INDUSTRIAL EXPOSUREPROJECT

On
A Study of paint industry in india

“BERGER PAINTS”
Submitted in Partial Fulfillment of the requirements for the
Award of Degree of Bachelor of Business Administration (BBA)

2016-2019

Submitted by: Dev

Under the guidance of: MR. Shakti Sharma

BHARATI VIDYAPEETHUNIVERSITY
SCHOOL OF DISTANCE EDUCATION,
Academic Study Center – BVIMR, New Delhi

(A Constituent Unit of Bharati Vidyapeeth University

,Pune)AnISO9001:2000CertifiedInstitute

NAAC Re-Accreditation Grade “A” University

1
 ACKNOWLEDGEMENT

This project is a result of dedicated effort. It gives us immense pleasure to prepare

this is A Study of paint industry in india “BERGER PAINTS” We would like to
thank our project guide MR. SHAKTI SHARMA, for consultative help and
constructive suggestions on the matter on this project. We would like to thanks our
parents and colleagues who have helped us in making this project a successful one.

2
 DECLARATION

This is to certify that I have completed a Project titled " A Study of paint industry
in india “BERGER PAINTS” under the guidance of MR. SHAKTI SHARMA in
the partial fulfillment of the requirement for the award of Bachelors of Business
Administration of BharatiVidyapeeth University, New Delhi. This is an original
piece of work & I have not submitted it earlier elsewhere.

Dev

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 CONTENTS
CHAPTER 1:- Introduction to Company
1.1:- Nature of Business/History
1.2:- Type & Ownership pattern
1.3:- Organisational structure
1.4:- Production Layout
1.5:-Organizational Policies
CHAPTER 2:- Industrial Analysis
2.1:- Industrial Overview
2.2:- Current Issues
2.3:- Key Competitors
2.4:- Environmental Scanning (PESTEL analysis)
2.5:-Porter’s Five Forces Model of Competition
CHAPTER 3:- Marketing Strategy
3.1:- Products of the company
3.2:- 4'Ps
3.3:- STP (Segmenting Targeting and Positioning)
3.4:- Distribution Channels
3.5:- Promotion Strategy
CHAPTER 4:- Financial Analysis
4.1:- Sources of Finances
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 4.2:- Ratio Analysis (Any 3)
4.3:-Net Profit or Net Balance Sheet
CHAPTER 5:- Key learning from the company and Recommendations
5.1:- Performance Analysis of the company [Minimum 4-5 lines]
5.2:- Reasons for the diversification of the company
5.3:- Comment on Organizational Leadership
5.4:- Market Share / Growth Rate of the company
5.5:- SW OT Analysis of the company
CHAPTER 6:- Finding
CHAPTER 7:- Conclusion

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1.1 Nature of Business/History:-

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Berger Paints India Ltd is a paint company based in India.[5][6] The company is
headquartered at Kolkata and has 13 manufacturing units.[7] It has manufacturing
units at Howrah and Rishra[8],Tezpur
andNalbari [9],Hindupur[10] ,Jejuri[11],Jammu[12] ,Puducherry and Udyognagar. The
company has presence in 4 countries – Russia, Poland, Nepal and Bangladesh.
They have an employee strength of over 2,800 and a countrywide distribution
network of 25,000+ dealers.

History

1940's - James Wilfred Adamson, founder of the British Paints Organization,

embarked on his career as a traveling salesman. Adamson bought his first Oil and
Colour business in 1909. By 1917 Adamson was owning paint manufacturing
companies in Rhodesia, Canada and the Caribbean. Elsewhere an Englishman, Mr.
Hadfield, set up Hadfield's (India) Limited on 17 December, 1923, ...a small paint
company in Calcutta. Towards the end of 1947 British Paints acquired Hadfield's
(India) Limited and thus British Paints (India) Limited was incorporated in the
State of West Bengal. What British Paints, (Holding), UK acquired was a company
which at that time produced 150 tonnes of ready mixed stiff paints, varnishes and
distempers. Our 1947 sales was a princely RS.25 lakhs, with a total employee
strength of 100. The first Managing Director of British Paints was Mr. A. V.
Niblett.

1950's - Sales offices were opened in Delhi and Mumbai and in 1951 a depot was
started in Guwahati. Sales rose to Rs.6 million in 1952. The Company declared its
first dividend and shifted the Head Office to 32, Chowringhee Road, Calcutta. By
1959, modernization of the Howrah Factory was completed and the first resin plant
commissioned. With that, the Company entered the synthetics paints market.

1960's - Mr. R. A. Godwin took over as the Chairman & Managing Director in
1962 and initiated further modernization. By 1965 British Paints (Holdings)
Limited, UK. was acquired by Celanese Corporation, U.S.A. As a result, the
controlling interest of the Company passed on to CELEURO N.V., Holland. In
1969 Celanese Corporation sold their interest in the Indian Company to Berger,
Jenson Nicholson Limited, UK. It was the beginning of the legacy of Lewis Berger
in India - which the Company would later take forward to enviable heights.
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1970's- Mr. D. Madhukar took over as the Managing Director in the year 1973.
Under his expert stewardship the Company took the giant strides that made it the
fastest growing company in the paint industry. Developments took place in every
sphere...new sales offices added, newer products introduced, new markets opened
up and new services offered. Sales reached over Rs. 160 million by 1978.

1980's- Mr. Biji K. Kurien takes over as Chief Executive in 1980. From 31
December 1983 the name of the Company was changed to Berger Paints India
Limited (BPIL) with unanimous approval of the shareholders. By this time
Berger's operations were divsionalised into the Retail Business Line (RBL) and the
Industrial Business Line (IBL) in order to better cater to needs of our customers. -
Simultaneously, the Company started using the trade name and mark BERGER.
From 1983 till date, for more than two decades, the Company has solely used and
developed the name and trademark of BERGER and all its other variants in India.
BERGER became a household name in India. - During this period many new
products were launched like "Luxol Silk" the first premium emulsion in India,
Viton Refinish for cars, Bison Acrylic Distemper and Rangoli Acrylic Emulsion.

1990's- BERGER PROLINKS, a service aimed at providing paint and application

related information to professionals was introduced marking one of our first steps
into painting related services. - In 1991, the controlling stake in the Company was
acquired by Mr. K S Dhingra, Mr. G S Dhingra and their associates. At that time
the total sales of the Company was Rs 1.15 billion. - 1994 witnessed top
management change. Mr. Biji K. Kurien, who was the Managing Director of the
Company for the last 14 years, stepped down and Mr. Subir Bose, a 10 year
veteran in the Company, took over as the new Managing Director. The sales of the
Company touched 2.76 billion by 1995-96. - The latter half of the nineties saw
BERGER attain the ISO - 9000 certification (1996) and establishment of
BERGER's Quality Management System. - COLOR BANK tinting system was
also launched through which the consumer can select from a range of over 5000
colours and which are then made available in minutes. - As part of its expansion
program, a new paint-manufacturing unit at Pondicherry was commissioned in
early 1997. - A Joint Venture - Berger Becker Coatings Limited, was started in
Goa with Becker Industraifarg A. B., Sweden. - "In 1999, Rajdoot Paints Ltd. was
8
merged with the Company. The merger resulted in addition of two new factories at
Goa and Sikandrabad, U.P., a joint venture company by the name of Berger Becker
Coatings Private Limited, a network of new depots and several new brands."

2000 - The Company proposes to expand its operation through acquisitions, both
internally and externally, and strategic partnership, preferably with foreign firms.

