Asian Paints

Har Ghar Kuch Kehta Hai !!!

GROUP MEMBERS
Sushil Kumar Singh Rahul Kumar Abhishek Kumar Gopal Singh

CONTENTS
History Board of directors &Vision Business & Brands Partnership & Location Types of paints Subsidiaries Financial Statements Graphs & Pie-charts PieSWOT Analysis Achievements & Award Conclusion

Paint Industry
y Paint industry estimated at Rs. 135bn. y Unorganized sector accounts to 35% of paint market. y Volume growth estimated at 15%. y Indias share in the world paint market is 0.6%. y Per capita consumption of paint in India is 1.2kg/annum.

HISTORY
In 1942, a partnership was started by four entrepreneurs named Champaklal Choksey, Chimanlal Choksey, Suryakant Dani and Arvind Vakil as ASIAN OIL & PAINTS COMPANY. In 1945, the firm was turned into a company. In 1957, a plant was set up at Bhandup, Mumbai. In 1967, Asian paints became the 10th largest paint company in the world. In 1973, AP became a public ltd company. In 2002. AP was a market leader of Indian Decorative Paints with market share of 44%.

BOARD OF DIRECTORS

Mr. Ashwin Choksi

Mr. Ashwin Dani

Mr. Abhay Vakil

Mr. Mahendra Choksi Mr. Mahendra Shah Mr. Hasit Dani Mr. Deepak Satwalekar Dr. S. Sivaram

Mr. Dipankar Basu Mr. Amar Vakil Ms.Tarjani Vakil Mr. R.A. Shah

VISION
Asian Paints aims to become one of the top 5 Decorative Coatings companies worldwide 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.

MISSION
TO BE THE LARGEST DECORATIVE PAINT CO. WORLDWIDE AND TO BE THE 5TH LARGEST PAINT MANUFACTURING CO. WORLDWIDE

Indias largest paint company for nearly four decades.

Asian Paints - Today

Operates in 21 countries with 29 paint mfg. facilities with capacity of 420 mn. Lts/annum.

Asias third largest paint company and leader in 11 countries.

BUSINESS
Asian Paints is producer of wide range of Paints. It even manufactures intermediate Products. Products.

PARTNERSHIP
Asian Paints has two alliances, one with PPG Industries, USA & other with Protech Chemicals, Canada.

BRANDS
Asian Paints, Berger International, SCIB Paints and Apco Coatings.

LOCATION
Asian Paint has 29 manufacturing countries. S. Asia: Bangladesh. Nepal, India & Sri Lanka. S.E. Asia: China, Malaysia, Singapore & Thailand. Middle East: Bahrain, Dubai & Oman. S. Pacific: Australia, Fiji, Tonga & Samoa Islands.

Jamaica Singapore

Kasna Bhandup

Product Lines

SUBSIDIARIES
APCO: It operates in South Pacific
Ocean, Australia, Fiji and Tonga.

BERGER: Its presence in over 35

countries and also, its one of the largest company in Bahrain. It has operations in China, Myanmar, Singapore and Hong Kong.

SCIB: SCIB: It is one of the reputed name

and ranks among top five paint companies in Egypt.

SWOT ANALYSIS
STRENGTH:
Market leaders with 44% market shares. Strong in inventory control. The pricing strategy is oriented to middle and lower end consumers. Widest product range in terms of products, shades, pack sizes. Comprehensive nation wide coverage of the market.

WEAKNESS:

Seasonal demand and hence in off seasons it can lead to cash flow problems. Innovation in developing new product is inadequate. Weakness on the technology front in industrial paints.

OPPORTUNITIES:

The automobile industry accounted for 50% of the industrial markets.

THREATS:

Competitors have gone in for hitech instacolour spot mixing. Domination of few foreign companies. Competition is catching up fast, hitech facilities gives abundant choices.

Company Country Costing Sales

Nippon Kansai Daihan DNT Korea chem Asian Paints Rock Japan Japan S.Korea Japan S.Korea India Japan 475 340 174 171 130 105 95

Rank
1 2 3 4 5 6 7

Marketing, Sales & Distribution

Rural Marketing Initiatives since 1960. Distribution is one of the main strategy of Asian Paints. Advertising & Promotional Expenditure started in 1980s. Advertising Methods- Radio, TVCs, MethodsPrint, Internet, OOH, POP, Retail Outlets, Seminars, Workshops.

Advertisements
Promotional Expenditure grew from 15% in 2003 to 21% in 2008.

