Asian Paints Ltd

 Asian Paints Ltd. INTERNATIONAL BUSINESS DIVISION PRESENTED BY  GROUP 1

Contents

Paint Industry  y

Sales  

y

V alue

= $65 bn (2002) to $ 83bn (Est. 2007) ± 5% V olume = 24.3 MMT (2002) t o 28.8MMT (Est. 2007) ± 3.5%

Segments  

Decorative

& Industrial Paints Construction Industry and Aut omotive industry 

 Asian Paints Ltd. y

y y y y

V ision:

³To secure a place among top 5 decorative paints companies in the w orld by end of  this decade´ i.e. 2010 Started in 1942. Largest paint manuf acturer in India since 1967. Ranked 10th glo bally in Decorative Paints sales. Turno ver of  $570million. ³Excluding Berger International´

International Business Division y y

Geographical reach in 23 countries (excluding India) Comprises of  21 subsidiaries   

y y y

4 joint ventures 7 Greenf ield ventures 10 acquisiti ons

Exited f rom Malta & Mauritius. Continuous losses till 2004. ROCE (glo bal operations)< 10%.

Porter¶s Five Force Analysis y

Industry Rivalry - High Top 10 companies = 51% market share Ù Fragmented market Ù M&A and Strategic re-p ositioning Ù



Decorative

Paint Segment

Price based competition Ù Product performance undiff erentiated Ù Brand equity diff erentiates Ù

y

Entry barriers - High High Investment requirements for Greenf ield ventures Ù Stiff  competiti on in Devel oped Markets Ù

Porter¶s Five Force Analysis (Contd..) y

Substitutes ± Lo w   White cement, white wash, Brick & St one cement

Ù

y

Customer ±

Lo w (Decorative) ; High (Industrial)

Paint Contractors, Industries, Households, Construction Pro ject Cos. Ù Consumer Education required Ù Marketing tuned to local needs Ù

y

Dealers/Retailers,

Suppliers ± High Raw materials as 50% of  cost of  sales Ù Titanium Oxide and Crude-derivates with v  olatile pricing Ù

SWOT Analysis (IB)

Strength  W orking Capital Management.  vation. y Culture of  continuous inno y Brand Equity  y MIS y Internal f unding of  expansion programs. y R&D, Regional Technology centers y

  

y

Localized Manuf acturing 

y y

Impro ve sourcing & formulation eff iciencies Develop new products, strengthen quality processes Impro ve inventory mgmt. & drive manuf acturing eff iciencies. Products calibrated to meet local consumer needs.

Economies of  scale Skilled w ork force & management

 Weakness y

y y y y y

y

Inability to produce prof its till 2004, a marginal prof it in 2004-05. ROCE6%/annum Limited competition (no MNC present) Opportunity to be among top 3 brands within 5yrs.

Pref er acquisition of  leading player in emerging markets than Greenf ield  ventures.  Seeding of  markets through exports (incase of  Greenf ield ventures)  Localized Manuf acturing  Gro wth through Joint  V entures 

Leveraging lessons f rom APL y

Introducing concepts like color w orld. Encouraging co-creation   Awareness among customers in emerging markets 

y

Production capacities close to market  

y

De-risk

their operations. Enabling localization m ore eff ectively.

Recruiting local talents.

Glo bal Brand

Glo bal Brand ± Signif icance

Developing

potential candidates