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Ch-1Introduction

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1.1 Global Scenario

The global demand for paint is estimated at over 21mtpa. At valued at about $60 bn. The

industry is expected to grow at 3% over the next few years. The high growth regions are the

developing countries of Southeast Asia and Latin America. While the mature markets of North

America and Western Europe are likely to witness very low growth.

The share of industrial paint is 70% and rest is accounted by decorative segment. Also, almost

60% of the world market.

The largest player is ICI of UK with a share of around 10% followed by Akzo-Nobel

(Netherlands), PPG (US), NIPPON (JAPAN), BASF (GERMANY), KANSAI (JAPAN). Overthe last few years the industry has been consolidating with an objective to strengthen the product

lines and distribution chains.

This has led to series of mergers and acquisitions. Indias market is only 0.65 mn tones, roughly

2.7% of world demand, but is growing at annual clip of 10%.

THE WORLD COATING SCENARIO:

The total output of the world paint and manufacturing industry was valued at $54 billion in 1996.

The industry supported some 12,250 active firms. This industry is expand to forecast 3.5 percent

annually to nearly 26 million tones. By the year 2002 the valued will be $72 billion.

Tonnage gains in the industrial coating segment will be constrained by a shift in trend towards

higher solid coatings (such as powder coatings), which often weigh less per kilo than solvent

brone coatings, and require generally fewer, thinner coats.

On the other hand, the architectural segment is seeing a continuous shift towards water-based

paints, which weigh more than their solvent-brone counter parts, and will promote stronger

tonnage gains. These trends have evident around the world but have had the most impact in more

mature markets.

Most of developed world has already effected such as switch to water-based formulations for

most architectural applications. The developing world is also experiencing this trend- India

included.

The world paint and coatings industry is becoming increasingly dominated by a small group of

highly focused, globally positioned firms. For many of these companies (E.g. Sherwin Williams,

Kansai Paints, and Nippon Paints) coating represents the primary line of business.

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In other cases (e.g.; AKZO NOBEL, ICI, HOECHST DUPONT and COURTALDS) the firm

strong position has arisen from involvement in various upstream petro chemical activities,

including production of many of basic raw material used in coating production.

The most rapid gain in paints and coatings production will be registered in the developing

regions of Latin America and Asia-Pacific. Although the Asia Pacific region hold the long term

prospects as a market for paints and coating, regional production has been lower, primarily due

to financial crises has hit this region. However, India was not severely affected by this crisis.

The wave of currency devaluation and shape rise in interest rate will seriously dram pen

spending in key paint sector such as construction and durable in short term, particularly in

Indonesia, South Korea and Thailand. India, in a earlier budget have announce a new housing

policy, which should result in boom for the construction sector, which will boost demand for

architectural coatings.

A very interesting trend is emerging in the architectural coatings segment, we are experiencing a

shift from solvent based coating to water based coatings. Water based coatings now account for

most of house-hold paint demand in developed countries and is gaining ground in developing

countries too.

During 1990s, the drive has spread to industrial and specialty coatings segment. The higher

performance standards for industrial coatings have necessitated intense product reformulation

efforts, leading to a number of alternatives technologies.

Meeting environmental regulation is another challenge for paint companies in developed world.

Even companies in developed regions should be prepared in this area, as paint product as soon

adopting global standards, hence all paint companies will have to comply the environmental

regulations.

Global trend towards free trade will have an impact on product mix, since exported goods must

meet the environmental codes of the target market. The formation of trading blocks like NAFTA

will involve the establishment of more environmental regulation of member nations.

Global production of paint and coatings can be divided in two broad sectors: Architectural Paint

and Industrial Coatings.

In 1996 Architectural Paint accounted for 58% of the total output with the industrial coatings

accounting for the remainder. However, the industrial coating segment is slightly larger in value

(Dollar) terms because industrial coating trends to cost significantly more than architectural

paint.

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In 1998, the worlds top ten Paint and coatings suppliers accounted for nearly 42 percent pf the

market. The next ten producers accounted to additional 13 percent of sales, which gives a top 20

firms a collective market share of over 50 percent.

The most basic division is between architectural coating and industrial coating. AKZO NOBEL,

the worlds top player has a strong presence in both the segments. (60:40 in favor of industrial

coating) Sherwin William, ICI, Asian Paints, and Benjamin Moore focus primarily on

architectural paint. Whereas PPG, KANSAI Paint, courtyards, NIPPON Paint and RPM focus

heavily on the industrial segment. BASF, DUPOINT, LILY industries and DAI NIPPON focus

entirely on industrial coatings.

Globally Industrial paint are the major segment accounting for around 70% of the market, global

trade is overall sparse, due relatively simple technology, and especially to maintain high

inventory and the dealer level and high transportation cost. Per capita consumption is 26 kg in

the USA, 4 kg in Philippines and 16 kg in Taiwan.