Elements of Asian Paints marketing strategy

Asian paints bypassed the buyer segment and went to individual customers of paints. Went slow on urban areas and concentrated on semi urban and rural areas. Went retail while its competitors remained content with handful of wholesale distributers. It also voted for nationwide marketing or distribution .it wanted to have an active presence through out the country.

Sales and Marketing Innovations

Color World Over 10,000 color worlds installed in the country Asian Paints Home Solutions From Paint to a Painted wall Now launched in 13 cities across the country Kids World Royale Play Samplers Color Next Signature Store

CONCLUSION
Proper implementation of government accounting policies. Maintaining proper gross working capital of the company. Proper utilization of advanced technology. Maintaining good relations with suppliers, creditors & debtors. Innovation & creativity.

Operations and logistics functions

International Operations
Asian Paints operates in 22 countries across the world and has 30 paint manufacturing facilities that serve consumers in more than 65 countries with a combined total manufacturing capacity of around 370 million liters per annum .

The countries that Asian Paints has presence are as follows:

South Asia : Bangladesh, Nepal, and Sri Lanka South East Asia : China, Malaysia, Myanmar, Singapore and Thailand Caribbean Islands : Barbados, Jamaica, Trinidad and Tobago Middle East : Bahrain, Egypt, Oman and United Arab Emirates South Pacific : Australia, Fiji, Solomon Islands, Samoa Islands, Tonga and Vanuatu

Raw Materials

The paint industry is raw material intensive. intensive. It takes around 300 different petroleum based raw materials to make paint. On an average, raw materials account for 60% of net sales (industry average). In case of small-scale units it forms smallup to 70% of the net sales. These raw materials can be divided into three broad categories as shown in the chart in next page

Types Of raw Materials Asian Paints require two types of raw materials Powder and Liquid. Pigments, Binders and Additives are included under the Powder category and Solvents and other Petroleum based products are included in the Liquid category.

Storage Of raw Materials

The powder raw materials are stored in Jumbo bags of 25 kg/ 50 kg/ 500 kg; whereas liquid raw materials are stored in big containers and can be stored for 7 days.

Around 300 raw materials are required by the industry and all raw materials are not directly related to crude oil. The basket of raw materials is quite exhaustive. Raw materials, which constitutes around 60 percent of total cost for the paints industry is an important factor for maintaining operating margins. The industry imports around 25 per cent of raw materials. But the most important raw material is titaniumtitanium-dioxide, which accounts for around 30% of total manufacturing costs. Besides TiO2, there are other petroleum based raw materials which constitute around 40-50% of total raw 40material consumed. Hence any movement in crude oil prices will impact the profitability of the company.

Waste Minimization, Recycling and Reuse

APIL has identified a total of 78 types of wastes from paint manufacturing facilities, out of which 18 are hazardous as per HW Amendment Rules, 2000. Given below is the approach to waste minimization adopted by APIL. (Options are not given in order of preference) preference) a. Recycling a potential waste or portion of it 'on site' where it is generated b. Improving process technology and equipment that alter the primary sources of waste generation c. Improving plant operations, such as housekeeping, housekeeping, materials handling, equipment maintenance, maintenance, automating process and packing equipment d. Redesigning or reformulating products e. Conducting waste audits and monitoring and tracking of waste generation.The companys efforts have resulted into almost no wastage during production. There is almost no damages during transportation also.

LOGISTICS
In this rapidly changing Business Environment, what gives companies like Asian Paints the Competitive Advantage...The answer is LOGISTICS. Logistics is a process of planning, implementing and controlling efficient and costcosteffective flow of materials and information from point of origin to point of consumption. Hence, Logistics is nothing but the process of strategically managing the movement and storage of materials, parts, and finished inventory from suppliers, between enterprise facilities and customers. Typically 10-15% of a companys 10turnover is spent on logistics, depending on the nature of product and the distribution pattern adopted. adopted.

