Corporate Strategy

Paint Industry

Submitted to: Submitted By:

Prof. Shalini Rahut Tiwary GVSK Kondaveeti (190301007)
Namrita Gupta (190301012)
Utkarsh Pandey (190301020)
Yamineesh Tiwari (190301023)
Table of Contents
No table of contents entries found.
1- Introduction
Paint industry in India is over 100 years old and its beginning can be traced back
to the setting up of a factory by Shalimar Paints in Kolkata in 1902. Domestic paint
industry is estimated to be around Rs 500 billion with the decorative paint
category constituting almost 75% of this market and industrial paint category
constitutes the balance 25% of the paint market which includes automotive
coatings, marine coatings, packaging coatings, powder coatings, protective
coatings and other general industrial coatings. Decorative paint segment includes
exterior wall paints, interior wall paints, wood finishes, enamels as well as
ancillary products like primers, putties, etc.

This sector is raw material intensive and accounts

for over 300 material out of which 50% petro-
based derivatives in the manufacturing process.
Industry is highly impacted with fluctuation in crude
oil prices. Government initiatives to boost
manufacturing sector estimating a growth of US$ 1
trillion by 2025 which may rank India amongst the
three growing economies and manufacturing
destinations of the world. These factors expected
to significantly boost industrial paint consumption.

Until 2016, Organised paint companies in India

had a market share of only 65% whereas
unorganised paint companies holding the rest 35%
market share. After GST application, paint industry
got streamlined and the organised players in India
make up for the 80% market share and the rest
20% market share is distributed among the
unorganised players.

Asian Paints has the biggest market share in the

industry if 41%-42%. The next company is Berger
Paints with a market share of 13%-14%. Kansai
Nerolac Paints too has a market share of around 13%-14%. Akzo Nobel India has a
market share of 9%-10%. These are the 4 biggest paint companies in India. There
are also some other listed paint companies in India such as Shalimar Paints.

2- Key Drivers
• Gradual shift in the preferences of people from the traditional whitewash to
high-quality paints like emulsions and enamel paints.
• Rise in disposable income of the average middle class.
• Increasing investment on education; urbanization; development of the rural
market.
• Launches of innovative products, like friendly, odour free, and dust & water-
resistant paints.
Product Diversification
Decorative Paints Market – Residential/Commercial

• Interior Paints and Exterior Paints

Industrial Paints Market -

Automotive Coating, High-Performance Coating, Powder Coating, Coil Coating,

Marine
Major Players

Foreign Players: British Paints, Nippon Paints

Domestic Players: Asian Paints, Dulux, Berger, Kansai Nerolac, Shalimar Paints

3- PESTEL

Political

• Fiscal incentives given to housing sector will benefit paint industry in

long term.
• Make in India initiatives are helping Indian brands to expand.
• Reduced tax (GST) rates have induced the sales.

Economical

• 100% FDI
• Rise in Income and increase in industrialization.
• Slowdown in economy due to COVID-19 led to downfall in demand.
• Dependency on crude oil.
• Increased expenditure in rural areas.

Social

• Shift in consumers preferences from traditional to high quality

products.
• Emerging low socio income group in India, seeking upscale housing.
• With increased socialistic measures of govt the demand of more
cleaned and upscaled housing and infrastructure sector increased

Technological
 • Use of Augmented Reality for testing colour of paints because of
advance technologies.
• Modernization of paints -
• Waterproof paints
• Teflon coated paints
• Lead free paints
• Germs repellent paints.
• Dust repellent paints etc.

Environmental

• Ecological and toxicological disruption due to solvents, monomers

and softening agents.
• Use of harmful components impacts health – irritate eyes, skin
rashes and Volatile Organic Compounds add to depletion of ozone.

Legal

Strict compliance to be ensured of below statutory laws: -

• Environmental laws
• Health and safety law
• Pollution control law

4- Porter 5 Forces
 Supply => Supply exceeds demand in both the decorative as well as the
industrial paints segments. Industry is fragmented.
 Demand => Demand for decorative paints depends on the housing sector
and good monsoons. Industrial paint demand is linked to user industries like
auto, engineering and consumer durables.
 Barriers to entry => Brand, distribution network, working capital efficiency
and technology play a crucial role.
 Bargaining power of suppliers => Price increase constrained with the
presence of the unorganised sector for the decorative segment. Sophisticated
buyers of industrial paints also limit the bargaining power of suppliers. It is
therefore that margins are better in the decorative segment.
 Bargaining power of customers => High due to availability of wide choice.
 Competition => In both categories, companies in the organised sector focus
on brand building. Higher pricing through product differentiation is also followed
as a competitive strategy.