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1.2History of the industry

Paint has been used by mankind since its origin. The evidence can be found in the

cave paintings. The Chinese a re considered to be the pioneers of manufacturing

paint s thousands of years ago. In modern times paint is made artificially and is used in many

different ways. There are three basic things required to make paint. You need a Pigment to get

the exact color you want Binder to hold the paint together Thinner so that it can be applied

easily. Types of Paints There are different types of paints available today. Till the

19th century the word paint was used to describe oil-bound types only. The paints bound with

glue were called distemper. For farmhouses and cottages an alternative was found and was called

lime wash or color wash. Different things need different paints. The interior of the house is

painted by different type of paint than the ex terior of the house . Au tomo bi les usedifferent type of paint. The industr ial paint is d if fer en t th an ma rin e pa int . Now

color s a re made by us ing d i f f ere nt ingred ient s for spec i f i c surfaces.

For example enamel paint, when dries it becomes especially hard and usually has

glossy finish. The term enamel paint today means hard surfaced paint and usually it is used in

reference to paint floor coatings of a gloss finish or spray paints. It can be used for

concrete, stairs, porches and patios. Fast dry enamel is ideal for refrigerators, counters and

other industrial finishes. High-tempenamel may be used for engines, brakes and exhaust.

Enamel is also used on wood to make it water resistant. The Indian Paint Industry in

India, Indian Paint industrys total market size is US$1400 million. The organizedsector of the industry is 55%. The 45% unorganized sector has about 2500 units.

The big players and their market share-value of the organized sector are Asian

Pain ts 37% Goodlass Nerolac 15.9% Berger Paints 13.8% ICI 11% Jenson & Nicholson

5.7% Shalimar 4% Others 12%The market segment is divided into two sectors.

Architectural70% Industrial 30%The total volume of the market is 600,000 MT.

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1.3Indian ScenarioThe earliest paint factory in India dates back to 1902, when Shalimar Paints, Colour& Varni shCompany, A Pinchin Johnson uni t , was es t abl i shed a t Calcut t a .

Gr o wi n g in dus t r i a l i z a t io n , expansion of the railways and introduction of electric power a

couple of years earlier had all kept business confidence soaring high. However, this did not

provide a ready and expanding market for the nascent paint indust ry then . Imports from

Britain continued to swarm the market and rawmaterials were not easy to come by.

The industry still consisting of one lone unit went through arather prolonged period of

infancy, till the World War II brought in dramatic opportunities. Withthe stoppage of imports

owing to war conditions, the domestic market at last became almost theexclusive

reserve of the domestic industry. European manufacturers, hitherto exporting to

India,readily saw the advantages of setting up manufacturing facilities here. The

per iod bet ween thew a rs th us s aw th e gre a t es t eve r in f l ux o f fo r e i gn p a in t

compan i es i n t o I nd i a - Good l as s W al l ( 1918) , E l phan t O i l Mi l l s ( 1917) i n

Bo mb ay , an d Br it is h P ai nt s, Je ns on & N ic ho ls on an dMacfarlances in Calcutta.

Macfarlanes was brought over by the Poddars and became a completelyIndian company,

while the other three: Shalimar Paints (Pinchin Johnson), British Paints andJenson

Nicholson continued as British operated units.

While talking about the post independent development of the Paint industry in

India,mention must be made of Asian Paints, a completely Indian unit which started

on a very smallscale, grew so big and so beyond recognition over the years that it is today not

only the largest unitin India but way ahead of the second largest, Kansai (Goodlass)

Nerolac Paints Ltd., fo rmerl y aunit of Goodlass Wall (UK).

Besides Asian Paints, numerous factories, wholly Indian in ownership and with rare exceptions

intechnology as well were set up in Calcutta, Kanpur and Bombay. The British units, though a

few innumber, were technically strong and financially sound and, with the active support and

patronageof the Government, controll ed a vast ly hi gher share of the market. The pos t

independence periodwitnessed a steady growth in the paint industry. From a mere Rs.200million turnover in 1950, the paint industry crossed the Rs.14000 million mark in 1990-91.

But even in this period, paints were considered a luxury item. Only people with high incomes

wereexpected to decorate their houses with the use of paints. Paints, as a protective

element, were totally unheard of. The industrial segment, which was traditionally a low user of

paints, vis--visi t s coun t er pa r t s in t he d ec o ra t iv e s eg me nt , to o co n t r i bu te d to

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this notion. In l ine with thismisconceived notion, the government drast ical ly

increased duties on paints in the early ninetieswith an aim to bolster exchequer revenues.

The result was obvious. This inevitably brought about ado wntu rn in t he fo r tun es o f t heind ust r y. T he pro duc ts , whi ch are high ly p r ic e e las t ic , saw a negative growth

rate of 20 % in 1991-92. The next year was also not good, registering a growth of only 2%,

bringing it back to the 1990-91 level, thus corroborating the fact that the industry neededlower

excise levels to grow. The industrial slowdown during that periodalso did not help matters.In line

with the liberalized policies and the realization that paints are not necessarily a luxury

item,duties were progressively reduced from 1993-94.