- Crisil has upgraded the fixed deposit programme of Berger Paints from FAA to
FAA+.

2001- Berger Paints India Ltd. has unveiled a new brand promotion strategy which
it claims to be the first of its kind in the industry.

- Despite a slight increase in sales, the net profit of Berger Paints India Ltd has
dropped by around 10 per cent for the half-year ended September 30, 2001.

- Berger Paints Ltd and ICI Ltd, have formed a 50:50 joint venture to manufacture
auto and industrial coatings at Rishra in West Bengal.

2002-Acquires 50% stake in Berger Auto & Industrial Coating Ltd. 

2003-BOD decided not to amalgamate Berger Auto & Industrial Coatings Ltd with
the company.

-Posts 54% growth in the net profit to Rs.14.14cr for the second quarter end.

2004-Delhi based Punjab National Bank (PNB) and Bangalore-based Vijaya Bank
enter into a four-way partnership with Principal Financial of the US and Berger
Paints to set up an insurance broking company

2005- The Motors & Industrial paints business of ICI India with its factory at
Rishra, West Bengal was acquired as a 100% subsidiary Berger Auto & Industrial
Coatings Limited and then merged with the Company in 2005.

2006- Berger Paints India Ltd has entered into a Joint Venture Agreement (JV)
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with Nippon Bee Chemical Co Ltd of Japan for the purpose of formation of a
Company for manufacture and sale of coatings for plastic substrates used in
automobiles and parts thereof in India.

-Berger Paints (India) Ltd has given the Bonus in the Ratio of 3:5

2007- Berger Paints India Ltd has entered into a Joint Venture Agreement (JV)
with Nippon Bee Chemical Co Ltd of Japan for the purpose of formation of a
Company for manufacture and sale of coatings for plastic substrates used in
automobiles and parts thereof in India.

2008- Berger Paints India bought Polish firm Bolix SA, a leading provider of
external insulation finishing system (EIFS) in the B2B segment. Berger Paints has
bought for a net purchase price of $38.6 million (around Rs 1,54.7 crore). Berger
Paints India acquired the entire bloc in the Polish firm held by global private equity
group Advent International. 

- Berger Paints India Ltd has informed that Mr. Gerald Kenneth Adams has been
appointed as a Director of the Company effective January 30, 2008.

2009- Berger Paints India Ltd has informed that Mr. Pulak Prasad was appointed
an Additional Director (non-whole time) of the Company under Section 260 of the
Companies Act, 1956.

2010- The Company's sales in the year ended 31 March 2010 was Rs 1822.7
crores. - Berger Paints, the paint major, is quite bullish on the expansion front as
the company is going to make an investment of Rs 300 crore in order to set up a
water-based paint plant at Hindupur in Anantapur district of Andhra Pradesh.

2011-BergerPaints - Board recommended Final Dividend of Re. 0.80 per share

(40%) of face value of Rs. 2/- each

2012-Berger enters new chemicals business

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- Berger Paints introduces new products

-Berger Paints gains over 2% on stake hike by UK Paints

2013

-Berger Paints acquired architectural operations of Sherwin Williams Paints.

2014 -Berger Paints Inaugurates New Facility in Hindupur, Andhra Pradesh.

2015 -Berger Paints - Berger Paints signs MOU with the Russian Government
-Berger Paints India Ltd - Company’s Powder Coating plant at Maharashtra has
commenced commercial production

2016 -Berger Paints India Wins 1st Prize in NECA, 2016

1.2 Type and Ownership Pattern:-

Holder's Name No of Shares % Share Holding

Promoters 587487919 60.5%
ForeignPromoter 140656782 14.49%
GeneralPublic 75010682 7.72%
FinancialInstitutions 72059439 7.42%
ForeignInstitutions 51780262 5.33%
Others 29346732 3.02%
NBanksMutualFunds 14689612 1.51%

1.3 Organizational Structure:-

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Board of Directors

MR. KULDIP SINGH DHINGRA

Chairman

MR. GURBACHAN SINGH DHINGRA

Vice-Chairman

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MR. ABHIJIT ROY

Managing Director & CEO

MR. KAMAL RANJAN DAS

Director

MR. PULAK CHANDAN PRASAD

Director

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 

MR. NARESH GUJRAL

Director

MR. GOPAL KRISHNA PILLAI

Director

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 

MR. DHIRENDRA SWARUP

Director

MR. KANWARDIP SINGH DHINGRA

Director & National Business Development Manager

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 

MRS. RISHMA KAUR

Director & National Business Development Manager

1.4Production Layout

Raw Materials

A paint is composed of pigments, solvents, resins, and various additives. The

pigments give the paint color; solvents make it easier to apply; resins help it dry;
and additives serve as everything from fillers to antifungicidal agents. Hundreds of
different pigments, both natural and synthetic, exist. The basic white pigment
is titanium dioxide, selected for its excellent concealing properties, and black
pigment is commonly made from carbon black. Other pigments used to make paint
include iron oxide and cadmium sulfide for reds, metallic salts for yellows and
oranges, and iron blue and chrome yellows for blues and greens.

Solvents are various low viscosity, volatile liquids. They include petroleum
mineral spirits and aromatic solvents such as benzol, alcohols, esters, ketones, and
acetone. The natural resins most commonly used are lin-seed, coconut, and
soybean oil, while alkyds, acrylics, epoxies, and polyurethanes number among the
most popular synthetic resins. Additives serve many purposes. Some, like calcium
carbonate and aluminum silicate, are simply fillers that give the paint body and

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substance without changing its properties. Other additives produce certain desired
characteristics

Paint canning is a completely automated process. For the standard 8 pint paint can
available to consumers, empty cans are first rolled horizontally onto labels, then set
upright so that the point can be pumped into them. One machine places lids onto
the filled cans while a second machine presses on the lids to seal the cons. From
wire that is fed into it from coils, a bailometer cuts and shapes the handles before
hooking them into holes precut in the cans.

in paint, such as the thixotropic agents that give paint its smooth texture, driers,
anti-settling agents, anti-skinning agents, defoamers, and a host of others that
enable paint to cover well and last long.

Design

Paint is generally custom-made to fit the needs of industrial customers. For

example, one might be especially interested in a fast-drying paint, while another
might desire a paint that supplies good coverage over a long lifetime. Paint
intended for the consumer can also be custom-made. Paint manufacturers provide
such a wide range of colors that it is impossible to keep large quantities of each on
hand. To meet a request for "aquamarine," "canary yellow," or "maroon," the
manufacturer will select a base that is appropriate for the deepness of color
required. (Pastel paint bases will have high amounts of titanium dioxide, the white
pigment, while darker tones will have less.) Then, according to
a predetermined formula, the manufacturer can introduce various pigments from
calibrated cylinders to obtain the proper color.

The Manufacturing 
Process

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Making the paste

 1 Pigment manufacturers send bags of fine grain pigments to paint plants.

There, the pigment is premixed with resin (a wetting agent that assists in
moistening the pigment), one or more solvents, and additives to form a
paste.

Dispersing the pigment

 2 The paste mixture for most industrial and some consumer paints is now
routed into a sand mill, a large cylinder that agitates tiny particles of sand or
silica to grind the pigment particles, making them smaller and dispersing
them throughout the mixture. The mixture is then filtered to remove the sand
particles.

 3 Instead of being processed in sand mills, up to 90 percent of the water-

based latex paints designed for use by individual homeowners are instead
processed in a high-speed dispersion tank. There, the premixed paste is

18
 subjected to high-speed agitation by a circular, toothed blade attached to a
rotating shaft. This process blends the pigment into the solvent.