5- SWOT Analysis:
SWOT analysis of one company from each strategic group is done.

Asian Paints:

Strengths:
 Asian paints has strong international presence with its subsidiaries; Berger
International Limited, Apco Coatings, SCIB Paints and Taubmans, Causeway
Paints and Kadisco Asian Paints.
 The largest paint company in India and third largest company in Asia.
 Most renowned brand in Indian Paint Industry & its has strong customer focus
and innovative-spirit has made it market leader since 1968.
 They have over 39% of market share in organized segment, clear leader in
decorative paints and are strong competitors to Kansai Nerolac Paints to be
leaders in Industrial paints and coatings.
 Asian Paints operates in 15 countries and has 26 paint manufacturing
facilities in the world serving consumers in over 60 countries.
 Cutting edge technologies deployed to achieve maintain the competitive edge
for eg. Supply chain management system that regional distribution centres,
integrates plants, outside processing centres etc. hence Asian Paints have
strongest supply chain system.
 They have maintained their brand name and increased awareness by unique
ways of advertising and roping in celebrities like Deepika Padukone and
Ranbir Kapoor.
 The company has strong financials.

Weaknesses:
  Limited market share in industrial paints segment of Asian paints.
 In decorative paints Industry Customer tastes and perceptions change very
fast and products may become obsolete, Asian paints should look into this.

Opportunities:
 Asian paints should look for more opportunities abroad.
 There is a good scope for growth especially in industrial paints category for
Asian paints.
 There is a good scope for growth in Automobile industry segment.

Threats:
 Raw material scarcity and volatility in prices.
 Stringent Government rules and regulations regarding the quality of products
and manufacturing facilities as Environment policies are given more
emphasis.

SWOT Analysis of Berger Paints:

Strengths:

Basket of Products:

Berger Paints offers extensive variety of products which includes home to

industrial paints. They also offer decorative paints option which is the brand
new offering and in demand in the market. Berger Paints acquired the
decorative paints unit from the Indian arm of US-based Sherwin Williams
Paints.

Brand Recognition:

Berger paints the second largest Paint manufacturer gives them a healthy
brand equity. Almost everyone recognises the brand and is familiar with its
products and offerings. Their rigorous campaigns have made them a
household name.

International Market:

Berger paints have international operations in few countries that include

Nepal, Bangladesh, Russia, Poland, Cyprus and collaboration with Becker of
Sweden and Nippon paints of Japan.

Loyalty:

Loyal customers to Berger Paints when it comes for re-painting their homes.

Efficient Supply Chain:

 Berger paints have an efficient supply chain network throughout the country.
Berger paints have seven manufacturing facilities, 85 depots, many regional
outlets, they house around 2500 employees and a massive network of 15000
dealers.

Diversification:

Berger paints have expanded into the Construction Chemicals segment and
thus have expanded their scope for revenues and profits.

Company with low Debt.

Weaknesses :

 Inefficient use of shareholder funds - ROE Berger paints declining in the last 2
years .
 Berger Paints depends on one segment heavily for its maximum revenue and
that is the decorative segment, This is not a long term strategy and high
growth rate cannot be sustained for long.

Opportunities :
 Diversification : Huge scope for business and product diversification is
available for Berger Paints.
 They can innovate and invest in their R&D to come up with superior
technology for the paint industry. Berger paints can also launch more eco-
friendly paints and make it health friendly.

Threats:
 Raw material Prices:
There are high fluctuations in the prices of the raw materials of paint.
 Changing government laws:
Changing government laws may lead to new companies in this sector. That
means an increase in competition.
 Competition eroding the margins:
There is stiff competition amongst the top three – Asian paints, Nerolac and
Berger paints. Amongst these, Berger paints seems to be left behind resulting
in penetrative pricing and lesser margins.