SOME LOGISTIC FUNCTION OF ASIAN PAINTS

(a) Order processing: Most paint companies are hit by the fact that they do not make the raw materials themselves. For example, phthalic anhydride (PAN) example, is manufactured from orthoxylene and which goes into the production of paints along with titanium dioxide. Asian Paints is the only paint company that manufactures PAN. The other paint companies have to import their stock. Since PAN prices generally outpace international orthoxylene prices by almost 50% paint companies end up paying a fortune when prices rise. In such a situation Asian Paints benefits by selling PAN in the open market. market. (b) Transportation Management: The company has outsourced its transport management to Dynamic Logistic Pvt. Ltd. Ltd. (c) Inventory Management: The company prefers to maintain low inventory levels due to having large no. of suppliers at bay. APs average inventory level equals only 14 days sales, while the industry average is 51 days sales. This right away provides a 45% edge in inventory costs to AP compared to its competitors. The company has 350 raw material and intermediate and goods suppliers. suppliers. (d) Warehousing: The company does not own warehouses instead they have 90 depots scattered all over the India which are on lease basis.

e) Packaging: The company has 140 packing material vendors. (f) Plants: The company currently has 5 paint manufacturing plants in India. It manufactures and markets more than 2,800 items of paints . The current paint plants of the company in the country are located at Bhandup (Maharashtra) established in 1955, Ankleshwar (Gujarat) established in 1981, Patancheru (Andhra Pradesh) established in 1985, Kasna (Uttar Pradesh), and Sriperumbudur (Tamil Nadu) with a combined annual production capacity of 3.90 lakh KL

(g) Acquisition The acquisition gives Asian Paints a foothold in an emerging market and also opens the possibility of exporting to neighboring countries. Asian Paints has already made its presence felt in the emerging markets after its acquisitions in Singapore (Berger International) and Egypt (SCIB Chemicals SAE). These acquisitions immediately give access to both emerging markets and those in which Berger International has a strong presence. In the industrial coating segment, the company acquired Hawcoplast Chemicals in November 2001 for Rs 22 crore, which provided it with a presence in the growing powder coating segment. (h) Subcontracting The company has around 28 subcontractors that manufacture various product lines. lines.

(i) Vendors Asian Paints manages more than 800 vendors that supply around 15,000 materials that are used to manufacture around 17,000 SKUs in various categories. (j) Research and Development (j) The company has 140 R & D teams around the world, 7 decorators, 115 scientists (k) Retail Outlets or Dealers The company supplies to more than 22,000 retail outlets or dealers and 65 sales offices in India through 90 depots as opposed to 12000 to their nearest competitor. Over 35% of the dealers do business only with APIL. It has 90 offices in India and 30 situated all across the country.

Upgraded i2 Solutions to Improve its Supply Chain Planning Capabilities i2 planning solutions provide Asian Paints improved demand forecasting for approximately 1,600 SKUs and allows the business to simultaneously plan for procurement, production, distribution and inventory across its entire supply chain including manufacturing locations, warehouses, distribution centers and depots. i2 solutions are helping Asian Paints manage the following business processes: -- Master Planning: The i2 solution generates a supply chain plan for Asian Paints that synchronizes procurement, production and distribution. This plan is optimized and constrained by resin/emulsion and critical material availability, shade-stream shademanufacturing capacity, target inventory requirements and demand forecast. It also makes pre-season, prepreprebuild planning process repeatable, consistent and logical while eliminating non-value added activities. non-

-- Material Planning: Given the high

number of raw materials and vendors, optimized material planning is a key requirement for Asian Paints. i2 Supply Chain Planner connects across multiple factory planning instances, provides visibility for instances, resolving shortages/lateness across plants and maintains an audit trail of the actions taken. i2 solutions have significantly reduced planning

cycle time and improved consistency of the decision making process. process. -- Distribution Planning: The
demand patterns experienced by Asian Paints are typically highly skewed towards the last week of a month. This requires flexible distribution planning to cater to frequent changes to demand and supply positions in the supply chain. The i2 Supply Chain Planner solution allows planners to quickly re-plan, thus optimizing distribution recosts and reducing inventory stock-outs stocksimultaneously. simultaneously.

The i2 SCM engine will link all the vendors and suppliers, thus helping the company in assessing the stock of their vendors and suppliers at any given time. Additionally, Microsoft Dynamics NAV 4.0, formerly Microsoft Business Solutions Navison, Solutions offered hub-and-spoke model which was ideal for Asian hub-andPaints. The hub-and-spoke concept refers to a parent or hub-andholding company that uses one business software system (the hub), which is integrated with the systems used by its individual subsidiaries or divisions (the spokes). It was decided: While the parent company was running SAP, the subsidiaries would be standardized on Microsoft Dynamics NAV.

Benefits
The hub-and-spoke model has hub-andenabled Asian Paints subsidiaries to interact with the parent organization easily and effectively, effectively, removing the need for generating multiple reports. Reduces IT Administration No More Double Reporting

Diagrammatic Representation of Supply Chain Management

FINANCIAL STATEMENT S

Objective of the Financial Analysis

1.Why the profit of the company decrease due to increase in sale? 2.How the cash balance increase in the 2008-09? 3.How the working capital is fluctuating?