This squared growth as most companies passed on duty reductions. Further, the

entry of worldmajors in the automobile and white goods market in India since 1993 helped the

market to expand.De ma nd for aut o p ai nt s sh ot up sud de nl y. Fo rm a m od es t 8 %gr ow th ra te in 1 99 3 -9 4 , p ai nt demand touched 12% in 1995-96.

Rap i d i ndus t r i a l i za t i on and i mpr ovemen t s i n t he i n f r a s t r uc t u r e s uch a s

transport, energy andcommunication during the last decade gave a further fillip

to the growth of the paint industry. Aided by Governments liberal policy of technology

import, the automotive and consumer durablesegments expanded phenomenally, with a

flurr y of foreign collaboration. Increased demand for decorative, protective and

functional coatings was a natural fall out, which brought, in its stride, ahost of indigenous

developments as well as the injection of new technology.

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Paints and Their Market Share

0%5%

10%

15%20%25%30%35%40%45%50%

Product Share

Product Share

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1.4Growth of the IndustryThe Indian paint and coatings industry is riding high on the growth in the Indianautomobileindustry, new construction in the housing segment and improving infrastructure

throughout thecountry. Thirty percent of the paint business is comprised of new construction

projects. GDPgrowth projections of six to 6.5% in the current year mean a growth of nine to ten

percent in Indian paint business. The growth will be 12-13% in the industrial segment and eight

to nine percent for decorative paint. The Indian automobile industry has been performing

remarkably well and will benefit the market leader in the segment, Goodlass Nerolac.

As for the future, the industry has predicted a CAGR of eight to nine percent for the next five

yearscompared to last years growth levels of 27.4% for cars and 8.9% for two wheelers. The

Indianhousing industry is likely to do well in the current year as well, recording a growth rate of35% lastyear. As a result of the overall health of Indias economy, it is safe to predict a nine to

ten percentgrowth rate for the Indian paint industry in the next five years.

Consumers can look forward to new product launches, some for application in special

areas.Companies will be increasing the value added services available to customers by offering a

varietyof finishes through specialized and trained applicators. There will be more options like

ranges of colors/finishes for wood applications through the tinting machines. Additionally, the

trend towardswater-based coatings is likely to set in both for industrial and decorative

applications. While Indiahas not yet embraced the DIY concept as cheap labor is still available,

exclusive retail chain storessponsored and run by Indian paint companies will become a reality.

The Indian paint industry has progressed well and moving ahead is likely to be influenced

byseveral factos including new technologies, new innovative products, new

associations,consolidation of industry and poor performers getting out of the market. Ultimately,

in the yearsahead there will be only four or five key players operating in the Indian paint market

Drivers to the growth of the Paint Industry

Increasing level of income and education:

The increasing proportion of young population along with increasing disposable incomes is

leading to a change in consumer habits. The Indian economy is shifting from a savings economy

to a spending economy. With more income at their disposal, people are now ready to pay for

better products and paint is no exception.

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Educated consumers are more brands conscious and seek value in what they consume. Thus,

paint companies offering value-added features like non-toxicity, weather protection, texture, eco-

friendly production, etc. will attract more demand. These value-added products enable themanufacturers to earn a better premium as compared to the regular paints, thus offering higher

Margins.

Increasing Urbanization:

Urbanization is leading to a shift from temporary houses to permanent houses. Urban houses are

well-designed in its interior as well as exterior aspect. This calls for more houses being painted

using medium and premium paints. For urban houses, interior design is becoming a fashion

statement and a lot of paint is used to decorate the interiors. This will lead to an increase in the

per capita consumption of paint which will increase the overall demand of paint. Urbanization

also brings more nuclear families. More nuclear families mean more number of houses even for

the existing population thus further driving the demand.

Increasing share of organized sector:

Decrease in taxes on key raw materials will improve the position of the organized players. The

Organized sector is expanding its distribute on network and adopting the installation of tinting

machines at retail outlets. These tinting machines offer a wide variety of color shade options to

choose from. The unorganized players are not I n a position to offer such facility as it is

comparatively capital intensive. Shift in use, from distemper segment towards premier segment

is also shifting market share from the unorganized sector to the organized sector.Development of the Realty, Automobile and Infrastructure sector:

The growth of the paint industry is largely dependent on the development of the realty and

housing sector, as decorative segment generates about 70% of the total paint demand from this

sector. The Automobile segment generates more than two-third of the demand for Industrial

paints, and hence is the growth driver for Industrial Paints. The Infrastructure segment creates

direct demand for paints as well as creates indirect demand through supporting the growth of the

realty, auto mobile, FMCG and other industries where paint is used.

The growth potential in the above 3 sectors is immense, the paint industry being dependent on

these 3 sectors is expected to grow along with them.

Availability of financing options:

Easier housing finance and auto finance is expected tofavour more people to buy houses and

travel in personal vehicles. This will drive the growth of housing and automobile sector, of

which the Paint industry will get its share.

