins. Another challenge on the resin front is that the
introduction of newer technologies and newer types of resins are pushing out few
conventionally used resins. Governmental regulations against paints containing
volatile organic compounds (VOC) will be a major factor in throwing out certain
kinds of paints from the market. This will definitely affect the resin situation in the
market and would require the paint companies to adjust accordingly.
Paint consumer looking to other alternatives to paint
Last among the key factors of competition in Porter's model is the threat from
substitutes and this is one issue which is, slowly but surely, irking the paint
suppliers. As countries in the Asian region become affluent, there is an increasing
demand for more trendy and easy-to-use alternatives to paints. Colorful patterned
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instead of regular emulsion paints. In terms of industrial use, the use of coatings
for office equipment is decreasing significantly. Equipment suppliers prefer to usemetallic finishes and oxidation process to give a more matt and sleek look to the
Equipment. Also, these metallic options are considered more hassle-free as there
are no issues of paint chipping, re-painting etc.
In conclusion
Based on the above-stated factors, it can be clearly concluded that the paints &
coatings industry is facing challenges from almost all directions in the competitive
landscape. Paint suppliers have to act aggressively and efficiently to stay abreast in
this highly competitive market. The key to success in this market lies in building a
strong brand image through aggressive marketing strategies and gaining customer
loyalties.
Technology collaboration
All the paint majors have tie-ups with global paint leaders for technical know-how.
Asian Paints has formed a JV with PPG Industries Inc service the automotive
OEMs.
Berger has a series of tie-ups for various purposes. It has a technical tie-up with
Herbets of Germany in addition to its joint venture with Decker Industrifag. With
the agreement with Herbets 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
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being flooded with Japanese automobiles. It also has an agreement with Orica of
Australia Pvt. Ltd. to produce new generation protective coatings. The companyalso has tie-ups with Calspar 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 E I Du Pont de Nemours of the US. Interestingly, DuPont, which is a leader in automotive coatings in the US, has a technical tie-up
with Kansai Nerolac for the manufacture of sophisticated coatings for the
automotive sector. Goodlass also has technical collaborations with Ashland
Chemicals Inc, USA, and leader in the petrochemical industry, Nihon Tokushu Co
and Oshima Kogyo Co Ltd, Japan.
Overseas expansion
If the global Goliaths are poring 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 forsyth & 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.
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Budget Impact
There is a great emphasis by the Finance Minister on rural and infrastructure
development. But these are typically the long-term growth drivers for the sector as
a whole. While benefits from these initiatives are unlikely to be immediate,
nevertheless, these are steps in the right direction. Perhaps, one would have
expected a more aggressive stance on rural and infrastructure development.The
reduction in excise duty on small cars is likely to benefit both Asian Paints and
Kansai Nerolac in a significant manner, as the prices of cars will decline. In a
scenario where domestic players are increasing capacity and new players are
expected to launch products in the small car category, the top two paint companies
will witness traction at the top line level. The reduction in customs duty is a big
positive for paint majors, considering the fact that imports as a percentage of sales
were around 6% of sales for companies like Asian Paints. The reduction in excise
duty on plastic (the main packaging material as far as the paint sector is concerned)should cushion the impact on increase in other raw material prices.
Growth- Share Matrix:-
In the BCG model, the two dimensions are the industrial growth rate and the
market share. Industry growth rate is said to be high if it is more than 10%, low if
it is less. Market Share is defined as market share relative to the market share of
the largest competitor, on a logarithmic scale. Thus a firms position is measured
by dividing its market share by the largest competitors share. The result is a
number, which is more than 1 if the SBU is a dominant competitor. If it is less than60
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1, it is not dominant. If the SBU is not the dominant player, it has an inferior cost
position and is an inefficient competitor with weak prospects for success in the
market.
The description results in a two-by-two matrix. The divisions are as follows: Question Marks- Low Market Share- High Growth
Stars- High Market Share-High Growth
Cash Cows- High Market Share-Low Growth
Dogs- Low Market Share-Low Growth
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Sales and Distribution System:-
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Advertising Management And Sales Promotion
Asian Paints: Every Color Tells a Story
Brand: Asian Paints
Company: Asian Paints
Agency: O&M
Brand Count: 211
Asian Paints is the market leader in the highly fragmented and highly competitive
Rs 7750 crore ($1.73 Bn) Indian paint Industry. The organized sector constitutes
around Rs 5400crore ($1.2 Bn).