Profit & Loss A/c

Particular Income Sales Turnover (-)Excise Duty Net Sales Other Income Total Income Expenditure Raw Materials Employee Cost Other Manufacturing Expenses,Administrative& selling & Distribution cost Total Expenses PBDIT (-)Interest PBDT Depreciation Profit Before Tax 2,606.93 238.90 862.95 3,708.78 621.33 10.40 610.93 57.15 553.78 Mar '09 4,819.13 549.08 4,270.05 60.06 4,330.11

(Amt. in crore) Mar '08 Mar '07 3,914.86 495.80 3,419.06 60.23 3,479.29 1,956.13 194.67 711.90 2,862.70 616.59 8.27 608.32 43.77 564.55 3,244.57 423.28 2,821.29 40.45 2,861.74 1,660.71 157.11 581.71 2,399.53 462.21 6.87 455.34 45.42 409.92

Ex i e Duty Ne Sales + Othe In ome To al Income Expendi ure Raw Mate ial Employee Co t Othe Manufa tu ing Exp,Adm & elling & Di t o t To al Expenses PBDIT Inte e t PBDT Dep e iation Pro i Be ore Tax Ex eptional Iteme PBT Po t Ext a o dina y Item Tax

549.08 4,270.05 60.06 4,330.11 2,606.93 238.90 862.95 3,708.78 621.33 10.40 610.93 57.15 553.78 5.90 547.88 183.57

495.80 3,419.06 60.23 3,479.29 1,956.13 194.67 711.90 2,862.70 616.59 8.27 608.32 43.77 564.55 0.00 564.55 187.96

423.28 2,821.29 40.45 2,861.74 1,660.71 157.11 581.71 2,399.53 462.21 6.87 455.34 45.42 409.92 0.00 409.92 139.99

Bal an c e S he e ts
Particular Sources of Fund Equity Share Capital Reserves Netw orth (a) Secured Loans Unsecured Loans Deferred Tax Liability (Net) Total Debt (b) Total Liabilities (a+b) Application Of Funds Fixed Assets Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Current Assets & Loan & Advances Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Other Current Assets Total CA, Loans & Advances (a) Current Liabilities Provisions Total CL & Provisions (b) Net Current Assets (a-b) Total Assets 1,116.93 494.02 622.91 88.86 234.77 546.71 311.02 128.26 193.66 48.46 1,228.11 771.9 185.84 957.74 270.37 1,216.91 Mar '09 95.92 998.55 1,094.47 24.59 49.94 47.91 122.44 1,216.91

(Amt. in crore) Mar '08 Mar '07 95.92 832.58 928.5 36.7 58 31.52 126.22 1,054.72 95.92 648.16 744.08 66.9 58.77 22.15 147.82 891.90

937.89 509.06 428.83 110.39 422.88 538.97 251.9 41.35 178.27 33.18 1,043.67 784.56 166.49 951.05 92.62 1,054.72

806.2 471.29 334.91 11.62 334.39 433.8 235.96 42.49 115.45 31.53 859.23 594.1 54.15 648.25 210.98 891.90

Cash Flow State me nt

Particular Mar ,09 Mar ,08 (A) Cash flow from operating activities Profit before prior period item,tax and after exceptional i547.88 564.55 Adjustment for : Depreciation/ Repairment 57.15 43.77 Interest Income. -3.14 -3.71 Dividend Income -16.93 -25.01 Interest Expenses 10.4 8.27 Loss/(Profit) on sale of short term investments -0.1 -0.96 Loss/(Profit) on sale of assets -6.08 -0.93 Exceptional items 5.9 0 Perior Period Items (net) -1.95 -1.39 Operating profit before working capital changes 593.13 584.59 Adjustment for : Trade Receivables -59.12 -15.94 Other Receivables 2.4 -30.55 Inventories -7.74 -104.9 Trade and other payables -29.05 199.31 Cash generated from operations 499.62 632.51

Income tax paid (net of refund) Net Cash generated from operations activities Cash flow from investing activities Purchase of fixed assets Sale of fixed assets Loans to subsidiaries Repayment of loan subsidiaries Purchase of Investment Sale of Investment Interest Received Dividend Received Net Cash used in investing activities Cash flow from financing activities Proceeds from long term borrowings Repayment of long term borrowings Repayment of short term borrowings Interest paid Dividend and dividend tax paid Net Cash used in financing activities Net Increase /decrease in cash and cash equivalents Cash and cash equivalent as at 31.03.2008 Cash and cash equivalent as at 31.03.2009