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Increasing Penetration in the Rural Markets:

Paint usage in rural areas is generally in the distemper segment, hence dominated by theunorganized players. Demand in rural areas independent on agriculture, which is dependent on

the monsoons. With the development of irrigation facility, the dependence of agricultural output

on monsoons will be on a decreasing trend. Also, with the modernization of agriculture and

accompanying development of rural India, consumer preferences are expected to improve. Paint

companies are expanding their distribution network in rural parts of India, which is a relatively

untapped market for the organized players. These factors supported by the increasing penetration

of the paint companies will help drive the demand for paints.

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1.5 Top companies in the industryGoodlass Nerolac:-

This companys paint decors every third car in the country. It is the market

Leader in the industrial paint segment supplying over 90% of the requirements and has planned

to increase its presence in the decorative segment through aggressive new product development

and brand building. They are the second largest company in India in the decorative segment with

market share of around 20%. They are the leaders in powder coatings. Goodlass Nerolac

PaintsLtd is a subsidiary of Kansai Paint Company Limited, which is the largest paint

manufacturing company in Japan and among the top ten coating companies of the world, with a

human asset of over 1900 professionals and a sales turnover of Rs. 925 cores.

This company started in 1920 as Gahagan Paints and Varnish Co. Ltd. at Lower Parel in

Bombay. In 1930, three British companies merged to formulate Lead Industries Group Ltd. In

1933, Lead Industries Group Ltd.acquired entire share capital of Gahagan Paints in 1933 and

thus, Goodlass Wall (India) Ltd. wasborn. Subsequently, by 1946, Goodlass Wall (India) Ltd.

was known as Goodlass Wall Pvt. Ltd.In 1957, Goodlass Wall Pvt. Ltd. grew popular as

Goodlass Nerolac Paints (Pvt.) Ltd. Also, itwent public in the same year and established itself as

Goodlass Nerolac Paints Ltd. In 1976, Goodlass Nerolac Paints Ltd. became a part of the Tata

Forbes Group on acquisition of a part of the foreign shareholdings by Forbes Gokak. In 1983,

Goodlass Nerolac Paints Ltd. strengtheneditself by entering in technical collaboration

agreements with Kansai Paints Co. Ltd., Japan andNihon Tokushu Toryo Co. Ltd., Japan. In1986, Goodlass Nerolac Paints Ltd. turned into a jointventure of the Tata Forbes and the Kansai

Paints with the latter acquiring 36% of its sharecapital. In 1999, Kansai Paints Company Ltd.,

Japan took over the entire stake of Tata Forbesgroup. During this journey, Nerolac has entered

into technical collaborations with other industryleaders such as E.I. Du-Pont de Nemours &

Company Inc., USA and Oshima Kogya CompanyLtd., Japan for different product.

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Berger Paints:-

This company started in 1947 as British Paints when it acquired Hadfield's(India) Limited, a

paint company that produced 150 tones of ready mixed stiff paints, varnishes and distempers.

Sales offices were opened in Delhi and Mumbai and in 1951 a depot was startedin Guwahati.

Sales rose to Rs.60 lakhs in 1952. The Company declared its first dividend andshifted the H.O. to

32, Chowringhee Road, Calcutta. By 1959, modernization of the HowrahFactory was completed

and the first Resin Plant commissioned. With that, the Company enteredthe Synthetics Paints

market. By 1965 British Paints (Holdings) Limited, UK was acquired byCelanese Corporation,

U. S.A. As a result, the controlling interest of British Paints (India)Limited passed on to Cel.

Euro N.V., Holland. In 1969 Celanese Corporation sold their interestin the Indian Company to

Berger Jenson Nicholson Limited, UK. In 1975, the foreign holding of the Company was

reduced from 60% to 45% through a Public issue. A year later the foreignholding was diluted to

below 40% by sale of a portion of the shares to the UB Group.

In 1983, the name of the Company was changed to Berger Paints India Limited (BPIL) and

bythis time the Berger's operations were divisionalized into the Retail Business Line (RBL) and

theIndustrial Business Line (IBL) in order to better cater to the needs of the customers. During

thisperiod 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.

In 1990s, Berger Pro Links, a service aimed at providing paint and application related

information to professionals, was introduced marking one of the first steps into painting related

services. In 1991, the stake of the UB Group in the Company was purchased, by Mr. K S

Dhingra, Mr. G S Dhingra and their associates. The sales of the company touched 276 cores

by1995-96. 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 colors 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. Berger Paints Home Decor a complete

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painting solution service was launched making painting a hassle free activity for consumers. An

illusion multichrome finishes was also introduced as "designer finishes for walls" allowing

consumers to transform their walls into fashion statements. This is a first for the Indian paintindustry.

