ABSTRACT

Strategies bring multiple societal and environmental

benefits to all stakeholders. Strategy plays an essential
role in running a business smoothly. An insight view
of the assignment will encompass the Strategic
Analysis.

Strategic analysis of
Asian Paints
 NAME ROLL NO. EMAIL ID

PUNEET MALASI EGMP47039 Puneet.Malasi18@Iimb.Ac.In

RAHUL MISHRA EGMP47041 Rahul.Mishra18@Iimb.Ac.In

RAMAN KUMAR GARG EGMP47042 Raman.Garg18@Iimb.Ac.In

SHISHIR MAHESHWARI EGMP47054 Shishir.Maheshwari18@Iimb.Ac.In

VIVEK KHANDELIA EGMP47072 Vivek.Khandelia18@Iimb.Ac.In

 1. Asian Paints: The Quest For Transformation & Dominance in the decorative paint market

Asian Paints is the 9th largest paint company in the world, #1paint company in India and 3rd largest paint company in Asia
with 50+ years of market leadership in India. In addition, 27 paint manufacturing facilities across globe, serving its
consumer base in 65 countries with operations in 16 countries, and Market capitalization of ₹143,179 Crores as on 31st
March 2019 standing among top 10 companies in the world. The company generated Revenue of ₹16,391.78 crores as
against ₹14,153.71 crores in the previous year – a growth of 15.8%.

Company is listed in BSE (Part of BSE 30 S&P SENSEX Code: 500820) and NSE (Part of NSE NIFTY 50 Code:
ASIANPAINT).

The Company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to
home décor (with the acquisition of the Sleek Group and Ess Ess in 2013 and 2014, respectively), bath fittings and
providing of related services.

With the vision of “Clear Goals for a Clear Future” The Company has come a long way since its small beginnings in
1942. It was set up as a partnership firm by four friends who were willing to take on the world's biggest, most famous
paint companies operating in India at that time. Over the course of 25 years, Asian Paints became a corporate force and
India's leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the
market leader in paints since 1967. Today, it is double the size of any other paint company in India. Asian Paints
manufactures a wide range of paints for decorative and industrial use. Asian Paints is the holding company of Berger
International.

2. Paint Industry Over view:-

Paint is a liquid that, after application to a subtrate in a thin layer converts in to thin layer to a solid film –most commonly
used to protect color and or provide texture.

The domestic paint industry is estimated to be a ₹50,000 Crores industry with the decorative paint category constituting
almost 75% of this market. The decorative paint market includes multiple categories depending on the nature of the
surface like exterior wall paints, interior wall paints, wood finishes, enamels as well as ancillary products like primers,
putties, etc. The industrial paint category constitutes the balance 25% of the paint market and includes a broad array of
segments like automotive coatings, marine coatings, packaging coatings, powder coatings, protective coatings and other
general industrial coatings. The domestic paint industry still continues to have a sizeable 30-35% share of unorganised
players which primarily cater to the low end of the product basket. The paint industry continues to see the emergence of
small to medium level new paint players who continue to put pressure at the low-end emulsions.
Asian Paints is the leading Paint manufacturing company in India with a market share of over 54 percent.

Market Net Net

Stock Cap Sales Profit Total Debt % of
Company Name Price* (Rs. cr) (Rs. cr) (Rs. cr) Assets Liability

Asian Paints 1,358 1,30,297 16,392 2,135 7,652 15 0.12

Berger Paints 314 30,450 5,516 467 2,359 215 5.61

Kansai Nerolac 437 23,575 5,174 439 2,883 3 0.08

Akzo Nobel 1,757 8,002 2,918 211 877 3 0.14

-
Shalimar Paints 77 413 288 82 400 145 25.16

*As on 7/7/19
Apart from its core Paints business, Asian Paints also operates in Home Improvement business where it has launched its
modular kitchen brand called ‘Sleek’ and also bath fittings brand called ‘Ess Ess’. But Home Improvement contributes to
only 2-3 percent to Asian Paints revenue. Rest comes from its core business of decorative and industrial paints.

Asian Paints is a clear leader in India in decorative paints market. Decorative paints make up 80% of the paints market
whereas the share of industrial segment is only 20%, much lesser than the Western markets. Asian Paints has positioned
itself much ahead of its competitors in the decorative paints segment with more than 55% of the organized market share.
The unorganized industry is rapidly declining in India with currently having 30% of the market share of decorative paints.