SWOT Analysis of Shalimar Paints:

Strengths:
 Shalimar Paints has a pan-India sales and distribution network. With 30+
depots, the company services more than 5,000 dealers across the country.
 Equipped with world-class infrastructure and manned by skilled talent, the
R&D centres focus on:
o Product and process innovations
o Development and prototyping of innovative, environment friendly
technologies
 o Creating new business opportunities by bridging technology and
product gaps faster
o Customisation of Industrial Coatings products as per customer
requirement
 Company with Low Debt

Weaknesses:
 Inefficient use of assets to generate profits - ROA declining in the last 2 years
 Low Piotroski Score : Companies with weak financials

Opportunities :
 Tremendous growth opportunities in Rural India

Threats
 Stringent Government rules and regulations regarding the quality of products
and manufacturing facilities as Environment policies are given more emphasis
 Raw material scarcity and volatility in prices.
 Competition from national and international brands as they target India owing
to its large market.

6- Ansoff Matrix:

Product Development

Asian Paints:

Asian paints introduced first-of-its-kind SmartCare Ultron (in waterproofing segment)

Apcolite Spray Paint is a glossy enamel paint offered in

an aerosol spray pack for the first time by Asian Paints.

Berger Paints:

Weather Coat Anti Dust is a dust repellent coating for exterior. This paint has been
developed for dry, dusty regions of India where rainfall is meagre. It helps reduce
dust accumulation on the walls reducing painting frequency and making the building
look new for a longer period.

Kool & Seal Berger launched energy efficient products such as Weather Coat Kool &
Seal and Weather Coat Roof Guard, which reflect high energy infrared rays and help
maintain room temperature.

Easy Clean An interior emulsion with cross linking polymer technology ensures
stubborn stains can be cleaned easily. Under its new variant, this paint is able to
absorb offensive odours such as cigarette smoke, etc.

Nerolac:

Under EXCLUSIVE PICK OF HOME PAINT COLOURS FOR 2020

Sanguine Blue (4225)

Sweet Apricot (4071)

Tropical Mist (2641)

Kokum Red (4108)

Darlington (2978)

Market penetration strategy:

Kansai Nerolac:

Distribution expansion to 25000 dealers

Price decrease in select products amounting to 1.8 %

Berger paints:

Berger Paints is expanding its distribution network by 10-12% annually

Diversification strategy:

Asian paints, JSW Paints and Berger paints are going to produce sanitiser
commercially and entering home and personal hygiene space across the country.

8(A)- Value chain analysis of Asian Paints

Primary Activities- Asian Paints

Inbound Logistics

• Extensive variety of input materials, large supplier base adds complexity to

supply chain management; thereby providing many opportunities to innovate. 

Operations

Annual mfg. capability of over a billion litrs, having state-of-the-art manufacturing

facilities, few amongst the largest globally, having complete automation of
operations.

Asian Paints group operates in 15 countries across the world across four regions viz.
Asia, Middle East, South Pacific and Africa through the eight corporate brands viz.
Asian Paints, Asian Paints Berger, SCIB Paints, Apco Coatings, Taubmans,
Causeway Paints and Kadisco. 

Outbound Logistics

Asian Paints follows its wide distribution channel to reach at bottom level customer.

Marketing and Sales

• Asian Paints follows diversified policies with objectives such as

• Increase sales

• Customer awareness

• Fight against competition.

• Advertise and promotion activities.

Services

Asian Paints is very famous for providing better service to consumer by providing
them assistant who helps consumer to design and decorate their home. Asian Paints
provides 3D designing technology to their consumer on their official website as well
as on their official application at free of cost. Consumer can meet to their home
designing assistant by giving just a missed call on the toll free number and nearest
assistant contact to consumer within 24 hours.

Support Activities- Asian Paints

Procurement

 To complete the primary activities supporting activities are vital because

without supporting activities smooth running of primary activities is not
possible. As a procurement Asian Paint deals with procurement of finance,
procurement of material, procurement of machinery, procurement of
employees which supports to production process.

Technology Development: -
  Asian Paints reduced cycle time on the factory line with the Sight Machine
digital twin, delivering a very good return on investment from the initial project
alone.

 Introduced Augmented Reality application for testing colour of paints on wall.

 Recently launched Viroprotek Sanitizer, Germkill to as a contribution for
fighting against COVID-19.

Human Resource Management: -

 Company has large employee base of 6500+ employees

 HR structure is as follows:-

o Business HR >> Plant HR >> Corporate HR

Business HR

Work closely with line managers to run all people processes – recruitment, learning,
performance, engagement. You would independently design and execute HR
interventions which addresses core business needs.