ICI (DULUX) :-

ICI India was the subsidiary of the $15 billion British multinational company ICI Plc.Brunner

Mond & Co., one of the four Companies that combined to form ICI in UK in 1926,opened a

trading office to sell alkalis and dyes in Calcutta. In 1923, Brunner Mond & Co. (India) was

incorporated and the company's name was subsequently changed to Imperial ChemicalIndustries

(India) Ltd., in 1929. During its 70 years in India, ICI had created six subsidiarycompanies in

businesses such as research, chlorine, caustic soda, paints, rubber chemicals,explosives, polyester

fiber, urea, agro-chemicals, seeds, pharmaceuticals, special chemicals, polyurethane,

nitrocellulose, and surfactants. In 1984, all ICI companies consolidated in one of the largest

mergers in Indian corporate history. By 1997, as a part of a restructuring exercise ICI had exited

or was planning to exit from several non-core businesses. The 1996 sales break upwas as

follows: Paints 43%, Explosives 28%, Rubber chemicals 17%, Pharmaceuticals 8%, andOther

Products 4%. ICI (India) ranked No. 4 in the paint business, after Asian Paints, GoodlassNerolac

Paints and Berger Paints. Unlike the other paint companies ICI (India) was a diversified unit and

paint constituted 43% of its net sales. ICI (India)s turnover in 1996-97 was $180million and

paint amounted to $77.4 million. ICI identified paints as a thrust area and wasaggressivelymoving to improve their position. They invested $11 million in a new decorativepaints plant near

Bombay and were constructing a $16.7 million plant for industrial paints nearChandigarh in

North India. ICI (India) intends to go on an offensive with a target of achieving ten-fold growth

in 10 years. The 10X Plan, as it was called, envisaged a strategbased on acquisitions, take-over

and alliances.

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Asian Paints:-

- Asian Paints Limited was established in 1942 as a partnership firm by fourfriends Champaklal

H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R.Vakil tomanufacture paints

in a garage in Mumbai (Bombay). From its humble beginnings, the companyhas moved on to

become the largest paints company in India with a market share of 30 percent.The company with

a turnover of US$ 535 million on standalone basis and US$ 640 million onconsolidated basis

(including turnover of all its subsidiaries) is one of the top ten decorativepaints companies in the

world. Its reach and dominance in the Indian market can be gauged fromthe fact that it is more

than twice the size of its neares competitor in India and it has been themarket leader in paints

industry in India since 1968.The company operates in 22 countries andhas 29 paint

manufacturing plants in the world which service consumers in over 65 countries.The company

operates around the world on its own and also through its three subsidiaries BergerInternational

Limited,Apco Coatings and SCIB Chemicals.The company aims to become one of the top fivedecorative paint companies in the world and has embarked on an aggressive strategyof

expanding its global operations. The promoters hold the majority stake in the company (46.8per

cent of the equity stake).The next largest shareholders are the foreign institutional investors(19.5

per cent stake), followed by Indian public (16.5 per cent stake). Domestic banks,

financialInstitutions, mutual funds and insurance companies hold 13.4 per cent stake. Corporate

bodiesand non-resident Indians hold the remaining stake.

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Ch-2About Berger

Paints

companies

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2.1 vision and mission

Vision

To endure an environmentally safe and secure future with a commitment from the company and

all its employee to practice and implement methods that help reduce the harmful effects on our

environment.

Mission

To conserve natural resouraces and ensure that protection of the environment remains our top

priority.

To take up the challenge and develop more advanced products which consistently help reduce

the harmful effects on our environment and conserve natural resources.

We not only take the responsibility for environmental protection but also make our employees

aware and committed to the cause

We respect the needs and social implications of all communities and cultuares where our

business operates.

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2.2 History and development

The name Berger or Lewis Berger is today synonymous with colour worldwide. But actuallytheorigin of the name dates back to over two & a half centuries in England in 1760, when a

youngcolour chemist named Lewis Berger, started manufacturing in Europe, 'Prussian blue'

using asecret process that every designer and householder coveted. Mr. Berger perfected this

process &art of the blue colour, which was the colour of most military uniform of that time.

Enriched bythe imagination of Lewis Berger, the unending quest for creation and innovation in

the world of colour & paints still continues

The history of Berger Paints India Limited as a company started in 1923 as Hadfield's

(India)Limited which was a small colonial venture producing ready- mixed stiff paints, varnishes

anddistempers setup on a 2 acres of land in one of India's first industrial towns close to KolkatainHowrah, Bengal. Subsequently in 1947, British Paints (Holdings) Limited, an

internationalconsortium of paint manufacturing companies bought over Hadfield's (India)

Limited and thusthe name changed to British Paints (India) Ltd. The gentleman who took over,

as its firstmanaging director was Mr. Alexender Vernon Niblet, an Englishman who was later on

followedby Mr. Alfred Godwin in 1962

Further in the year 1965, the share capital of British Paints (Holdings) Limited was acquired

byCelanese Corporation, USA and the controlling interest of British Paints (India) Ltd

wasacquired by CELEURO NV, Holland, a Celanese subsidiary. Subsequently in 1969, the

CelaneseCorporation sold its Indian interests to Berger, Jenson & Nicholson, U.K. Then onwards

thecompany British Paints (India) Ltd became a member of the worldwide BERGER group

havingits operations across oceans in numerous geographies and this marked the beginning of

LewisBerger's legacy in Indiawhich 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

ableleadership of it first Indian Managing Director Mr. Dongargaokar Madhukar.