Thinning the paste

 4 Whether created by a sand mill or a dispersion tank, the paste must now be
thinned to produce the final product. Transferred to large kettles, it is
agitated with the proper amount of solvent for the type of paint desired.

Canning the paint

 5 The finished paint

product is then
pumped into the
canning room. For
the standard 8 pint
(3.78 liter) paint can
available to
consumers, empty
cans are first rolled
horizontally onto
labels, then set
upright so that the
paint can be pumped
into them. A machine places lids onto the filled cans, and a second machine
presses on the lids to seal them. From wire that is fed into it from coils, a
bailometer cuts and shapes the handles before hooking them into holes
precut in the cans. A certain number of cans (usually four) are then boxed
and stacked before being sent to the warehouse.

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1.5:- Organizational Policies:-
VISION

To be the most admired Indian Paint &

Coating Solutions
company with globally recognised competencies.

MISSION

To maximise shareholder value by developing and delivering innovative and best

solutions for our customers, consistently outperforming our peers and providing a
Dynamic & Challenging
work environment for our employees.

Corporate Social Responsibility (CSR)

As a part of the commitment towards the stakeholders and the society at large,
Berger Paints is committed to discharge its responsibility for the cause of the
society through a variety of philanthropic and benevolent activities benefiting the
society.

Berger Paints ensures an environmentally safe and secure future with a

commitment from the company and all its employees to practice and implement
methods that help reduce the harmful effects on our environment.

It is the duty of the organization to look after the conservation of natural resources
and ensure that protection of the environment remains top priority. Berger Paints is
committed to take up the challenge and develop more advanced products which
consistently help reduce the harmful effects on our environment and conserve
natural resources.

The organization not only takes responsibility for environmental protection but
also make the employees aware and committed to the cause.

 Vendors will comply with all applicable laws and regulations of India and
the country of manufacture. Vendors will also comply with all applicable
national and international trade related laws while transporting goods.
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 Vendors will comply with all environmental legislations and will take care
of the environment.

 As and when necessary or required by Berger, vendors will comply with

applicable standards under ISO, BIS, etc.

 There shall be respect for human rights, and no employee of a vendor shall
suffer harassment, physical or mental punishment, or other form of abuse.

 Wages and working hours will, as a minimum, comply with all applicable
wage and hour laws, and rules and regulations, including minimum wage
and maximum hours in the country concerned.

 There shall be no use of forced or compulsory labour and employees shall be

free to leave employment after reasonable notice.

 There shall be no use of child labour, and specifically there will be

compliance with relevant International Labour Organization (ILO)
standards.

 The working conditions of the employees of the vendors will be safe and
healthy.

 All products and services will be delivered to meet the quality and safety
criteria specified in relevant contract elements and law, and will be safe for
their intended use.

 Business will be conducted with integrity. A vendor will not offer any gift,
hospitality or material benefits to any employee or person who may
influence Berger's decision to accept an offer. Gifts customarily given on
special occasions like New Year, Diwali, Pujas, Christmas, etc., which not
expensive in value or distributed generally and openly at ceremonies and a
business lunch or dinner shall not come under purview of this Clause.
Invitation to employees in general customer meets, seminars, conferences
organized by business partners under an open invitation will also not fall
under the purview of this clause. There will be no actual or attempted money
laundering.

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 Berger's direct suppliers will take responsibility to require adherence to the
principles of this Supplier Code from their direct suppliers and exercise
diligence in verifying that these principles are being adhered to in their
supply chains.

 Non-compliance with this Policy may lead to cancellation of contract or

blacklisting of a vendor.

22
2.1 Industrial Overview:-
Berger Paints was incorporated in 1923. It is the third largest paint manufacturer
and second largest manufacturer in decorative paints. Its headquarter is located in

23
Kolkata, it has distribution network of 75 stock points and 12,000 paint retailers.
The company has come a long way to become at one point of time; a part of the
worldwide BERGER group in 1983 and thereby acquiring its present name Berger
Paints India Limited to having subsequently gone through further ups & downs as
well as ownership changes to gain its present status wherein the majority stake is
with Delhi based Dhingra brothers.

The gentleman who took over, as its first managing director was Mr. Alexender
Vernon Niblet, an Englishman who was later on followed by Mr. Alfred Godwin in
1962.Further in the year 1965, the share capital of British Paints (Holdings)
Limited was acquired by Celanese Corporation, USA and the controlling interest
of British Paints (India) Ltd was acquired by CELEURO NV, Holland, a Celanese
subsidiary.

Subsequently in 1969, the Celanese Corporation sold its Indian interests to Berger,
Jenson & Nicholson, U.K. Then onwards the company British Paints (India) Ltd
became a member of the worldwide BERGER group having its operations across
oceans in numerous geographies and this marked the beginning of Lewis Berger's
legacy in India ? which the company would later take forward to enviable heights.
From 1973 the company entered into one of its dynamic phases of business with
introduction of new generation products in the industrial, marine and decorative
segments under the able leadership of its first Indian Managing Director Mr.
Dongargaokar Madhukar.

Year 1976 was another turning point in the history of the company when the
foreign holding in the company was diluted to below 40% by sale of a portion of
the shares to the UB Group controlled by Mr. Vittal Mallya. The reins of the
company were taken over by Mr. Biji K Kurien as its Chief Executive & Managing
Director in the year 1980. Finally in the year 1983, the British Paints (India)
Limited, changed its name to Berger Paints India Limited.

The entire 80s & 90s saw the lunch of many new products from company's stable
such as premium emulsions and high quality acrylic distempers. The COLOUR
BANK tinting system was launched through which the consumer could select from
a range of over 5000 shades.

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Again the fortunes of the company changed hands in 1991 with UB Group's stake
in the company bought over by the Delhi based Dhingra brothers, Mr. K.S.Dhingra
& Mr. G.S.Dhingra and their associates of the UK Paints Group. Presently
Dhingras' control a majority stake of almost 73% in Berger Paints India Limited,
which is a professionally managed organization, headquartered in Kolkata, with
the stewardship resting since 1994 with the current Managing Director Mr. Subir
Bose.

The company?s manufacturing facilities are located in West Bengal, Uttar Pradesh,

Pondicherry, Goa, and Jammu and Kashmir.

It has subsidiaries are Beepee Coatings, Berger Jenson & Nicholson (Nepal),

Berger Paints (Cyprus) and Berger Paints Overseas. It also acquired 100% stake of
Motor and Industrial paints business of ICI India.

It has technical license agreement with DuPont Performance in the area of

automotive coating; Nippon paints for new generation automotive coating, Orica
Australia Pty for protective coating and TIGERWERK Lacku.Farbenfabrik GmbH,
Australia for specialised powder coating.

The company has a joint venture with Nippon Bee Chemical for manufacturing of
coatings for plastic substrates used in automobiles and mobile phones.

It has wide range of colour bank with over 5000 shades. Lewis Berger ColorBank
offers computerised paint technology through its outlets which mixes different
shades to create desired paint. Headquartered at Kolkata, with 11 strategically
located manufacturing units and  about 170 sales offices( all including those
belonging to the Company?s own division and subsidiaries). The company also has
an international presence in 3 countries. 

Awards/recognition

 10th Annual Construction World Global Awards 2012

 Builder Information Bureau (BIB) 2012 Leadership in the paint category

 Genius HR Excellence Award 2011 – Excellence in Best Training Initiative

Category A – 22nd April 2011, Kolkata

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  Readers Digest Gold Award for the most trusted brand – 2008

 Best Supplier Award for outstanding contribution in Product Development

from OEM customer M/S Whirlpool –2005, Faridabad.

