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Paints : 

1 Paints

Contents : 

2 Contents Market Characteristics History of the Indian Paints Industry Industry Overview and Outlook Trends in the Industry Porters Five Forces Analysis The Business Process Consumer Purchase Behavior Player Profiles Brands

Market Characteristics : 

3 Market Characteristics Decorative paints Caters to the housing sector Premium paints (acrylic emulsions) used mostly in the metros. Medium range (enamels) popular in cities and smaller towns. Economy paints (distempers ) demanded in the suburban and rural markets Distribution network is the key Industrial paints Include powder coatings, high performance coating, automotive and marine paints Two-thirds of the industrial paints produced in the country are automotive paints Technological superiority and tie-up with automobile manufacturers

Indian Paints Industry: A Brief History : 

4 Indian Paints Industry: A Brief History 1902 – Shalimar Paints, Calcutta 1920-45: Asian Paints, Nerolac started operations 1965-91: Paints looked upon as luxury item 1983: Demand for automotive paints picked up with entry of Maruti 1991: Reduction in excise duty and many controls on the industry removed. After 1991: Steady growth, slow disappearance of unorganized sector units and industry fragments.

Industry Overview : 

5 Industry Overview Four main players Asian Paints- 42% Goodlass Nerolac-20% ICI Paints- 14% Berger Paints- 15% Asian Paints dominates decorative segment Goodlass Nerolac dominates industrial segment

Industry Characteristics : 

6 Industry Characteristics Demand for paints linked to the industrial and economical growth Decorative paints market naturally price-elastic Industry majors maintain a vast dealership network High inventory levels

Key Success Factors : 

7 Key Success Factors Costs and price drivers – raw materials Working capital management Heavy seasonality of demand Brand building Stocking and distribution Access to latest technologies

Trends in the Industry : 

8 Trends in the Industry Reduction in excise duties and taxes – larger scale plants Customer power ! Proliferation of industrial use Super premium decorative segment – better margins Niche marketing strategies India – an exporter Industry expected to further consolidate

More Trends… : 

9 More Trends… Increased emphasis on attractive packaging, more sturdy packaging, lighter SKUs, etc. From tin cans to plastic tubs Asian Paints introducing “sub-stockists” Focus on rural markets Computerization and ERP Less seasonality

Market Practices : 

10 Market Practices Discounting is the norm Dealers operate with the company on credit – 2 to 6% Stock sometimes “undervalued” to “save” taxes and excise Bulk purchasers and “key accounts” are given additional discounts Distinct Segmentation in the Market Super economy segment – cement based - <Rs 100 per litre Economy segment - oil based – Rs 100/- per litre Medium segment – Rs 200 per litre Premium segment- Rs 300 per litre Super premium segment – Rs 1200 for a four litre pack

Industry Prospects : 

11 Industry Prospects Market slated to grow from 9000 crores to 18000 crores in the next five years ! Per capita consumption of paint is India is around 800 gram, compared to 15-25 kgs in most developed countries. Organized sector will grow 16 to 20% per annum 30 million new homes, millions of cars and vehicles, Infrastructure projects all will fuel huge demand !

International Players in India : 

12 International Players in India International retailers had until January 2006 been able to operate in India only through franchise arrangements with local partners The Indian Government passed a regulation in January 2006 allowing entry of foreign single retail brands without the need for franchise arrangement Starting February 2006, foreign single retail brands are allowed to: open their own stores in India; own upto 51% of local joint ventures

Porter’s Five Forces Analysis : 

13 Porter’s Five Forces Analysis Buyers power: High Supplier’s power: High Threat of entry Low Threat of substitutes Low Thus, overall the industry is profitable Industrial rivalry : High

Business Process : 

14 Business Process Factory - nimbleness in the supply chain, efficiency and speed of the production very important , since inventory turnover periods are significantly high. Depots - normally owned by company, strict quality control essential to prevent loss of inventory due to product deterioration leading to them not meeting the product specifications. Dealers Dedicated dealers Terms of trade more favourable Higher margins , exclusivity of distribution , greater variety of product lines stocked , technical support in terms of MIS Independent dealers Form a large part of the distribution process in paints industry Customer

