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Indian paint industry market assessment Future outlook About the company
Presence in India
International presence Role of channel partner Channel design decision Selection of channel member Channel structure
CONTENTS [contd...]
Alternate channel structure Different channels for high end customers Distribution task
SECTORS
ARCHITECTURAL 70% Decorative ( housing & construction sector ) INDUSTRIAL 30% (Automotive & consumer durables)
SMALL CITIES
INDUSTRIAL : GNPL Dominates the Industrial segment with41% market share. APIL has a 15% market share. Berger & ICI have about a 10 % and 9 % market share.
FUTURE OUTLOOK
Ratio of industrial paint to decorative paint is expected 50:50.
Demand for paints for new housing is app. 30% , rest from repainting.
Premium product in this category are doing well due to superior quality and durability.
Workforce of over 2500 employees and a countrywide distribution network of 20,000 dealers.
YEAR 1923
HIGHLIGHTS Setup on a 2 acres of land in one of India's first industrial towns close to Kolkata in Howrah, Bengal.
Mr. Alexender Vernon Nible, first managing director bought over Hadfield's (India) Limited and thus the name changed to British Paints (India) Ltd. Share capital of British Paints (Holdings) Limited was acquired by Celanese Corporation, USA Marine and decorative segments under the Leadership of it first Indian Managing Director Mr. Dongargaokar Madhukar. British Paints (India) Limited, changed its name to Berger Paints India Limited. The COLOUR BANK tinting system was launched consumer could select from a range of over 5000 shades. the Company ventured into Russia through a foreign subsidiary.
1947
1965 1973
1983 90S
2011
The Company's consolidated sales turnover for the year was Rs 2328.12 crs.
PRESENCE IN INDIA
Howrah Manufacturing Capacity : 11,200 MT Berger Paints India Limited 14 & 15 Swarnamayee Road P.O. Botanic Garden, Howrah 711 103 Phone : +91 33 2668 4706 / 4709 / 6212 / 6213, Fax : +91 33 2668 2956. Pondicherry Manufacturing Capacity : 18,000 MT Berger Paints India Limited 53-56 Pandasozhanallur Village Nettapakkam Commune, Pondicherry 605106 Phone : +91 431 2699143 / 9574 Fax : +91 431 2699171.
Goa Manufacturing Capacity : 6,000 MT Berger Paints India Limited 316 & 317 Kundaim Industrial Estate Kundaim, Panda, North Goa Phone : +91 382 2395 610 / 6407 /6212 EMAIL Id: bilarn@satyam.net.in.
Vallabh Vidya Nagar Manufacturing Capacity : 17,000 MT Beepee Coatings Limited Plot No. 433 / Part G.I.D.C.Estate Vithal Udyognagar, Anand via Kheda District, Gujrat Phone : +91 2692 236140 / 6207 / 6334.
PRESENCE IN INDIA
Rishra (BAICL) Berger ICAI 103 G.T. Road, Rishra District : Hooghly, West Bengal 712248 Phone : +91 33 2672 0641 / 0642 / 0643
Jammu Berger Paints India Limited SIDCO Industrial Growth Centre Sanba, Jammu, Jammu & Kashmir 184 121 Phone : +91 1923 246451 / 6458 / 6459
INTERNATIONAL PRESENCE
CHANNEL STRUCTURE
14 MANUFACTURING PLANTS ACROSS INDIA
DIRECT CUSTOMER
RETAILER
CHANNEL STRUCTURE
DELHI OR EACH STATE MANUFACTERING UNITS DEPOTS/ STORAGE
20,000 dealers all over India 1200 plus dealers on new Delhi alone 14 products 1200 shades & depots in Delhi, badurpur, mayapuri, wazir gunj, mandor
NORTH
SOUTH
EAST
WEST
CONTESTS: Dealer to dealer contests are held to promote push strategy and best dealer gets the reward. Berger paints does the same in various geographical areas.
SAMPLING: Allowing the dealer to experience the product or service by providing samples of various paints. TIEING UP WITH INSTITUTIONAL PROJECTS:A tie up with any of the project in the near by areas. SCHEMES: Promotional schemes and benefits such as Gift vouchers and Seasonal discounts sponsor trips to the dealers or Giving them a chance to earn profit by selling the products on the earlier rates instead of the revised rates.
DISTRIBUTION TASK
The task of the each member of the distribution channel is quite different but the motive is same for every member i.e. to provide the product to the consumer. The manufacturers task is to provide product to the wholesaler. The wholesalers task is to provide the product to the retailer. The retailers task is to provide the product to the consumer.
TERMS OF CREDIT
Most manufacturers give 7 to 10 days credit period to wholesalers as company does not want block payments more than that period. The credit period is extended for certain wholesaler depending upon how they meet their targets and can be extended up to 21 days.
PAYMENT
Cheque is a preferred mode of payment by the manufacturer however.
Terms of Credit Payments from customer is through cash.
MARK-UP
The typical mark up on any product by a retailer is 7-10 % and by a wholesaler is 1-2 %. There is less mark up on running products such as Berger enamel. More mark up on less running products such as silk. New products allow you to have a higher mark up as the price doesnt not have an earlier price point.
Manufacturer
UNKNOWN
Wholesaler
1-2 % Gross Margin received by wholesaler on sale to retailer
Retailer
7-10% Gross Margin received by retailer on sale to consumer
Consumer
Source : 6 Direct Interviews with the retailers
MARGIN SHEET
PRODUCTS Cost to manufacturer per meter Red oxide primer(421) Berger kidz DL Jadoo white Snow white Matt wo(181) Unknown Unknown Unknown Unknown Unknown Cost to wholesaler Per meter 1853.57 1438.94 405.03 3894.73 247.28 1890.64 1467.71 413.13 3972.62 252.22 2022.98 1570.45 442.04 4250.70 269.87 Cost to retailer Per meter Mrp (Rs.)
Specification of inventory
Inventories extended in the starting of the season. Increased at the time of Diwali. On as and when basis keeping a minimum stock of 20 litres of a sub category of a paint.
Terms of Credit
INNOVATIONS
Pre painting audit of structure before painting starts. The surfaces to be painted are checked for surface porosity, moisture content, alkalinity, effervescence, water seepage, undulations, micro cracks, etc. Recommending appropriate painting system keeping in mind the wall surface and climatic conditions. Suggesting the kind of primer, topcoat, pre-primer coat (if any), etc. that should be used. Product and shade development along with preview facility so that we can provide tailor made discerning customers having specific requirements we tailor make products and shades as inputs for providing specific properties. Post selection of shades we give visual print to the building with the chosen shades through our preview facility through which one can find out how the building will look like before painting in virtual sphere through simulation software. Technical Services to provide solutions to overcome typical problems and on-site supervision. Recommending panel of contractors to undertake quality jobs and ensure on-time delivery.
RECOMMENDATIONS
Various schemes provided by company to the dealers must be completely entertained by the help of personal meetings as most of the dealers are not well educated to understand the schemes. Frequency of advertisements on television should increase. Advertising campaigns for rural segment of the society should be targeted. Dealers and painters should meet at a regular interval of time as it helps to promote the brand as well as maintain the goodwill of the company in the market.
RECOMMENDATIONS
Asian and Nerolac paints are used to do advertisements by painting of shops, whereas Berger paints just provide a hoarding to the dealers. Company should start painting of shops for dealers. It serves dual purpose, firstly it will attract customers and it also provides satisfaction to the dealers.
There must be a demarcation between target of small dealers and big dealers, so that small dealers can also get motivated to complete their target.
Berger should use competitive pricing for some its products which are competing with Asian and Elite paint products in the market.