 Berger Paints received the 1st rank as fastest growing paint company at
Construction World NICMAR Award –2005, Bengaluru.

 Environment Excellence Award for Howrah Works ? by West Bengal

Pollution Control Board & Indian Chamber of Commerce – 2001, Kolkata

2.2: Current Issues

Brighter year ahead: analysts expect 14-21% rise in paint stocks

Share prices of most paint companies have lagged the S&P BSE Sensex in the last
six months on worries over rising prices of key inputs and expectations of muted
volumes, also partly reflecting in the October-December 2017 (Q3) performance.
However, things are changing for the better.

Higher prices of titanium-dioxide, mainly due to a supply disruption in China, and

crude-based derivatives — key raw materials used by paint companies — weighed
on their gross profit margins in Q3.

Berger Paints to build new plant in Uttar Pradesh with Rs 1.5 bn investment

Incidentally, the region has delivered the highest decorative paint sales for the
company but has been catering largely to units from West Bengal, Jammu and
Delhi so far.

“We anticipate that by 2020, the installed capacity will need to be increased by 7-8
per cent to cater to demand from the market and this plant will help meet the
projected volume. Additionally, apart from fiscal incentives, we will also be able to
save more on logistics cost as the paint can be manufactured locally,” Abhijit Roy,
managing director at Berger Paints told Business Standard.

The plant will largely manufacture decorative paints and cater to local needs for
industrial coatings.
26
The paint maker decided to set up the new plant after it felt that the existing
installed capacity in its plants for decorative paints in West Bengal, Jammu and
Delhi can neither be augmented nor will be cost-effective to service the Uttar
Pradesh-Bihar region in the near-term. Decorative paints make up nearly 80 per
cent of the company’s annual sales.

Currently, the company has an installed manufacturing capacity of 609,247 KL per

annum, of which 79 per cent caters to the decorative paints business, followed by
protective coatings which account for 11 per cent of total sales.

Buy TCS, Beger Paints, Cadila Healthcare, says Prabhudas Lilladher

The day began with a negative sense with Nifty making a low of 10,075 and
immediately bounced back to confirm a double bottom formation at 10,080 levels
and bounced back to 10,400 levels. The support for the day is seen at 10,330 while
resistance is seen at 10,430.

BUY TCS

CMP: Rs 2580.50

STOPLOSS: Rs 2400

TARGET: Rs 2800

The stock has corrected from Rs 2777.40 levels in the recent past days and has
maintained near its 200-DMA which is around Rs 2494. The positive candle
pattern has indicated a Buy and we anticipate the stock to move up further till Rs
2800 levels. We recommend a buy in this stock keeping a stop loss of Rs 2400 and
a target of Rs 2800.

2.3: Key-Competitors

Company Current Book Value P/E Ratio Market

Price Cap
(Rs. Cr.)

27
Kansai Nerolac Paints
459.85 52.05 48.98 24,782.22
Ltd.

Asian Paints Ltd. 1,107.00 72.47 58.89 106,183.20

Shalimar Paints Ltd. 142.40 48.55 0.00 320.38

Hard Castle & Waud

Manufacturing Company 378.55 529.36 115.63 25.72
Ltd.

2.4: Environmental Scanning(PESTEL analysis)

A PESTEL analysis is a framework or tool used by marketers to analyse and
monitor the macro-environmental (external marketing environment) factors that
have an impact on an organisation. The result of which is used to identify threats
and weaknesses which is used in a SWOT analysis.

PESTEL stands for:

 P – Political

 E – Economic

 S – Social

 T – Technological

 E – Environmental

 L – Legal

Lets look at each of these macro-environmental factors in turn.

28
All the external environmental factors (PESTEL factors)

Political Factors

These are all about how and to what degree a government intervenes in the
economy. This can include – government policy, political stability or instability in
overseas markets, foreign trade policy, tax policy, labour law, environmental law,
trade restrictions and so on.

It is clear from the list above that political factors often have an impact on
organisations and how they do business. Organisations need to be able to respond
to the current and anticipated future legislation, and adjust their marketing policy
accordingly.

Economic Factors
29
Economic factors have a significant impact on how an organisation does business
and also how profitable they are. Factors include – economic growth, interest rates,
exchange rates, inflation, disposable income of consumers and businesses and so
on.

These factors can be further broken down into macro-economical and micro-
economical factors. Macro-economical  factors deal with the management of
demand in any given economy. Governments use interest rate control, taxation
policy and government expenditure as their main mechanisms they use for this.

Micro-economic factors are all about the way people spend their incomes. This has
a large impact on B2C organisations in particular.

Social Factors

Also known as socio-cultural factors, are the areas that involve the shared belief
and attitudes of the population. These factors include – population growth, age
distribution, health consciousness, career attitudes and so on. These factors are of
particular interest as they have a direct effect on how marketers understand
customers and what drives them.

Technological Factors

We all know how fast the technological landscape changes and how this impacts
the way we market our products. Technological factors affect marketing and the
management thereof in three distinct ways:

 New ways of producing goods and services

 New ways of distributing goods and services

 New ways of communicating with target markets

Environmental Factors

These factors have only really come to the forefront in the last fifteen years or so.
They have become important due to the increasing scarcity of raw materials,
polution targets, doing business as an ethical and sustainable company, carbon
footprint targets set by governments (this is a good example were one factor could
be classes as political and environmental at the same time). These are just some of
30
the issues marketers are facing within this factor. More and more consumers are
demanding that the products they buy are sourced ethically, and if possible from a
sustainable source.

Legal Factors

Legal factors include - health and safety, equal opportunities, advertising

standards, consumer rights and laws, product labelling and product safety. It is
clear that companies need to know what is and what is not legal in order to trade
successfully. If an organisation trades globally this becomes a very tricky area to
get right as each country has its own set of rules and regulations.

After you have completed a PESTEL analysis you should be able to use this to
help you identify the strengths and weaknesses for a SWOT analysis.

We hope that you have found the above information useful. The PESTEL analysis
is taught in our CIM courses.

2.5:Porters five forces model of competition

1.Existing Competitors Rivalry -
The current condition of the market looks bright with amplegrowth
opportunities for all the players. Almost 80% of the organized market share
is occupied by the topfour players. However the competition can only
increase from this point as market gets saturated but thatwill definitely take
some time. Till that point the competitors can co-exist and keep satisfying the
customerwith a healthy profit margin. The rivalry between the existing
competitors therefore can be said as
Medium.
Competitor’s Business Models
 i.Asian Paints
 –Overall market Leader due to cost leadership strategy

31
 ii. Kansai Nerolac
 –Market Leader in Industrial Paints Segment, also present in decorative
paintssegments.
 iii.Akzo Nobel
 –Major revenue comes from decorative segment. Also present in automobile
paints.
 iv.Shalimar Paints
 –Oldest Company. Mainly into decorative and non-automobile paints.
 
2.Bargaining Power of the Buyers
 –The main customers of the decorative and industrial paints arehouseholds
and automobile industry respectively. For household paints, the customers
can be contractors(who can buy in bulk) or the end-users (people who
paint/re-paint their houses). These buyers are veryprice sensitive as they have
the power to choose between the brands. Their decisions are based on
quality,price and other differentiating factors (weather protection features for
protective coatings). Theunorganized sector also provides the customers with
cheaper options which further increased the buyersbargaining powers.
However the players each one of them have their own market expertise which
bringsdown the bargaining power. Therefore the bargaining power of the
buyers can be attributed as
mediumto high.
Shalimar paints although being the oldest company in the industry has failed
to cope with thechanging attitude of buyers and could not produce proper
product mix. With more and more playerscoming into the picture and more
products available, buyer power will be more intense in coming years.
 