Consumer Behaviour –Decorative Paint : 

15 Factors affecting purchase are price, finish, durability, range of colours/ shades Maximum demand from the household sector who uses paint as a decorative medium Purchase decision influencer-regarding the above parameters - the dealer or the painter- whose view is given major importance Consumer Behaviour –Decorative Paint

Consumer Behaviour –Industrial Paints : 

16 The major factors affecting purchase decision: Brand, price, quality, durability, timely supply, credit and discount terms, logistics service, relationship with supplier Access to technological parameters assist paint companies to customize their products as per needs of specific industrial sectors Consumer Behaviour –Industrial Paints

Slide 17: 

17 The organized sector Asian Paints Goodlass Nerolac ICI Paints J&N Shalimar Paints Players in the Industry

Asian Paints : 

18 Asian Paints US $ 680 million Asian Paints Group has a presence in 23 countries Ranks among the top 10 decorative coatings companies in the world Subsidiaries - Berger International Ltd., Apco Coatings, SCIB Paints and Taubmans Market leader in the decorative segment

Asian Paints : 

19 Asian Paints Asian Paints CSF – Supply Chain Market driven strategy Colour World – Paint retailing of the future ColourNEXT 2006 , Kids World Royale Play – readymade special effects Bye Bye Gattu

Asian Paints : 

20 Asian Paints Promotional campaigns Point of sales activities and dealer incentives Shift from individual branding to umbrella branding – building the Asian Paints brand Messages of durability, excellent finish, wide range of colour availability – shade combinations

Asian Paints : 

21 Asian Paints Asian Paints Apex Asian Paints Ace Exterior Asian Paints Premium Gloss Asian Paints Apcolite Premium Asian Paints Premium Emulsion

Asian Paints : 

22 Asian Paints Touchwood Utsav Acrylic Distemper Tractor Acrylic Distemper Tractor Emulsion

ICI Paints : 

23 ICI Paints Multi-divisional company dealing in rubber chemicals, paints, polycarbonate, others Revenues in 2004 - $157.51 million (paints business) Mainly auto refinishes and decorative paints Present in all categories Brands - Dulux, Duco, and 2K Only Indian decorative paint manufacturer producing paints that are totally free from toxic metals

ICI Paints : 

24 ICI Paints Promotional campaigns/positioning Premium brands advertised through television Dulux Interior - Washability, durability, fungal resistant, smoothness and exclusiveness Weathershield (exterior wall finish) – Prevents exterior walls from cracking and eroding due to high rutile content

ICI Paints : 

25 ICI Paints Dulux Velvet Touch Dulux Supreme 3-in-1 Dulux Acrylic Emulsion Maxtilite Distemper Dulux Satin Finish Dulux Supergloss 5-in-1 Dulux Gloss

ICI Paints : 

26 ICI Paints Dulux Weathershield Max Supercote Exterior Acrylic Primer Maxtilite Distemper Dulux Tileshield

Goodlass Nerolac : 

27 Goodlass Nerolac Goodlass Nerolac is the second largest paint company Gross group turnover of approximately Rs 1200 crores Undisputed leader in industrial segment with a market share of 45% in industrial paints

Goodlass Nerolac : 

28 Goodlass Nerolac Five strategically located manufacturing units and a strong dealer network of over 11,500 dealers across the country As opposed to the Asian Paints strategy of hitting the entire gamut of paint segments, GNPL - mainly concentrated on industrial paints segment, which is technology driven

Goodlass Nerolac : 

29 Goodlass Nerolac Industrial Automotive coatings General industrial coatings High performance coatings - DIMETCOTE Powder coating

Goodlass Nerolac : 

30 Goodlass Nerolac Decorative paints "Nerocem" which is cement paint "Suraksha" the value pack "Nerotex" which is a texturized paint "Excel" the premium exterior paint “Impressions” the premium interior paint “Wonderwood” can be used for wooden surfaces

Slide 31: 


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