Year 1976 was another turning point in the history of the company when the foreign holdinginthe company was diluted to below 40% by sale of a portion of the shares to the UB

Groupcontrolled by Mr. Vittal Mallya. The reins of the company were taken over by Mr. Biji K

Kurienas its Chief Executive & Managing Director in the year 1980. Finally in the year 1983,

theBritish Paints (India) Limited, changed its name to Berger Paints India Limited.

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The entire 80s & 90s saw the lunch of many new products from company's stable such

aspremium emulsions and high quality acrylic distempers. The COLOUR BANK tinting

systemwas launched through which the consumer could select from a range of over 5000 shades.

Again the fortunes of the company changed hands in 1991 with UB Group's stake in thecompany

bought over by the Delhi based Dhingra brothers, Mr. K.S.Dhingra & Mr. G.S.Dhingraand 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 until 2012 with the ManagingDirector Mr.

Subir Bose. The current managing director of Berger Paints India Ltd is Mr. AbhijitRoy.

Company Background:-

Established in 17th December, 1923, the company then known as Hadfiled's (India) Limited;

wasa small paint company based in Kolkata having its only manufacturing facility at Howrah,

WestBengal to produce ready mixed stiff paints, varnishes and distempers. Post

independence,towards the end of 1947, British Paints (Holdings) Limited, U.K acquired

Hadfield's (India)Limited and thus British Paints (India) Limited was incorporated.

From a production capacity of 150 tonnes and sales turnover of around Rs. 25 lakhs in 1947,

thecompany has come a long way to become at one point of time; a part of the worldwideBERGERgroup in 1983 and thereby acquiring its present name Berger Paints India Limited to

havingsubsequently gone through further ups & downs as well as ownership changes to gain its

presentstatus wherein the majority stake is with Delhi based Dhingra brothers and business

Revenue more than Rs 2400 crs

Today Berger Paints India Limited, having solely used and developed the name and

trademark BERGER and all its variants in India, is a household name in paint. With Head Office

in Kolkatathe company manufactures and markets a range of decorative & industrial paint

products undervarious product brands and has it operations spread throughout the length &

breath of thecountry; with seven manufacturing facilities in India and more than 85 depots,

several regional &area offices, besides four facilities overseas. It has a workforce of over 2500

employees and acountrywide distribution network of 15000 plus dealers.

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Berger Paints has clearly demonstrated its commitment to Indian consumers for over 88 years,by

offering its varied range of high performing quality products backed by highest level of customer

service. Company's high ethical standards in business dealings and its on-going effortsincommunity welfare make Berger Paints India Limited a responsible corporate citizen. Whilethe

company's decorative and Industrial paints continue to gain an increasing market share,Berger as

an organization has managed to achieve sustainable competitive advantage throughinnovations in

all spear of business, desire to excel and by creating a winning culture & abidingfaith in its

values & philosophy among all its stakeholders.

With Berger Paints we can now see your imagination of colour unfurl in front of your eyes

andwatch your home come alive, telling a thousand tales.

Transform our home with the POWER OF IMAGINATION.

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1960

In 1760 a visionary German named Louis Berger, founded dye and

pigment making business in England. Louis involved his family into the business and

formed the company Louis Berger & Sons Limited. The company grew rapidly with a

strong reputation for innovation and entrepreneurship culminating in perfecting the process

of making Prussian blue, a deep blue dye - a color widely used for the uniforms of many

European armies.

1950

Berger commenced the paint business in the Indian sub-continent from 1950. Initially the paints

were first imported from Berger UK and later from Berger Pakistan.

1970

In 1970, Berger Paints Bangladesh Limited (BPBL), formerly known as Jenson & Nicholson,

had set up its 1st paint factory at Kalurghat, Chittagong. The shareholders were Jenson &

Nicholson (J&N), Duncan Macneil & Co. Limited and Dada Group.

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1971

Duncan Macneil subsequently sold their shares to the majority shareholder J&N Group. The

Dada Group's share was ultimately vested with the Government of the Peoples Republic ofBangladesh after the independence of the country in 1971.

1980

The name of the company was changed from J&N (Bangladesh) Limited to Berger Paints

Bangladesh Limited.

1990The company has established a subsidiary company named Jenson & Nicholson (Bangladesh)

Limited. The core business of the subsidiary was trading and indenting and its 100% share is

owned by Berger.

1995

Establishment of Double Tight Can Manufacturing Plant at Nasirabad, Chittagong under the

umbrella of subsidiary company Jenson & Nicholson (Bangladesh) Limited.

1999

Establishment of Most Modern State-of-the-Art Paint Production Plant at Savar, Dhaka.

2000

In August 2000, J&N Investment (Asia) Limited UK, the majority shareholder of the company

purchased the government shareholdings.

2002

Completion of the construction work of Corporate Office building on own land at Dhaka.

2003

Relocation of Corporate Office from Chittagong to Dhaka.

2004

Establishment of Powder Coating Plant at Savar, Dhaka.