32
3. Bargaining Power of the Suppliers
 –The Indian Paint Industry is a very raw material intensiveindustry with as
many as 300 manufacturers involved in the whole manufacturing process.
The rawmaterials can be of different categories like solvents, pigments,
additives. Titanium dioxide is one majorconstituent of the raw material the
price of which is fixed globally. Besides, many of these suppliers aretrying to
enter the industry themselves. All these factors result in solid bargaining
power of the suppliers.There the bargaining power of the suppliers can be
said to be high.

4.Threat of New Entrants:

 As stated before the Indian Paint industry is dominated by few keyplayers
and many of these are almost century old firms. So the new entrant will find
it difficult to matchthe knowledge base which they have gathered through all
these years. The entry barriers of the industryare as follows :
 
 Brand equity of present players

 
 Distribution network

 
 Cost of modification of products
 Access to technology
 
 Technical Servicing

However new technologies are available which can reduce the life cycle of production and
the newentrants can use these technologies. Therefore, the threat of new
entrants ismedium.In recent yearsinternational players like PPG, DuPont and

33
Sherwin Williams are entering the market with theirinternational experience and
resources. In coming years this force may act as major game changer in theindustry.
5.Threat of Substitutes:

The number of substitutes available for paint is very minimal. In the ruralareas, one
substitute which is conveniently used is lime wash. One more substitute mainly used in
urbanareas is wallpaper. In the urban areas, the emergence of glass walls
in corporate offices and malls whichreduces the usage of paints can be one more
major substitute. But still now, the threat of substitutes is low as the alternate measures are
not yet developed. But this threat has the potential to increase in thesubsequent years.

34
3.1 Products

Robbialac Plastic Emulsion Classic

Robbialac Synthetic Enamel Gold

35
 Luxury Silk Splendour

Robbialac Pearl Lustre Finish

Weather coat Smooth Classic

Robbialac SPD Super

Wood Keeper Finesse

3.2. Four P’s (Product, Price, Place, Promotion)

Product in the Marketing Mix of Berger Paints :

The company offers a varied portfolio of products and services.

Its range of products includes:

 Interior Wall Coating

 Exterior Wall Coatings

 Berger Metal and Wood Paints

 Undercoats

 Construction Chemicals

Its range of services includes:

 Express Painting

 Preview Facility

 Virtual Painter

36
  Paint Calculator

 Projects

 Expert Advice

 Powder Coatings

 GI & Automotive Coatings

 Protective Coatings

The services offered by Berger Paints are demarcated into Home Users,
Professional Users, and Industrial Users. The services relate to specific projects
undertaken by an individual or organisation wherein a product is delivered, for
example, different types of coatings or consultancy of specific nature is given for
example expert advice, virtual painter or preview facility.

Place in the Marketing Mix of Berger Paints :

The company has factories in 7 locations within India situated in all four major
regions of the country. It is present in more than 80 locations in India.
Internationally, it is present in 4 countries like Nepal, Russia, Poland, Bangladesh.
All the locations have dedicated sales team to service the customer needs.

Price in the Marketing Mix of Berger Paints :

The pricing of Berger Paints is affordable and comparatively   less than some its
closest competitors like Asian Paints and Nerolac.

For example, for a 100-125 sq. ft. area, Primer by Berger Paints costs Rs. 1880.
But for the same area, it will cost Rs.1980 in both Asian Paints and Nerolac.

The rate of Primer is Rs. 65/Litre by Berger Paints. For Asian Paints and Delux it
is labelled at Rs. 70/kg and Rs. 68 respectively. The rate of wall putty is labelled
by Berger Paints at Rs. 60 /Kg, whereas Dulux and Asian Paints price it at Rs.
68 /Kg and Rs. 70/Kg respectively.

One of the best products By Berger Paints is Berger Easy clean luxury emulsion.
One litre of Berger Easy and clean emulsion costs between Rs. 434- Rs362 in e-

37
commerce sites like Snap deal. The most popular product by Asian Paints, on the
other hand, is Asian Paints Royale Luxury Emulsion- Gold Standard which is
labelled at a much higher price at Rs. 4,004.

Promotion in the Marketing Mix of Berger Paints :

The company does a comparative analysis of its performance with respect to its
closest competitors to gauge its position in the market. The company’s strategy is
to select the target market   and position its product with the help of product
differentiation, service differentiation, and image differentiation. This helps to
capture the market by providing better quality products at a reasonable price.

Television is an important medium for advertising its products especially the high-
end emulsions.  Its aim is to focus on its product range for emulsions and improve
its supply chain across villages and small towns.  

The company has undertaken   various philanthropic activities as part of its

Corporate Social Responsibility (CSR) goal and improved its brand image.

3.3:- STP (Segmenting Targeting and Positioning)

Market segmentation is the process of dividing a broad consumer or
business market, normally consisting of existing and potential customers, into sub-
groups of consumers(known as segments) based on some type of shared
characteristics. In dividing or segmenting markets, researchers typically look for
common characteristics such as shared needs, common interests, similar lifestyles
or even similar demographic profiles. The overall aim of segmentation is to
identify high yield segments – that is, those segments that are likely to be the most
profitable or that have growth potential – so that these can be selected for special
attention (i.e. become target markets).

Many different ways to segment a market have been identified. Business-to-

business (B2B) sellers might segment the market into different types
of businesses or countries. While business to consumer (B2C) sellers might
segment the market into demographic segments, lifestyle segments, behavioral
segments or any other meaningful segment.

38
Middle Class and upper class segment

A target market is a group of customers within a business's serviceable available

market that the business has decided to aim its marketing efforts towards. Target
markets consist of consumers who exhibit similar characteristics (such as age,
location, income, and lifestyle) and are considered most likely to buy a business's
product or service.

Primary target markets are those market segments to which marketing efforts are
primarily directed, while secondary markets are smaller or less vital to a product's
success.

Home owners, Professionals and Industry Users

Positioning refers to the place that a brand occupies in the mind of the customer

and how it is distinguished from products from competitors. In order to position
products or brands, companies may emphasize the distinguishing features of their
brand (what it is, what it does and how, etc.) or they may try to create a suitable
image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end,
etc.) through the marketing mix. Once a brand has achieved a strong position, it
can become difficult to reposition it.

Positioning is one of the most powerful marketing concepts. Originally,

positioning focused on the product and with Ries and Trout grew to include
building a product's reputation and ranking among competitor's products.
Primarily, it is about "the place a brand occupies in the mind of its target
audience".[1][2] Positioning is now a regular marketing activity or strategy. A
national positioning strategy can often be used, or modified slightly, as a tool to
accommodate entering into foreign markets.[1][3]

The origins of the positioning concept are unclear. Scholars suggest that it may
have emerged from the burgeoning advertising industry in the period following the
Great War, only to be codified and popularised in the 1950s and 60s. The
positioning concept became very influential and continues to evolve in ways that
ensure it remains current and relevant to practicing marketers.

Fulfill your imagination of colors

39
 3.4:- Distribution Channels
A distribution channel is a chain of businesses or intermediaries through which a
good or service passes until it reaches the end consumer. It can include
wholesalers, retailers, distributors and even the internet itself. Channels are broken
into direct and indirect forms, with a "direct" channel allowing the consumer to
buy the good from the manufacturer, and an "indirect" channel allowing the
consumer to buy the good from a wholesaler or retailer.