Asian Paints started its journey in 1942 with four young men in a garage in
Bombay. The name Asian Paints was picked randomly from the telephone
directory. The brand has traveled from that garage to become Rs 1000 crore brand.
From 1968, this brand occupies a premium position in the Indian Paint industry.
The story of the evolution of Asian Paints as a brand is interesting. The brand now
has an iconic status in the industry thanks to some blockbuster big ideas from
O&M. The brand once positioned as a mass market brand has evolved itself to a
higher plane.
Indian paint industry can be broadly divided into two segments:-A) Decorative segment which constitutes the wall paints: exterior and interior,
wood paints etc.
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B)Industrial segment which consists of automotive paints, and paints for
industrial sector.
Decorative segment constitutes around 75 % of the total paint industry and Asian
Paints is the market leader with around 44% share. In the Industrial segment,
Nerolac is the market leader.
In the decorative segment, it is interesting to see how Asian Paints have changed
the buying process of the product like paints. Paints are usually considered to be a
low involvement product. In earlier times, the decision of the brand was taken by
the builder/contractor and the home owners do not involve much in the process
may be the decision of color rest with the house owners.
Asian Paints realized the need for brand building even during sixties. But at thatpoint of time, the company had a wide range of brands/sub brands. The focus of
the company was on product innovation and service network and managing quality
proposition. The brand focused on mass and rural market. Asian Paints had a
mascot called Gattu who was created by the celebrated cartoonist R K
Laskhman.These efforts made the brand a leader during the late sixties.
Then the company realized that although volume justified the leadership position,
share of mind for the brand was very low. That was the result of the mass
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segmentation adopted by the brand. Rightly so because the industry was driven by
channel driven promotions, building a brand at that time was" uncommon sense".
During 1983, the company tried to reposition the brand as a premium brand. Asian
Paints initiated the corporate campaign aimed to position the company as the
number one player in the industry. The objective was to upgrade to a more margin
premium product marketer .The corporate campaign "Spectrum of Excellence" was
aimed to increase the Salience of the brand in a quiet market.
But this campaign failed to inspire any interest in the consumers and the company
felt that the market is moving towards a commodity market where price is the most
important differential. Asian Paints undertook a consumer research aimed at
understanding the perception of consumers about the product category. The
research revealed lot of interesting insights. Consumers felt that paints could
change the mood of the space and it was a sign of festival and plenitude. It couldmake a gloomy place bright and pleasant. From this insight came the campaign of
Asian Paints associating itself with festivals. Research also confirmed that
customers tend to repaint their houses on the occasion of festivities. Thus born the
campaign "Celebrate with Asian Paints". The campaigns were carefully crafted and
there were different campaign for different regions. These campaigns effectively
enhanced the brand equity of Asian Paints and established itself as a premium
brand. More than that, these campaigns ensured an emotional connects with a
Brand in a low involvement category. The brand also phased out many subbrands
and rest of the subbrands was brought under Asian Paint's umbrella brand.
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During the late nineties the brand had to be reinvented. Because no longer
festivities formed an important part in ones life. Since many brands went after
festival seasons, the positioning platform has become cluttered. More over the
consumer buying behavior has changed. The category was becoming less seasonal.
People started associating more importance to home decor and interiors. The
choice of color became a high involvement decision. From a low involvement
category, paint was increasingly becoming a high involvement category.
The brand also went in a brand overhaul. The logo was changed to a contemporary
up market one designed by Enterprise IG based in Singapore. The logo/design was
to convey self expression, sophistication and Technology.
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Thus came the birth of a wonderful positioning strategy created by O&M. The
insight was that the brand is about people and homes and homes reflect the people
living in it. Hence Har Ghar Kuch Kehta Hai" translated to Every Home has a
story to tell". This campaign is a perfect example of a brand laddering up and
connecting to a higher level in the mind of the customer. The campaigns reinforced
The brand as a premium emotional brand.
Along with the campaign Asian Paints also ran parallel ads for its subbrands. Saif
Ali Khan endorsed the premium brand Royale .For Apex Ultima, the campaign
was highly localized and was different in different market.
View Asian Paints ad here:
Pongal :Saif Ad
Taking a cue from the success of Ghar campaign, the brand took ownership of the
COLOR. The insight is that each color has a story to tell. The latest campaign
reflects on the color and uses the campaign Har Rang Kuch Kehta hai" translated
to "Every color has a story to tell. The brand is so serious about the color that it
has tied up with IIT to explore new colors and conduct research on colors.