3. Industry Analysis –The Five Competitive Forces (Michael E. Porter) that shape the Paint Industry for
current and Future:-

 The threat of new entrants

There is no perceptible threat of entry of new firms within India as paint market is shrinking. However all major firms
have foreign collaborations mostly in the form of product specific technology transfer arrangements.

Result: Favourable

 The bargaining power of buyers/customers

 In commodity business, which the paint industry is increasingly tending to become, volume matters more than
value. Firms are finding it increasingly difficult to pass cost increase to customers. In the industrial paint
segment of paint industry 65% of the share of product goes to the general engineering and the balance 35% to
the automobile industry, both these industries are experiencing sluggish growth and so there is an increase in
buyers’ bargaining power.

Result: Unfavourable

 The threat of substitute products

 There does not seem any threat of substitute so major in both segments of paint –decorative and industrial
paint.

Result: Favourable

 The amount of bargaining power suppliers have

 Raw materials (solvents, resins, pigments and additives) constitute around 50% of total production cost and
hence have significant impact on margins in an industry that is increasingly becoming a commodity business
in decorative segment, and so there is moderate bargaining power of suppliers.

Result: Unfavourable

 The amount of rivalry among competitors

 There are existing rivals of Asian paints such as Nerolac, Berger etc.

 Due to increased rivalry there is cost pressure upon companies and moreover weaker companies are forced to
leave the market.

 Asian paint increased its advertisement expenditure along with research and development to compete this.

 Result: Unfavourable
 FIVE FORCES ANALYSIS
Entry Barriers

 High initial capital

costs, and moderate
continuing R&D costs
 Thin operating margins
require low cost
capital structure
 Wave of consolidation
and rationalization in
industry
MOD..

Supplier Power Buyer Power

 Volatile raw material prices  Competitive pressures force

EXISTING RIVALS
 Low switching costs from one
enhancement of distribution structure
supplier to another 1 Berger
 Volatile energy MOD HIGH  Large buyers such as Auto OEMs,
 prices
2 Nerolac Govt., DIY home centers, etc.
 Move towards supplier 3 Akzo Nobel  Fragmented coating industry
consolidation and integration  Demanding end consumer
low rivalry: moderate
L0W

