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PESTEL ANALYSIS INDIA

Presented By

Akshata AcharekarNilofer KhanDeepavali Vankalu

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Political Factors

India is the biggest democracy in the World.

The government type is federal republic.

The political Situation in the country is more or less stable.

State politics have been dominated by several national parties including the INC, BJP, the Communist Party of India (CPI), and various regional parties.

Export oriented Economy

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Economic Factors

The economic factors in India are improving continuously.

Market based economy Second fastest growing

major economy in the world.

Strong domestic market There is a continuous

growth in per capita income.

India has the third highest GDP in terms of purchasing power.

Foreign direct investment rose in the fiscal year.

Inflation rate is on a higher side

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Social Factors

India is the second most populous nation in the world with an approximate population of over 1.1billion people.

An increase in the purchasing power the Indian consumer which preferred local brand which is far cheaper is now able to get a taste of the relatively expensive market.

31.8, 32%

63.1, 63%

5.1; 5%

Population

0 - 14 years15 - 64 years65 years and above

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Technology

India is Known as a emerging leaders in the IT sector.

State of art R & D facility, Manpower is available.

Minimum efficient production level and influence outsourcing decisions

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Environmental factors

Include weather, climate, and climate change

May especially affect industries such as tourism, farming, and insurance.

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Legal factors

Include –

Discrimination law

Consumer law

Antitrust law

Employment law

Health and safety law

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Asian Paints is India's largest paint company

Ranked among the top ten Decorative coatings companies in the world

Turnover of INR 7750 crore ($1.73 Bn)

Asian Paints along with its subsidiaries have operations in 17 countries across the world

Consist of 23 paint manufacturing facilities

Servicing consumers in 65 countries through Berger International, SCIB Paints – Egypt, Asian Paints, Apco Coatings and Taubmans

INTRODUCTION

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TAG LINE

“EVERY COLOR TELLS A STORY”

HISTORY

1st February, 1942: Armed with little knowledge and great determination, Champaklal H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil get together to manufacture paint in a garage on Foras Road, Bombay.

1945: Asian Paints touches a turnover of Rs. 3,50,000.

Cont ….

1954 Asian Paints mascot, Gattu, the mischievous kid, is born.

1957 – 66The family-owned company makes the transition to a professionally managed organisation.

1967 Asian Paints emerges as India's leading paint company ahead of any international competition.

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Asian Paints has won many awards & recognitions which include

Forbes rated it under 200 'Best Small Companies of the world' in 2002 and 2003 and amongst the top 200 'Under a Billion Firms' of Asia in 2005, “Best small company in India” by Asia Money in 2002.

“Golden peacock environment management award” national quality award by union labour ministry.

“Five star rating” by British safety council in 2003 & 2005.

Awarded the "Sword of Honour" by the British Safety Council for all the paintplants in India. This award is considered as the pinnacle of achievement in safety across the world.

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Cont……

Ranked 24th amongst the top paint companies in the world by Coatings World – Top Companies Report 2006.

The Asset - one of Asia's leading financial magazine ranked Asian Paints amongst the leading Indian companies in Corporate Governance in 2002 and 2005.

Received the Ernst & Young "Entrepreneur of the Year - Manufacturing" award in 2003.

VISION

Asian Paints aims “to become one of the top five Decorative coatings companies world-wide by leveraging its expertise in the higher growth emerging

markets”. Simultaneously, the

company intends “to build long term value in the Industrial coatings business

through alliances with established global partners”.

INTERNATIONAL PRESENCE

South Asia- Caribbean region

- South East Asia

- South Pacific

Middle East

Caribbean region

Asian Paints operates in 5 regions across the

world viz.

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The five corporate brads

Asian Paints

Berger International

SCIB Paints

Apco Coatings

Taubmans

Growth drivers

•Bangladesh •China•Egypt•Malaysia•Myanmar•Singapore•Sri Lanka•Thailand•UAE•Growth Drivers

Market Leaders

•Jamaica•Barbados•Trinidad & Tobago•Bahrain•Nepal•Fiji•Solomon Islands•Vanuatu•Tonga

Focus forTurnaround

•Australia•Mauritius•Oman•Malta

INTERNATIONAL MARKETS

GROUP SUBSIDARIES

Apco Coatings is a subsidiary of Asian Paints in the South Pacific islands. Asian Paints operates in Australia, Fiji, Tonga, Solomon Islands and Vanuatu under the brand name of Apco Coatings.

Asian Paints Industrial Coatings Limited has been set up to cater to the powder coatings market which is one of the fastest growing segments in the industrial coatings market.

. In November 2002, BIL became a part of the Asian Paints Group.BIL has presence across three regions viz. Middle East, Caribbean and South East Asia.

Cont…..

Founded in 1979, SCIB Paints today is a reputed name and ranks amongst the top five paint companies in Egypt. SCIB Paints became a part of the Asian Paints group in August 2002

Asian PPG Industries Limited, a joint venture between Asian Paints (India) Limited and PPG Industries, Inc. USA with 50:50 equity sharing was established in March 1997

Taubmans Paints Fiji, the fourth largest paint company in Fiji, became a part of the Asian Paints family in September 2003.