Plant HR

Be in charge of all people-related activities at the plant, be it recruiting, training,

managing contractors, career development, and statutory compliance. The
excitement mounts when the union negotiations approach or when the factory
inspector visits!

Corporate HR

Handle recruitment, learning, talent management, organisation development,

performance management compensation and benefits, and employee relations
across the organisation. Gain expertise in a process, as well as exposure across
business functions.

HR department ensures activities like e-recruitment, Online learning, Vertical career

growth plan.

Infrastructure
State-of-the-art laboratories spread across multiple locations around the world,
Microbiology lab, Modern instrumentation lab, Resin and functional polymer
development lab.

8(B)- Value chain analysis of Berger Paints

Inbound Logistics

Raw material cost are one of the most major contributor in the price of the product
hence. Berger Paints try to keep the raw material cost minimal. Berger paints has a
large vendor base.

Operations

Berger paints has factories in 8 locations, spread over all four major regions of the
country. Also, Berger Paints has global presence in Polland, Russia, Nepal and
Bangladesh.

Outbound Logistics

• Effective inventory management is one of the major components of Berger

Paints strategy on distribution cost control. Berger’s distribution cost is less,
 which is advantageous. Berger’s average inventory level is much lesser than
the industry average.

• Distribution cost is less, which is advantageous.

• Berger’s average inventory level is much lesser than the industry average.

• More than 85 depots, 2000 dealers.

Marketing and Sales

By means of inventory management software like CBInvent, accurate demand

forecasting is done and helps Berger to target the kind of markets that have specific
needs.

CBInvent is a web based system which facilitates distribution centers of Berger to

serve the dealers in the installation of Color Tinting Machines booked by them

Service

Berger paints has a unique service i.e. Berger Prolinks – Innovative Service
proposition provides specifiers with a complete basis for recommended products and
it processes - databases, technical services, colour consultancy, site inspection, etc.,
Prolinks’ service experts ensure specific solutions to specific problems, whether it is
a particular shade that needs development, special climatic factors to be provided for
and also ensures application factors that have to be maintained.

Support Activities

Procurement

 To complete the primary activities supporting activities are vital because

without supporting activities smooth running of primary activities is not
possible. As a procurement Berger Paints deals with procurement of finance,
procurement of material, procurement of machinery, procurement of
employees which supports to production process.

Technology Development: -
Introduced BREATHE EASY – Berger’s first low VOC Paint. Mentioned on the right
are some of its properties:

• Low VOC

• Negligible aromatic content

• Highest standard of indoor air quality

• Global accreditation

• Chemical components restriction

• Zero health hazard

• Maximum performance

Company has innovative service proposition portal- Berger Prolinks

Berger’s “Device Distribution Beacon”, Virtual Painter, Germ Kill paint.

Introduced Berger Express painting, A tehnique for faster, cleaner & safer wall
painting.

Human Resource Management

Number of employees 33,500+ (2018)

Infrastructure

Berger Paints India is headquartered at Kolkata, with 16 strategically located

manufacturing units across India (including the subsidiaries), 2 in Nepal, 1 each in
Poland and Russia and about 162 stock points. The company also has an
international presence in 4 countries (Nepal, Bangladesh, Poland and Russia). The
Company has another SBU named British Paints.

9- COMPARITIVE DISADVANTAGE – BERGER VS ASIAN

PAINTS
• Berger paints have a competitive disadvantage over Asian paints on the
purchase of finished goods. The reasons are as follows:

• Backward Integration: Asian Paints outsources only part of the printed cans to
the external suppliers. Baba containers are one of the suppliers of 20litres tins
to the company. In order to reduce the cost for reducing the cost of purchase
for finished goods, the company went for backward integration and the
company itself produces part of the 20 litres printed cans. Asian metal
container is another supplier for the printed cans to Asian paints.

• Berger on the other hand does not manufacture itself the printed cans and
outsources it to the external vendors. The cost of purchase of finished goods
for Berger paints is 15% higher compared to Asian Paints. The cost of
purchase of finished goods as percentage of sales for Berger paints is only
1.5 compared to industry average of 3.5 and this in turn provides competitive
advantage to Asian paints.

• Plastic cans:

• Another cost advantage for Asian paints is its switching from Metal container
to plastic container. Initially the cost for the purchase of finished goods was
higher but switching to plastic container helped them to reduce the cost
further because the metal container was costly compare d to plastic container.