Threat of Substitutes

 R&D efforts help improve the product offering and

one paint/ coating is substituted with another

improved paint/ coating

 Dependency on a few large customers

Table 1: Rivalry among competitors

Attractiveness Remarks

Low High

1 2 3 4 5

No. of Large Grocery Wide bodied Small

competitors store jetliner

Industry growth Slow Vinyl record Internet browser Fast

Fixed cost High Steel Real estate agency Low

Differentiation Low Sugar Beer High

Switching cost Low Diskette Software High

Secret Used car Stocks Open

 Openness of
terms of sales

Excess capacity Large Residential Office space in Small

property in South Mumbai
Bangalore

Strategic stakes High Internet Part-time coaching Low

browser

Table 2: Barriers to exit

Attractiveness Remark

Low High

1 2 3 4 5

Asset High Steel Automotive Small

specialization gears

Cost of exit High Steel Tea stall Small

Government High Public bus Grocery Small

restrictions service in UK store

Table 3: Barriers to entry

Attractiveness Remark

Low High

1 2 3 4 5

Economies of scale Small Tea stall Oil Large

refinery

Product Low Sugar Beer High

differentiation

Brand identity Low Sugar Cigarette High

Switching cost Low Diskette Software High

 Access to channels Easy Newspaper Petrol Limited
of distribution

Capital requirement Small Tea stall Oil Large

refinery

Access to Easy Generic AIDS Restricted

technology drugs medicine

Access to raw Easy Distilled Ivory Restricted

material water

Government None Tea stall Public bus Substantial

protection in UK

Table 4: Threat from substitutes

Attractiveness Remark

Low High

1 2 3 4 5

Availability of High Fountain pen AIDS Low

close substitutes medicine

Switching cost Low Diskette Customized High

Software

Substitute’s Better Vinyl record Suburban Worse

price-value trains in
Mumbai

Profitability of High Vinyl record Trans- Low

the producers of
substitutes Atlantic flight

Table 5: Bargaining power of buyers

Attractiveness Remark

Low High
 1 2 3 4 5

Number of Small Air bags for Toothpaste Large

buyers cars

Availability of Many Fountain pen AIDS Few

substitutes medicine

Switching cost Low Diskette Software High

Buyer’s threat of High Air bags for Cars Low

backward cars
integration

Industry’s threat Low Air bags for Oil High

of forward cars refinery
integration

Contribution to Low Low end Semi- High

quality packaging conductor
chips

Contribution to High Housing Paper clips Low

cost

Buyer’s Low Public bus Luxury High

profitability service cars

Table 6: Bargaining power of suppliers

Attractiveness Remark

Low High

1 2 3 4 5

Number of Small PC Tea stall Large

suppliers

Availability Few PC Tea stall Many

of substitutes

Switching High PC Garment Low

cost
 Supplier’s High PC Wide Low
threat of bodied
forward jetliner
integration

Industry’s Low Petrol pumps Garment High

threat of retailers
backward
integration

Contribution High PC Low end Low

to quality packaging
Low Talcum powder High

Contribution Oil
to cost refining

Industry’s Low Vinyl record Cars High

importance to
supplier

Table 7: Government actions

Attractiveness Remark

Low High

1 2 3 4 5

Industry protection Low Tea stall Public bus High

in UK

Industry regulation High Chemicals Software Low

(pollution, etc.)

Customs and tariff High Garment Software Low

restrictions abroad

Table 8: Overall assessment

Attractiveness Remark

Low High
 1 2 3 4 5

Barriers to entry

Rivalry among competitors

Barriers to exit

Power of buyers

Power of suppliers

Threat of substitutes

Government action

Overall attractiveness

4. Internal Analysis

3.1) Core Competence:

3.2) Competitive Advantage:

Marketing factor

 Asian paint is market leader with 38% share in organized sector

 Asian paint is more than twice the size of its nearest rival
 >50 years leader
 It has the widest range of products
 40 different decorative paints – 1000 shades, 8 different sizes in packing and number of brands
 Brands are quite powerful
 90% accuracy in forecasting, 100 fastest moving Stock Keeping Units, monitored daily
 Country wide distributions (29 plants in 22 countries)
 Physical distribution far superior than competitors
 Strong in inventory control ( 18 processing centers, 350 raw materials, and intermediate goods, 140 packing material
vendors, 6 regional distribution centers, 72 depots are integrated)

Manufacturing/Operations factor

 Size advantage in comparison to competitors

 Finesse in production planning, scheduling, matching with marketing requirements
 In-house production – 4 production location which gives spread benefit
 Outsourcing- highly reliable suppliers with superior quality assurance

Human Resources

 Asian paints believes that people are its strongest assets

 A talent pool of ~5000 employees employed across 23 countries bring a unique blend of mindsets and skills
 Excellent training is provided to develop leaders and re-strengthen competencies from within the organization

Information Technology

 Only company in India to have integrated Supply Chain Management (SCM) solution from i2 Technologies and
Enterprise Resource Planning (ERP) solution from SAP
 Customer relationship management (CRM) tools are being used in Asian Paints helpline and Home Solutions
initiatives
 Efficiency of business is increased because of transparency and accuracy of information across the country

Research and Development

 At Asian Paints, R&D plays an important role in developing new products and innovations, and reducing costs by
value re-engineering of formulations
 It consists of 140 strong R&D teams consisting of many qualified scientists. They have always backed the company’s
vision and business plans. They have successfully managed to develop high-end exterior finished and wood furnishes
in-house.

3.3) Corporate factors: Commented [MS1]: Need to write something on Awards

and environment and safety here and TQM

3.4) SWOT Analysis:

Strengths:

Strong Growth: Asian Paints has shown a healthy growth of around 8 – 12 % in the past 5 financial years. This has made
sure that the company maintains the top spot as far as market share is concerned. It is double the size of any other paint
company in India.
 o Strong Global Presence: Asian Paints has a wide footprint on a globe operating in 19 countries and have 27
manufacturing units around the world. Asian Paints serves in over 65 countries and is the third largest paints
company in Asia.
o A wide range of Products: The Product portfolio of Asian Paints allows them to cater to different segments and
industries, they are present in the Industrial coatings, Decorative paints, Ancillaries, Asian Paints Royale etc. This
allows them to penetrate different segments of business and sections of society that helps them maintain market
share.
o Brand Value: Asian Paints was ranked 20th in the Top 20 best brands in Interbrand report by Economic Times. It
also featured in the Top 20 World’s Most Innovative companies.
o Strong Supply Chain Management: Asian Paints has is a superior technologydriven company which has
focused on integrating Supply Chain Management (SCM) and Enterprise Resource Planning (ERP) solution from
SAP.
o Marketing campaigns – Asian paints has always had good marketing campaigns. It has continued its association
with Saif Ali khan over the years and had also roped in Soha ali khan for a beautiful campaign. From time to time
it has roped in other personalities for ads but Saif Ali khan has been a constant. Recently, Deepika padukone has
been chosen as their brand ambassador for Asian paints Royale play. Their brand mascot – GATTU is very
famous too and is one of the most popular brand mascots of India.
o Asian paints royale play – The Royale play was an amazing and breakthrough concept launched in the market
by Asian paints wherein painters from the company themselves will paint your house using unique designs and
colours. These painters were specially trained and consumers relied on them because they came from the house of
Asian paints. Deepika Padukone is the brand Ambassador for the sub brand.

Weaknesses:

o Low Market Share in Industrial and Auto Paint: Asian paints has a low market share in the industrial paint
(about 15 percent) and auto sector (about 20 percent) when compared to Kansai Nerolac and AkzoNobel.
o Slow International Business: Except for Bangladesh, Nepal and UAE, Asian Paints have been performing below
par in other overseas countries.

Opportunities:

o Growth in Industrial Sector: It has a chance to acquire market share in the Industrial as well
as automobile sector as well considering the current market situations.
 o Growing Indian Economy: With growth in Indian Economy and developing infrastructure, Asian Paints has a
chance to increase revenue base and venture into smaller cities, to increase sales.
o Emerging Nations: Asian Paints’ vision is to become one of the top five decorative coatings companies in the
world. This can be achieved by focusing on the emerging economies of the world.
o Adapting to consumer psyche – Change is always constant. So although Asian paints is leading the market due
to Royale play, there are other factors which it can bring in to dazzle its customers and therefore keep the majority
market share. Off course, easier said then done.

Threats:

o The threat of Slowdown: Any Economic slowdown will have a direct negative impact on the construction
industry and consequently paint industry will also get affected.
o Unorganized sector: The unorganized sector still has about 35 percent of the market share and this can prove out
to be a deterrent to the growth of the industry.
o The scarcity of Raw materials: The raw materials required in the Paint industry control the pricing of paint and
scarcity can cause a jump in the prices, which can be a threat for the Paint Industry. On an average, raw materials
constitute ~56% of the total expenditure in paint companies. Titanium dioxide is one of the major raw materials
and price fluctuations in its cost have direct and substantial impact on the cost of production. Crude oil derivatives
are the other major raw materials and have similar impact. Apart from these a large number of other raw materials
are used for adding/giving specific properties to the wide product range offered by the industry.

End-User: The decorative paints segment products find use in households and construction whereas the industrial
segment products find use in automotive industry, consumer durables industry and other OEM’s.
Market Share

3.5) Key Corporate Strategies

Research and Strategize around technology development, product development focussing also on creating sustainable
development products, as well as value re-engineering for productivity improvement and cost optimization.

To focus on geographical expansion and enhancement of product portfolio through customer

acquisition and product launches resulted in substantial growth in Protective Coatings and Powder
Business
Coatings market segments. Introduction of innovative products and systems helped the Company
performance
garner good share of business in the infrastructure segment.

3.6) Financial Performance Analysis:

4) Recommendations:
5) Bibliography:

https://www.asianpaints.com/content/dam/asianpaints/website/secondary-navigation/investors/annual-
reports/Asian%20Paints%20Annual%20Report%20FY2019.pdf

https://www.asianpaints.com/

https://en.wikipedia.org/wiki/Asian_Paints

https://www.equitymaster.com/research-it/sector-info/paint/Paints-Sector-Analysis-Report.asp

https://www.edelresearch.com/showreportpdf-26172/BRAVEHEART_SERIES_-_ASIAN_PAINTS_-
_THE_GROWTH_PALETTE-EDEL

http://bergerpaints.com.sg/

https://economictimes.indiatimes.com/asian-paints-ltd/infocompanyhistory/companyid-14034.cms