Asian Paints is a classic branding story and the brand is still exploring and
growing.
Kansai Nerolac Paints Limited
The tagline Style that makes a lasting impression elucidates long lasting benefits
of both the brands. Since the consumer scheme has been launched in Delhi, Punjab
& Gujarat the body copy of the ad is in Hindi & Gujarati
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Berger Paints: Natural colours
SCHEMES:-
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Schemes are a form of incentives or a motivation which are given to the
dealers/retailers/ painters/contractors etc so that they can push the product of a
particular paint company in the market. In the paint industry the margins are not
much in compare to some of the other industries, thats why the paint companies
comes up with all sorts of schemes in order to attract all the interested parties.
Schemes are considered to be one of the most important parts of the paint industry
thats why only top management people of the companies are entrusted with the
Task of designing a scheme. Almost all the schemes are designed in theheadquarters and then they are distributed to the other branches.
Why is it necessary to give the schemes:-
To attract the interested parties like dealers/retailers/painters/ contractors.
To provide them with some sort of incentives/motivation.
To force them to push the products to the customers.
To achieve a better sale of their products.
Types of schemes:-
Generally there are 2 types of schemes:-
1) Gift schemes.
2) Trip schemes.
Gift Schemes:-
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Gift schemes are the ones which are given to all the interested parties like
dealers/retailers/contractors/painters etc. gifts are generally distributed on purchase
of particular quantity of a particular product. All the gift schemes are designed by
head office and are circulated to the other branches. The companies have different
sets of gift schemes for different categories of people. For example- dealers &
contractors who purchases in bulk are eligible for different scheme, and the
painters & the small dealers with less amount of purchase receives lower range of
gifts. The gifts are generally given on point system.
Types of Gifts:-
The Company gives various types of items in the form of gifts.
Items starting from the range of Rs.30-5 lakhs are given as gifts to
interested parties. Starting from a coffee mug which comes for around
Rs.30 to a Hyundai car or a Maruti car which is worth Rs.5 lakhs
(approx.) are given as gifts.
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TRIP SCHEME:-
Trip schemes are bigger form of incentives for the dealers/
contractors/painters compare to the gift schemes. The targets which have to
be achieved in order to avail the trips are not that easy. The trip schemes are
of following two types:
Companies Gift schemes/ cash rewards Total no. of gift items given
Asian CD-player, mug, T-shirts,radio, dinner-set, caps, keychains, gold coin, watch, DVD-
player, washing machine(diwalischemes), bicycle, Tiffin box,Philips fm etc.
14
(including some high pricegifts)
ICI Cash coupons, silver, walkman,T-shirts, gold, hot-pot, bags,
sweet pkts, brush, trays,umbrella, torch, steel plates, penetc.
14(including some high pricegifts)
Berger Cash coupons, fan, soundsystem, Philips phone, keychains, flasks, cup-plate etc.
7
(including some high pricegifts)
Nerolac T-shirts, dinner-set, mug, watch,cups glass, bicycle etc.
6
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a) LOCAL TRIPS:-
Local trips mean trip schemes which are located inside India. Its not possible for
every dealer/contractor to achieve the huge targets set to achieve the foreign trip,
thats why the paint companies also gives some local trip scheme so that the
average & small dealers can easily achieve those schemes and can enjoy its
benefit. Examples of the local trips provided by these paint companies are as
follows:-
COMPANIES
TARGET
(POINTS/LITRE/Rs.)
LOCATION (LOCAL
TRIP)
ASIAN Rs.4 lakhs VISHAKHAPATMAN
ICI 12000 liters PURI
BERGER 10000 liters, GOA
KNPL Rs.1.5-2 lakhs BHUVANESHWAR
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b) FOREIGN TRIPS:-
Foreign trips comprises of places like Australia, Europe, Bangkok, Dubai,
China, London etc. The targets for achieving these trips schemes are very
high, so only the high profile dealers/contractors are able to avail these
sorts of schemes. The entire trip is for free except for the personal
expenses (e.g. shopping). Only 4-5-dealers/ scheme are able to achieve
such schemes.
The chart given below shows the details of some foreign schemes given by the
major players:-
COMPANIES
YEARLY TARGET
(POINTS/LITRE/Rs.)