-174.4 325.21 -238.4 7.6 -18.85 17.85 -2.7 197.76 3.07 16.93 -16.69 4.06 -10.66 -13.59 -10.4 -191 -221.6 86.91 41.35 128.26

-175.2 457.29 -258.3 1.57 -18.6 2.28 -202.7 115.18 3.64 25.01 -331.9 5.07 -0.94 -35.1 -8.28 -87.27 -126.5 -1.14 42.49 41.35

Analysis of Profit & Loss Account

Analysis of Balance Sheet

Own Funds & Loan Funds

1200 1000 800 600 400 200 0 2004-05 2005-06 2006-05 2007-08 118.7 119.6 147.82 126.22 572.22 622.28 744.08 928.5

(Rs. In crores)

1,094.47

Networth (a) Total Debt (b)

122.44

2008-09

Profit After Tax

448.42 4 0 400 3 0 2 4.59 300 2 0 200 1 0 100 0 0 2006-0 200 -08 2008-200 83.0 2.08 60.21 88.76 2 2.0 Asian Paints Berger Paints ICI India 3 .2 362.36

12.00

10.97 9.64 8.88 8.05 8.49

10.00

8.00 Net Profit % 6.00 Current Ratio Debts Equity Ratio 4.00

2.00

1 0.15

1.18 0.15 2005-06

1.15 0.17 2006-07

1.1 0.09 2007-08

1.11 0.07 2008-09

0.00 2004-05

Human Resources
Majority of employees are hired from premium management institutes.

Recreational facilities are provided to the employees.

Human Resources

Human Resources
Performance Appraisal: Appraisal
360 Degree Appraisal. Development Centre. ECA(Essential Competency Acquisition)

Other Initiatives:
Taking care of the Employees. Employee Portal- EGLOO Portal-

CORPORATE SOCIAL RESPONSIBILITY

Water Conservation-Total Water
Management Center in Bhandup , Mumbai 2002

Age Care Education Other Initiatives -surgeries,

diabetes detection, dental
Examination and vaccination,& immunization during the year 2008-09 2008-

Safety at its best

Asian Paints approaches the environment issue from the perspective of waste minimization and conservation of resources. Thus, the continued attempt is to reuse, recycle and eliminate waste, which results in less and less waste being generated. material losses in manufacturing have been reduced substantially over the last few years. Further, the company's five paint plants and the two chemical plants have the ISO 14001 certification for environment management standards.

All their paint plants have achieved 'zero industrial discharge' capability. This has been achieved by the installation of upgraded effluent treatment facilities and installation of reverse osmosis plants in conjunction with appropriate recycling and reuses schemes. Their emulsion manufacturing facility has also achieved 'zero waste' status. They have adopted the principles of "green productivity".

Mergers & Acquisitions

Buys Taubmans Paints (Fiji) In September 2003.

Acquires ICI Indias Unit (February 2007).

Sells stake in Australian Unit (June 2007).

THE CONCEPT OF COLOUR GENIE

Get your Sample , Get your Shade Its basically a concept that can get the shade of any sample in the paint to be applied on the wall. It is based on the use of an instrument known as the SPECTROPHOTOMETER. Also they provide sampler. They provide samplers in Royale Luxury Emulsion to sample shades on interior walls, & Apex Exterior to exterior walls.

Some of the key initiatives undertaken are

 In manufacturing to reduce losses in factory.  Sourcing efficiencies .  Sweat existing assets for better productivity.  Introduction of new technology to drive efficiencies and increase productivity.  Implementation of a new supply chain solution.

STRATEGIC MANTRAS
 Audacious in vision.  Focus on what know best.  Trim flab to achieve operational excellence.  Good governance made the business scene.  Purse quality with zeal.  Innovate to create value for customer.  Good in distribution.

ACHIEVEMENTS
Awarded the Sword of Honor - the British Safety Sword Honor Council. Ranked 24th - the top paint companies in the world Coatings World, Report 2006. Ranked by Forbes among 200 Best Small Company and Billion awarded it as Best Under A Billion Best Received the Ernst & Young Entrepreneur of the Year Entrepreneur Manufacturing Manufacturing award in 2003. Economic Times rated it as the 4th Most Admired Company Company in India. In February 2001, it was rated as the 9th Employer Today. Best Employer by Business Today. 2002 THE CHEMINOR AWARD FOR 2002 BY INDIAN INSTITUTE OF MATERIALS MANAGEMENT (IIMM).