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2005

In December 2005, the company got listed with Dhaka Stock Exchange (DSE) and Chittagong

Stock Exchange (CSE).

2006

Establishment of Emulsion Plant at Savar, Dhaka.

2009

Implementation of SAP accross the company.

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Development

Berger Paints is one of the oldest names in the paint industry, yet, it is one of the most

technologically advanced companies in the country. It is constantly striving for innovating

superior quality products and services. With more than 250 years of rich heritage, Berger

manufactures world class paints for all kinds of substrates and also provides unparallel services.

Bergers inception was laid out in 1760 by a German national named Louis Berger, who started

dye and pigment making business in England. Louis involved his family into the business and

eventually changed the status of the company to Louis Berger & Sons Limited. The company

grew and expanded rapidly with a strong reputation for excellence in innovation andentrepreneurship. In the initial years, Louis successfully refined the process of manufacturing

Prussian blue, a deep blue dye. This dye was widely used for the uniforms of many European

armies of that time. Production of dyes and pigments evolved into production of paints and

coatings, which till today, remains the core business of Berger. The company grew rapidly, by

establishing branches all over the world and through mergers and acquisitions with other leading

paint and coating manufacturing companies.

Berger Paints started painting Bangladesh since independence. Over the past few decades,

Berger has evolved and transformed itself in becoming the leading paint solution provider in the

country with a diversified product range that caters to all your painting needs.

Berger has heavily invested in technology and Research & Development (R&D) compared to

any other manufacturer in this market. Investment in technology and plant capacity is even more

evident from the establishment of Powder Coating and Emulsion plants at the Dhaka factory.

The state-of-the-art Dhaka factory is an addition to Berger's capacity, making it the paint giant in

Bangladesh. It sources raw materials from some of the best known names in the world. The

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superior quality of Berger's products has been possible because of its advanced plants and strict

quality controls that match international standards.

With its strong distribution network, Berger has reached almost every corner of Bangladesh.

Nationwide Dealer Network, supported by 8 Sales Depots strategically located at Dhaka,

Chittagong, Rajshahi, Khulna, Bogra, Sylhet ,Comilla and Mymensingh has an unmatched

capability to answer to paint needs at almost anywhere in Bangladesh.

Berger's one of the prime objectives is to provide best customer support-connecting consumers to

technology through specialized services like free technical advice on surface preparation, color

consultancy, special color schemes etc. To bolster customer satisfaction, Berger offers Home

Decor Service from where one can get an array of services pertaining to painting.

The product range includes specialized outdoor paints to protect against adverse weather

conditions, ColorBank, Superior Marine Paints, Textured Coatings, Heat Resistant Paints,

Roofing Compounds, Epoxies and Powder Coatings. In each of these product categories, Berger

has been the pioneer. Besides, Berger offers illusions-the first designer paint solution in

Bangladesh. The company also launched Power Bond adhesive, lnnova Wood Coating in

collaboration with Sherwin-Williams, Vehicle Refinish in collaboration with world renowned

PPG-USA, Texbond binder to cater to the growing needs of the customers.

Apart from business, Berger Paints has added another dimension to its social responsibilities bycontributing to the well being of the autistic children in Bangladesh from 2009. Berger Paints

Bangladesh Limited has been promoting the young and creative talents of the country through

Berger Young Painters Art Competition (BYPAC), Berger Award for Excellence in

Architecture (BAEA), Berger Award Programme for the Students of Architecture of BUET

(BASAB), Scholarship Programme for the students of Architecture Discipline, Khulna

University.

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2.3 Size of the unit:-

Berger Paints India Ltd is setting up two new manufacturing units, one near Pune and the otherin Andhra Pradesh.

The company is investing Rs 40 crore to set up a unit for automotive and industrial paints at

Jejuri, near Pune, Maharashtra, in the current financial year. Berger is also in the process of

establishing its largest unit at Hindupur in Andhra Pradesh, with an initial capacity of 8,000

tonne per month, which can later be increased upto 16,000 tonne per month. This project is

estimated to cost Rs 140 crore. The investment is being funded from internal accruals.

Last year, the company had invested about Rs 80 crore in the Hindupur unit which is expected tobe operational by December 2013. Once, both the projects are operationalised, the capacity of

the company is expected to increase from the existing 24,000 tonne per month to 40,000 per

month.

The company expects to cater to the automotive units in the West and South through the Jejuri

unit.

Berger Paints acquired the India operations of Sherwin Williams for an undisclosed sum in

March 2013. The acquisition will strengthen the Berger portfolio of exterior paints and will also

enhance its manufacturing capacity by around 2,000 tonne per month.

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2.4 Form of organisation:-

Like all other manufacturing organizations, BPBL has a conventional organization structure.Generally six board meeting are called in BPBL during a year where chairman of the board of

Directors presided over the meeting .In BPBL several committees like the Audit committee, Risk

committee, Remuneration committee, Executive committee and the Purchase committee are

formed along with Managing Director (MD) and other Executive & non-Executive Directors.