THE NEW ASIAN PAINTS GROUP

71%

5%

24%

Asian paint group

Paints - IndiaChemical - IndiaInternational

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Business Profile

segments

Paint

Decorative Paints

Industrial Paints

Chemicals

Phthatic Anhydried

Penraerythritol

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• Wall Finishes• Exterior Finishes• Enamels• Wood Finishes

Decorative

Paints

• Powder Coatings• Protective Coatings• Road Marking Coatings

Industrial

Paints

MARGINS STRATEGY

R & D efficiencies &Sourcing efficiencies

Control on overhead costs

Marginexpansiondespiteinputpriceincrease

GROWTH STRATEGY AND M&A

Growth Strategy: To increase sales growth rate of the group beyond past levels using a two-pronged

approach:Market Share Gain

Market Expansion

Organic

Growth

International M & A’s

Domestic M & A’s Inorga

nic Growt

h

INTERNATIONAL MARKET - STRATEGY

• To enter the high-growth emerging markets

• Adopt a regional hub approach to international operations

• Apply the emerging market business model:– Introduce new products suited to local needs– Introduce new technology, accordingly– Focus to improve all areas of operations, especially supply chain

M&A INTERNATIONAL - OPPORTUNITIES

Asian Paints believes there is plenty of scope to achieve significant presence in targeted countries

• Niches/segments available for Asian Paints in these markets

• Vast potential exists for Asian Paints, as most paintcompanies in these markets operate sub-optimally

viz., in Supply chain, manufacturing, technology & marketing

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CORPORATE GOVERNANCE

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The Corporate Governance philosophy of the Company is based on the following principles:

Satisfaction of the spirit of the law through ethical business conduct

Transparency and a high degree of disclosure levels

Truthful communication about how the company is run internally

A simple and transparent corporate structure driven solely by the business needs

Strict compliance with Clause 49 of the Listing Agreement as amended from time to time

Establishment of an efficient corporate structure for the management of the Company's affairs

Management is the trustee of the shareholders' capital and not the owner

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COMPETITIVE ADVANTAGE

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MANUFACTURING CAPACITY AND VOLUME

Asia

n Pa

ints

Kans

ai N

erol

ac

Berg

er P

aint

s

Shal

imar

0

50000

100000

150000

200000

250000

300000

350000

400000

354150

153900

157946

43000

282602

99130

138179

39161

Installed Capacity (tones)Production (tones)

80%

87%64%

91%

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Dealer Network & Reach

•Over 14500 direct dealers as opposed to 7000 of our nearest competitor

•Over 35% of the dealers do business only with APIL

•67 sales locations situated all across the•Country

APIL GNP Berger ICI

15000

7000

4500

3700

Retail outlets directly serviced

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RETAIL INITIATIVES

Asian Paints has fostered a

customer-centric approach to business.

Consumer-centric initiatives

• Asian Paints Home Solutions- Offers a “painted surface” vs. just “paint”– Aimed at controlling the quality of end product– Overcomes major “barriers to purchase/consumption”– Good response from the market; present in six cities

Asian Paints Helpline– Toll free access to the Helpline– High conversion rate into actual sales

Cont….

Colour World machines– 3175 machines installed till February 1, 2003– 827 machines installed under arrangement with Citibank– Colour World dealers make more than 50% of sales

Prediction of colour trends in India

The launch of Kids World

Royale Play

Do-It-Yourself mode

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CSR

Environment and safety.Improving infrastructure and

healthcare at local schools; adopting school education.

Total water management.Age care.

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Environment and Safety

Reuse

Recycle

Eliminate waste

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SUCCESS STORY

Information Technology

Asian Paints is the first company in India to have integrated Supply Chain Management (SCM) Solution from i2 Technologies, and Enterprise Resource Planning (ERP) solution from SAP.

Asian Paints has launched a supplier portal that includes an automated digital document exchange facility

An employee portal

Customer Relations Management (CRM)

Investment in I.T.

• Benefits:– RM & FG inventory reduction– Revenue Increase by avoiding retail shorts– Reduction in dead & slow moving stock– Plant through-put improvement

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FAILURE STORY

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Asian paint to exit from Thailand and China.

Already sold stakes in two loss making units in Hong kong and Malaysia.

Study conducted by the CSE’s Pollution monitoring laboratory found the Apcolite (Asian paint) sample with lead much higher than the standard.

Research and Development (R&D)

R&D efforts have been focused on developing new exterior finishes, economy emulsions and distempers.

R & D / INNOVATION STRATEGIES

Developing new products and innovations

Reducing costs by value re- engineering of formulations

Research and Development (R&D) Structure

In India, the company's has :

140 strong R&D team

7 doctorates

115 qualified scientists

R&D new developments

The development of the water based wood polish which is odourless and is of same quality as of solvent based polish.

The company is also in the process of setting up a new R&D centre near Mumbai (India)

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TODAY

Asian Paints becomes the 10th largest decorative paint company in the world.

Asian Paints is more than twice the size of its nearest competitor.

It is one of the most admired companies in India.

Present in 22 countries with 27 manufacturing locations, over 2500 SKU's, Integrated SAP - ERP & i2 - SCM solution.

On the recommendations of Booz, Allen and Hamilton, Asian Paints restructured itself into Growth, Decorative and International business units and adopted SCM and ERP technology.

Asian Paints aims to become the 5th largest decorative paint company in the world.

FUTURE OUTLOOK

To further improving the operations.

Plans to launch new products in line as:- Introducing Water – based Paints- Repositioning of existing Brands in Rural Market- Broadening of Distribution Network- Adding more choices for shades and effects- Enhancing Better Quality- Demand will be generated through the new constructions coming in housing and industries

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THANK YOU