Three Types of Distribution Channels

While a distribution channel can sometimes seem endless, there are three main
types of channels, all of which include a combination of a producer, wholesaler,
retailer and end consumer.

The first channel is the longest in that it includes all four, from producer to the end
consumer. The wine and adult beverage industry is a perfect example of this long
distribution channel. In this industry, thanks to laws born out of prohibition, a
winery cannot sell directly to a retailer. It operates in what is known as the three-
tier system, meaning the winery is required by law to first sell its product to a
wholesaler, who then sells to a retailer. The retailer, in turn, sells the product to the
end consumer.

The second channel is one where the producer sells directly to a retailer, who then
sells the producer's product to the end consumer. This means the second channel
contains only one intermediary. Dell, for example, is large enough where it can sell
its products directly to reputable retailers such as Best Buy.

The third and final channel is a direct to consumer model where the producer sells
its product directly to the end consumer. Amazon, using its own platform to sell
Kindles to its customers, is an example of a direct model, which is the shortest
distribution channel possible.

40
According to berger paints

Berger paints Bangladesh Ltd maintains very short and effective channel length to
distribute its products to the customers. It promotes direct selling approach and
manages dealers and projects.Objectes of such approach ix to gain more control
over its dealers and customers and brings close monitoring and evaluating to the
top management of the organization.

Dealer

Over the years Berger strategically develop a mentionable numbers of dealers

across the country. At present the company serves more than 2600 cash and credit
dealers by maintaining profitable exchange relationship with them. The company
provides significant financial facilities to its dealers like Discount ,Regular
Payment Revenue Scheme (RPRS),Additional Target Achievement
Bonus(ATAB)and Turn Over Commission(TOC).It also organizes some non
financial benefits to entertain its dealers :foreign tour,lunch,art exhibition and
concert to name a few.

Project

Berger directly sells its products to various projects of government and real state
company through lucrative price discount. The company delivers the product to the

41
projects sites at free of distribution cost. Besides Berger provides various gift items
to its corporate customers like calendar, pen, diary etc.

Customer

Berger always focuses on total customer satisfaction. Considering this it sometimes

sells its products directly to the customers who want to purchase in a bulk amount.
In this case the company allows substantial discount to build long term profitable
relationship with the customers.

3.5:- Promotion Strategy

Berger is the largest company in the world. They announce discount, reduce price,
free product monthly, yearly for sales promotion. When a company announce it
customer are lot of product order the company to get benefit.

Public Relation

Demand generation dealer development and arrangement of promotional activities

are the main takes of the marketing department. A number of executive are
involved in this connection. As the dealers are highly concerned in paints for their
required goods, they visit the factory for satisfaction, whether the factory of the
company is in that standard to procedure dealers satisfied paints. Dealers test the
sample and the marketing department deals this sample testing. Price and time of
delivery negotiation is another task for marketing department’s personal. An
executive is responsible for the selling contract from negotiation to delivery of that
lot or batch. Incase of bad production or if the color does not match with the
buyer’s requirement, marketing department goes for negotiation with that
particular buyer’s. Besides this department is responsible for perform various
promotional activities like advertising, offering discount, scratch card and gift
items.

Sales Promotion

To follow the recent management of the business word, the sales department has
been completely separates from marketing department. But still their are some
correlations exist between these two departments. In Berger paint Bangladesh Ltd

42
sales department sets the forecast in coordination with marketing department and
upon fixation of the sales it id the responsibility of the sales department to realize
the yearly sales volume of company products. Besides order collection, dealer
management, new dealer development, customer credit analysis, target fulfillment,
competitor’s information collection and other traditional sales activities are
performed by the sales department. It acts as a basis for collection of information
regarding dealer, project and customer in accordance with marketing department.

PERSONAL SELLING

With a view to bolstering consumer satisfaction, Berger Paints Bangladesh Limited

has introduced “Berger Home Decor” on June 15, 2002 through which one can
get an array of services pertaining to painting.

Berger Home Decor offers two-stage services

1. Free Service

2. Paid Service

Berger Home Décor is currently offering wide range of services to its prospects
and existing consumers embracing:

Technical advice on surface preparation and application guideline.

 Paint selection.

 Dealer selection.

 Painter/ Contractor selection and Color scheme.

 There is defined Telephone number, 02-9872428 for queries. By ringing

simply in the number one can make query or seek available services from
the company. According to the nature of query, the company provides
solutions.

43
44
4.1 Sources of Finance:-

Indian Promoters 60.5%

Foreign collaborators 14.5%
Indian inst/Mut Fund 2.6%
FIIs 11.9%
ADR/GDR 0.0%
Free float 10.5%
Shareholders 34,402
Pledged promoter(s) holding

4.2 Ratio Analysis:-

45
Key Financial Ratios of Berger
Paints India

Mar
Mar '16 Mar '15 Mar '14 Mar '13
'17

Investment Valuation Ratios

Face Value 1.00 1.00 1.00 2.00 2.00

Dividend Per Share 1.75 1.65 1.25 2.20 1.80

Operating Profit Per Share (Rs) 6.83 8.76 6.86 11.25 9.71

Net Operating Profit Per Share (Rs) 42.45 59.59 54.91 97.69 87.33

Free Reserves Per Share (Rs) -- -- -- -- --

Bonus in Equity Capital 52.40 73.38 73.40 73.43 73.47

Profitability Ratios

Operating Profit Margin(%) 16.08 14.69 12.48 11.51 11.12

Profit Before Interest And Tax

13.56 12.46 10.33 9.70 9.49
Margin(%)

Gross Profit Margin(%) 13.72 12.57 10.42 9.78 9.59

Cash Profit Margin(%) 11.62 10.62 8.97 8.56 8.38

Adjusted Cash Margin(%) 11.62 10.62 8.97 8.56 8.38

Net Profit Margin(%) 10.83 8.58 6.98 6.92 6.93

Adjusted Net Profit Margin(%) 10.70 8.51 6.92 6.85 6.86

46
Return On Capital Employed(%) 30.16 35.16 27.26 25.24 24.93

Return On Net Worth(%) 23.22 23.50 20.59 20.71 21.33

Adjusted Return on Net Worth(%) 20.17 23.50 20.59 20.71 21.33

Return on Assets Excluding

19.80 21.77 18.64 32.64 28.40
Revaluations

Return on Assets Including

19.80 21.78 18.65 32.67 28.43
Revaluations

Return on Long Term Funds(%) 31.96 36.71 33.35 32.00 32.61

Liquidity And Solvency Ratios

Current Ratio 1.23 1.27 1.08 0.97 1.25

Quick Ratio 0.64 0.70 0.94 0.93 1.23

Debt Equity Ratio 0.06 0.04 0.22 0.27 0.31

Long Term Debt Equity Ratio -- -- -- -- --

Debt Coverage Ratios

Interest Cover 82.92 32.22 12.41 10.57 11.59

Total Debt to Owners Fund 0.06 0.04 0.22 0.27 0.31

Financial Charges Coverage Ratio 96.02 37.33 14.68 12.27 13.27

Financial Charges Coverage Ratio

74.35 26.75 10.93 9.54 10.25
Post Tax

Management Efficiency Ratios

Inventory Turnover Ratio 5.21 6.66 6.52 5.47 5.24

Debtors Turnover Ratio 8.75 9.23 9.31 9.56 9.61

Investments Turnover Ratio 5.21 6.66 6.52 5.47 5.24

47
Fixed Assets Turnover Ratio 3.96 3.52 3.67 3.91 5.09

Total Assets Turnover Ratio 2.09 2.72 2.43 2.38 2.36

Asset Turnover Ratio 2.35 2.66 2.52 2.49 2.63

Average Raw Material Holding -- -- -- -- --

Average Finished Goods Held -- -- -- -- --

Number of Days In Working Capital 42.23 40.19 59.97 62.78 85.63

Profit & Loss Account Ratios

Material Cost Composition 60.86 56.07 59.27 61.58 63.48

Imported Composition of Raw

-- 33.92 30.19 26.37 24.63
Materials Consumed

Selling Distribution Cost

5.20 4.48 -- -- --
Composition

Expenses as Composition of Total

-- 0.06 0.05 0.09 0.14
Sales

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 21.74 32.24 32.57 32.54 29.70