LOCATION (LOCAL
TRIP)
ASIAN RS.45 LAKHS
RS.80 LAKHS
SINGAPORE
EUROPE
ICI 50 LAKHS
60 LAKHS
AUSTRALIA
CHINA
BERGER 150000 POINTS
200000 POINTS
AUSTRALIA
EUROPE
KNPL
75000-99999 POINTS
100000-149999 POINTS
>150000 POINTS
BANKOK
DUBAI
AUSTRALIA
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CURRENT PERFORMANCE OF INDIAN PAINTS & COATINGS
INDUSTRY:
Like all other industries, the Indian paint industry too has been affected by the
current global economic downturn. This effect was witnessed strongly during the
third quarter of FY2008-09. The current situation in India is quite volatile. The
government has already started taking steps to curb inflation by slashing the
interest rates on home loan and excise duty. I feel that this will have a positive
impact on the overall economy. We have seen a direct co-relation of the growth of
the paint industry with the growth of GDP in the country. The total contribution of
the paint industry is anywhere between 1.5 and 1.75 per cent of the entire GDP.
During FY2008 -09, the GDP is expected to grow anywhere between 6-7 per cent.
It is difficult to forecast whether during this year, the paint industry would witness
a single digit or a double digit growth.
R&D INITIATIVES IN YOUR COMPANY:
R&D has played a pivotal role in the growth of
Innovation is not just the domain of technology development. It can also be a
process to meet the demands of the consumers and make them come back for
more, says Dr Mosongo Moukwa, Vice President-Technology, and Asian Paints.
Armed with a PhD in engineering from the Universite de Sherbrooke, Quebec,
Canada, this management graduate from Case Western Reserve University,
Cleveland, US has over 20 years of experience. He has been one of the driving
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New technologies, developing new markets and introducing a diversified product
portfolio. In a tte--tte with Richy D Alexander, Moukwa shares his perspective
on the Indian paint & coating industry and the latest trends.
The overall demand in the paint sector will continue to be positive and is likely to
get impetus through factors like the low penetration levels of paint in India,
policies conducive to the growth of the construction industry, increase in
government focus on infrastructure development.
Asian Paints. Our company has always invested in research and development. We
have set up one of the largest technology centres in the country for paints and
coatings at Turbhe, Navi Mumbai.
Our technology and product development is focused on enhancing the performance
of paints and coatings. These improvements have been initiated with a view to
implement new functions into coatings, in order to create products with additional
properties. Secondly, there was a need to save energy and time and by forcing
paint processing companies to reduce the use of volatile organic and hazardouscompounds in coatings due to the environmental legislation of the US and the
European community. The third reason was due to the use of new types of
substrates in some industrial applications.
ENVIRONMENT-FRIENDLY PERSPECTIVE:
In the wake of the constant change in the environmental legislations around us and
the shift in the preference of the consumers who are demanding high quality and
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environment-friendly products, our focus will continue to be on developing
modern paints such as water based, high solids, radiation curable and powder.
Coatings delivered in this manner are growing by at least 7 per cent, followed by
the fastest growth rate witnessed in powder coatings at 12 per cent in India. The
company has a strong portfolio of water-based paints for the decorative markets
along with high solid coatings in the industrial segment. We are also quite active in
the powder segments.
In the future, new functions are increasingly important for the generation of
adjustable multifunctional properties in addition to the classical functions of paintssuch as protection and decoration. In the next one decade, most research inputs
across companies and research institutions will have to be focused in the following
three coating functions:
Easy-to-clean properties, self-cleaning (anti-staining, anti soiling) properties;
Sensor properties, activity, switch ability (measurement of and reaction to
external stimuli) and Defined flow characteristics and mechanical properties, long-term stability.
This calls for hybrid materials with complex morphology and nano-composites and
functional nano-particles.
INDIAS POSITION ON THE GLOBAL MAP IN TERMS OF
COMPETITIVENESS
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The per capita paint consumption in India is still among the lowest in the world at
over 1.5 kg per person, whereas in the Western Europe and Japan, the figure is 15
kg per person. In the US and New Zealand, it is as high as 25 kg per person. This
offers tremendous opportunity for us in India. As I drive through the streets of
Mumbai, and look at the many unpainted houses along the streets, I feel that there
is a goldmine here.
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RECOMMENDATION
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STRATEGIES TO COPE UP WITH THE CHALLENGES:-
Innovation is not just the domain of technology development. It can also be a
process to meet the demands of the consumer and make them come back for more.
Innovation also deals with our ability to provide simple manufacturing solutions
And ensure the highest quality of our products.
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