project the paint industries rediting

7/30/2019 Project the Paint Industries REDITING

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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

forces behind the exponential growth of his company by way of commercializing74


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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.

project the paint industries rediting

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