Dividend Payout Ratio Cash Profit 17.86 25.84 25.14 26.05 24.34

Earning Retention Ratio 74.97 67.76 67.43 67.46 70.30

Cash Earning Retention Ratio 79.98 74.16 74.86 73.95 75.66

AdjustedCash Flow Times 0.24 0.15 0.84 1.04 1.18

48
4.3 Net profit or Net balance sheet

Balance Sheet of Berger Paints

------------------- in Rs. Cr. -------------------
India

Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 97.10 69.35 69.33 69.30 69.26

Equity Share Capital 97.10 69.35 69.33 69.30 69.26

1,825.0
Reserves 1,440.27 1,222.64 1,061.76 914.33
4

1,922.1
Networth 1,509.62 1,291.97 1,131.06 983.59
4

Secured Loans 114.49 61.24 213.08 299.60 147.68

Unsecured Loans 0.00 5.27 75.41 3.20 155.34

Total Debt 114.49 66.51 288.49 302.80 303.02

2,036.6
Total Liabilities 1,576.13 1,580.46 1,433.86 1,286.61
3

Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

49
 12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

1,045.9
Gross Block 1,184.02 1,050.80 879.43 601.98
8

Less: Revaluation Reserves 0.00 0.83 0.83 0.83 0.84

Less: Accum. Depreciation 162.84 481.13 403.16 331.01 280.30

Net Block 883.14 702.06 646.81 547.59 320.84

Capital Work in Progress 0.00 0.00 87.51 132.22 171.23

Investments 577.62 414.39 243.75 187.29 90.58

Inventories 884.17 688.22 646.50 618.70 576.91

Sundry Debtors 480.59 461.46 434.41 383.21 324.55

Cash and Bank Balance 27.16 62.81 141.15 163.07 222.54

1,391.9
Total Current Assets 1,212.49 1,222.06 1,164.98 1,124.00
2

Loans and Advances 143.48 131.97 109.29 128.01 131.34

1,535.4
Total CA, Loans & Advances 1,344.46 1,331.35 1,292.99 1,255.34
0

Current Liabilities 999.22 838.57 663.47 627.09 469.91

Provisions 16.54 94.98 65.49 99.14 81.47

1,015.7
Total CL & Provisions 933.55 728.96 726.23 551.38
6

Net Current Assets 519.64 410.91 602.39 566.76 703.96

50
 1,980.4
Total Assets 1,527.36 1,580.46 1,433.86 1,286.61
0

Contingent Liabilities 362.26 365.88 361.71 345.24 462.29

Book Value (Rs) 19.80 21.77 18.64 32.64 28.40

51
5.1:- Performance Analysis of the company
Profitability Ratios

Gross, Operating, Net Profit Margin

52
The most important ratio is Net Profit Margin percentage or Net margin. It tells us
how much out of every sale BERGEPAINT gets to keep after everything else has
been paid for. It is highly variable from one industry sector to another. An ideal
company has consistent profit margins.

Gross Profit Margin = ( Revenue - Cost of Revenue ) / Revenue

Net Profit Margin = Net Income / Revenue

Return on Equity - Berger Paints India Ltd.

From an investor's perspective, ROE is a key ratio. The ROE (after subtracting
preferred shares) tells common shareholders how effectively their money is being
employed. Ideal long term average ROE should be above 15%.

53
Average 2 year ROE of Berger Paints India Ltd. : 25%

Return on Equity = ( Net Income - Preferred Dividend ) / Shareholder's Equity

Free Cash Flow - Berger Paints India Ltd.

Free Cash Flow is a measure which is ignored by most investors. FCF represents
the cash that a company is able to generate after spending the money required to
maintain or expand its Property, Plant and Equipment (PPE) also called as Capital
Expenditure (Capex). FCF can be used by the company to invest in other projects,
thus enhancing shareholder value.

Free Cash Flow = Cash flow from operations - Capital Expenditure

Leverage Ratios

Current Ratio

54
Current Ratio measures the company's current assets against its current liabilities.
Ideally the current ratio should be greater than 1.5. Avoid investing in companies
whose current ratio is less than 1. There are exceptions to this rule, some good
companies can have less than 1 or even a negative current ratio when they recieve
money faster from their customers than they have to pay to their vendors.

Current Ratio = Current Assets / Current Liabilities

Interest Coverage Ratio

An interest coverage ratio less than 1.5 is a red flag. The higher the ratio the less a
company is burdened by debt. If a company has no debt or the loan interest is
being paid by interest income from investments or other activities the ratio is zero
which of course is excellent. A negative ratio tells us that the company cannot even
pay its interest on loans from its operating income, stay far away from such
55
companies.

Interest Coverage Ratio = Operating Income / Interest

Debt to Equity Ratio (D/E)

Debt-to-Equity ratio varies across industries but many companies have a ratio
larger than 1, that is they have more debt than equity. If the ratio is very high,
raising more cash through borrowing could be difficult. Capital intensive industries
such as auto manufacturing tend to have a debt/equity ratio above 2, while IT
companies have a debt/equity of under 0.5.

Debt to Equity Ratio = Debt / Shareholder's Equity

Overall Performance

Company Performance

56
Watch the overall performance of revenue and profit, needless to say you should
invest in a company whose numbers are going up. 

5.2:- Reasons for the expansion/ Contraction or diversification of the

company
City-based paints company Berger PaintsBSE -0.86 % was planning to diversify
into new home decor business beside it's core product paints. 

The company in a notice to shareholders said it was considering the business

opportunities available in various areas relating to home decor, construction
industry and adhesive and will leverage its manufacturing and marketing strength. 

BergerBSE -0.86 % will be seeking shareholders nod to pave the way to venture
into new business.
Kolkata-headquartered Berger Paints plans to diversify into new categories beside
its core product, paints. The new categories will be “closer to its existing line of
business”, according Abhijit Roy, MD and CEO of the company.
In a notification to the bourses, the company has maintained that it is “considering
the business opportunities available in various areas relating to the home décor and
construction industry as well as adhesives and other related materials.”
The company has sought shareholders’ nod for appropriate changes to be made in
its Memorandum of Association.
Berger Paints makes industrial paints and consumer products such as metal and
wood paints, interior wall coatings, exterior wall coatings and clear coats for wood.

57
According to Roy, the company will explore options of getting into “one or two”
of these businesses at an appropriate time considering what fits best.
“It is not that we will enter into all these businesses. But we may explore the option
of getting into one or two of them without impacting our topline and bottomline,”
he added.
Berger stock closed at ₹249.40, down 0.64 per cent, on the BSE on Tuesday.

5.3:- Comment on Organization Leadership

Berger Paints India Ltd is a paint company based in India.[5][6] The company is
headquartered at Kolkataand has 13 manufacturing units.[7] It has manufacturing
units at Howrah and Rishra[8],Tezpur and
[9] [10] [11] [12]
Nalbari  ,Hindupur  ,Jejuri ,Jammu  ,Puducherry and Udyognagar. The
company has presence in 4 countries – Russia, Poland, Nepal and Bangladesh.
They have an employee strength of over 2,800 and a countrywide distribution
network of 25,000+ dealers

The driving forces of Berger Paints - reflect the very spirit of its founder Lewis
Berger - who laid the foundations of brand Berger way back in 1760 in the UK.
With modest beginnings in India in 1923, today, Berger Paints India Limited is the
second largest paint company in the country with a consistent track record of being
one of the fastest growing paint companies, quarter on quarter, for the past few
years..

Starting out as Hadfield's (India) Limited, it had just one factory in Howrah, West
Bengal. By the close of 1947, Hadfield's was acquired by British Paints (Holdings)
Limited, UK and came to be known as British Paints (India) Limited. In 1983, the
name of the Company was changed to Berger Paints India Limited. Currently, the
majority stake is with the Delhi based Dhingra brothers. Berger Paints has
established itself through a long course of time.

5.4:- Market Share / Growth Rate of the company

58
Market share studies determine the proportion of total sales received by a company
and its competitors.

A term used frequently in business as a performance measure, market share is the

proportion of total sales of a product during a stated person in a specific market
that is captured by a single firm. Market share can refer to entire industries,
segment of industries or particular geographic areas and can also apply to past,
present, or future periods.

MARKET SHARE 2008

The following table shows the market share of Decorative paints in Dhaka city for
the year 2008,

Companies Value sales (%)

Berger 55.40

Asian 17.20

Roxy 5.90

Pailac 3.40

Elite 7.90

Aqua 1.33

Romana 3.54

Uzala 0.80

Others 4.53

Total 100

Source: Secondary data

59
In 2008, Berger paints held 55.4% of market share in Dhaka city whereas the
second largest market share was occupied by Asian paints with 17.20%.Elite paint
possessed the third largest market share 7.90% where Roxy paint held the fourth
position with 5.9% market share. Romana and Pailac possessed consecutively
3.94% and 3.40%of the market share. Other paints like as Polac, Dunkun,
paramax, Bengal Agency, Nazrul Brothers paint, Imperial, Navana etc Held 4.53%
of the paint market share.

Source: Secondary data

Outcomes:

 Berger paints possessed the leading position in paints market.

 Asian paints possessed the second position.

 Elite paints held third highest market share.

 Roxy paints acquired fourth position of the paints market.

5.5:- SWOT Analysis of the company

According to the study of the organization Strengths, Weakness, Opportunity, and

Threats (SWOT) analysis of Berger paints Bangladesh Ltd is described below;
Strengths
 Sound profitable and growth with good internal capital generation.
 Dedicated effort of experienced and efficient management team.
 High quality environment pollution free products and huge range of product
and color verities.
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  Most updated techno based production system.
 Company reputation and goodwill.
Weakness
 Narrow distribution network
 Lack of adequate marketing and promotional efforts.
 Lack of full scale automation.
Opportunity
 Scope of market penetration through diversified products and increasing
sales.
 Online selling and automation of transaction process.
 Government’s policy of encouraging infrastructure development and private
sectors development.
 Adding more value in products and services than the competitors.
 High industry growth in the real estate sector accelerates the demanded for
paints.
Threats
 The new arrival of multinational and local companies in the paint industry.
 Increasing prices of the raw material and global demand factors and
devaluation of local currency.
 National and global political unrest.
 Inflationary economic conditions.
 

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FINDINGS
 Most of the dealer agreed that customer usually switch to competitors
products due to Supply shortage and lengthen delivery system. Customers
mostly switch to Asian Paints, Elite paints and Roxy paints as these
companies also offer almost similar shades. So to Some extent Berger paints
faces sales loss for other product.

 Cent percent dealer’s claims that they are dissatisfy with the product only for
shortage Of supply and lengthen delivery process.

 The main reason behind increase the market share of Berger Paints is its
high quality Products, well established customer loyalty, comparative
organized structure of Management, marketing, sales, distribution.

 In, 2007 Berger paints was the market leader with its 60% market share.

 In, 2008 Berger paints also possesses it leading position and its market share
increase to 62%.

 Asian paints is very much promising because of its better quality, good
competitive Strategies, well market analysis well established
communication, frequent dealer visit Some time this is more than that of
Berger paints.

 Berger paints can take the Asian paints as their largest competitor because
Berger Paints Started its business in Bangladesh since Independence where
as Asian paints started its Business just before four years. But with in a very
short time Asian paints capture it’s Market place with competitive strategies.

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 Berger Paints with in a very short time create more dealers of their own with
liberal credit policies, providing more profit to dealers, providing more
discounts facilities etc.

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Conclusion
This report is an attempt to make a clear picture of paints industries of India.The
paints market is very much competitive although Berger paints holds the major
market share. But the growth rate of the competitors is great challenges for Berger.
Its true that Berger paints is very prominent in the market because of its high
quality products, competitive price rate etc. The first choice of consumers is Berger
because they can relay on it and its long lasting capabilities .Its also able to provide
the consumers option of choosing variety of colors; 5000 shades with in 5 minutes
through its color bank.

Berger paints is very much restricts in credit policy. It provides credit only some
selected dealers where as other competitors are very much liberal in credit. Paints
traders, wholesalers or retailers, are naturally very much found of huge credit. Thus
they key competitors gradually grow up in the market through their vast credit
policy. With world class range and durability, Berger is always ready to answer to
all weather condition and try to satisfy every corner of the country.

SUGGESTIONS

1. The results of this study reveal a number of subjective factors used by managers
to evaluate proposed investments. So the human side of Capital budgeting would
be an interesting focus for further research.

2. There is a need to link the survey responses across different areas of financial
management. For example, It would be interesting to know is there a link between
use of a particular capital budgeting method and use of a particular source of
finance or use of a particular method of determining discount rate.
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 3. As these decisions affect the long term future survival and growth of the
organization, it would also be interesting to study whether the capital budgeting
decision makers are getting any special incentives or otherwise for taking such
decision which generate desired results.

4. Though the conditions in India have improved significantly after economic

reforms, there is a need to study the impact of taxation and government policies on
capital budgeting decisions of firms in India.

5. One of the unexplored areas still is the relationship between the capital
budgeting techniques and the strategic and corporate planning procedures used.
Future research will also be needed to understand why organizations have selected
capital budgeting practices and the extent to which selection and use of capital
budgeting practices matters in the efficiency and viability of a particular
investment proposal and their business as a whole.

6. There is a need to investigate how firms deal with some typical problems of the
capital budgeting decision process in specialized areas such as high technology and
social expenditures because there is a great uncertainty about the cash flows
associated with high technology projects and the benefits from a social project may
only be indirectly associated with identifiable cash flows.

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 BIBLIOGRAPHY
1.Marketing Management: A South Asian PerspectivebyPhilip Kotler,Abraham
Koshy, Kevin Lane Keller,Mithileswar Jha

2 Marketing Research: An Applied OrientationbyNaresh K.

Malhotra,SatyabhushanDash

3.Advertising and PromotionbyKeyoor Purani,George E Belch,Michael A Belch

Reference

1.http://en.wikipedia.org/ .

 http://stockshastra.moneyworks4me.com/paints-indian-paint-industry-analysis-
and-research-report-2011/ 

http://www.scribd.com/ 

http://www.slideshare.net/ 

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