These committees sit at least once a month to approve various proposals brought by the

management prior to implementation. All the proposals are initiated by the mid level managers

and then forwarded to the Managing Director (MD) through the head of the divisions or

departments. The company has also a legal problems faced by the company and external auditors

to conduct audit activities of BPBL.

There are four Non-Executive Directors, two Executive Director and ten Managers work under

the Managing Director (MD) of the company. Among the ten managers three directly report to

the Executive directors and other report to the Managing Director. The Managers of each

department monitor the work activities of subordinates, convey top management decisions and

provide necessary feed back to reach organizational goals and objectives. In response the bottom

level managers perform their responsibilities sincerely and report regularly to their immediate

superiors.

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2.5 Profiling of all department in company

Human Resources & Administration

Human Resources & Administration Department of Berger Paints Bangladesh Limited acts as

the center of excellence to provide overall policy direction on Human Resources &

Administration management issues and administrative functions related to management of

employees.

Our functions comprises of Recruitment, Compensation & Benefits, Learning and Development

and overall Human Capital Management. We believe, it is people, not technology who create the

company. Thus Human Resources & Administration Department emphatically values to hire,engage and retain talented employees. As a department, we provide a role that strives to achieve

a balance between the corporate goals and objectives with the satisfaction and welfare of our

employees. We serve to foster a positive working relationship for all the employees in Berger.

We do safeguard the code of conduct and discipline in the organization. In addition, by ensuring

people development and equity we maintain motivation in employees to meet job satisfaction.

We ensure a strong collective commitment to teamwork and a strong personal commitment to the

Department's mission and goals.

Information Technology

At Berger Paints Bangladesh Limited, we employed a number of highly technically skilled

professional to keep up with the rapidly growing need for Information Technology. Berger is an

IT driven company. In today's world, companies with effective 'information technology' are

achieving their business goals with ease. We adamantly believe that information technology is of

no use if it is not informative. Developing innovative 'info tech' not only helps us to attain our

business goals but also give us a cutting edge in serving our customers better. Through our

strong nationwide infrastructure for communication and data transfer, world renowned ERP

system (SAP), own Data Center with world class hardware, in house experienced DevelopmentTeam and System Administrators we are able to remit and process information with a click of a

button.

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Research & Development

The Research and Development wing at Berger Paints boasts of housing the best chemists in the

country. The highly professionally trained scientists receive the best training from famous paint

making houses, use of modern laboratories with latest and precision equipment, work jointly

with researchers of other organizations, and play significant role in developing cost effective

formula. The R&D unit works relentless with the objective of improving product quality,

redefining/ re-engineering processes for ensuring higher productivity, minimizing wastes and

complying with environmental regulations. Development of new products and selection of new

sources of materials tie up the R&D efforts with Marketing and Supply Chain activities in the

organization. Berger R&D can be proud of making quality paints and adhesives available to

every house in Bangladesh at the most affordable price.

Sales & Marketing

To communicate the message of delivering the high standard of products for diversified

executions, marketing department formulates strategies that competitors often describe as fierce,

but to us, that's how we work. Achievement in being the best did not come overnight, but rather,it was the persistent dedication on consistent effort to deliver our promises to the customers. If

we term our marketing department as the brain, then our sales department would be the muscle.

Neither one can flourish without helping each other. At Berger Paints, it is the team effort

between marketing department and the sales department that makes it possible to bring you the

best painting solutions at affordable prices. Maintaining liaison with nationwide dealers and also

ensuring that Berger products are available everywhere, our sales department is a big asset for

Berger Paints.

Marketing Department communicates internally on how to bring innovative painting solutions to

meet the needs of various wants. Linking consumers' needs with the capacity of fulfilling them,

the marketing department supervises Home Dcor centers throughout the country. Marketing

department also co-ordinates various events and activities as part of Bergers Corporate Social

Responsibilities. For the last two years, Berger has been contributing to the welfare of autistic

and differently challenged children of Bangladesh. In addition to that, the department is also

involved in organizing BAEA (Berger Award for Excellence in Architecture), BASAB (Berger

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Award for the Students of Architecture, BUET), BYPAC (Berger Young Painters Art

Competition), Scholarship Program for the students of Architecture, Khulna University etc.

Internal Audit

Berger Paints Bangladesh Limited regularly conducts internal audit for all of its business units

(including functional departments and offices). These audits cover production facilities, research

and development activities, selling and marketing activities, supply chain functions, human

resources and administration, financial management systems, information systems, sales centers

and dcor service activities. A team of auditors conduct the internal audit in two phases. The first

phase comprises of a periodic review of all the business units. The second phase involves the

assessment of business units that require immediate attention to measure effectiveness, efficiency

and economy.

The mission of the internal audit department is to ensure that the BPBL's operations are

conducted according to the highest standards by providing an independent, objective assurance

function and by advising on the best business practices. Through a systematic and disciplined

approach, the internal audit department helps the company to accomplish its objectives by

evaluating and improving the effectiveness of risk management, control and governance

processes.

The prime objective of internal audit department is to examine and evaluate whether the BPBL's

frame work of risk management, control, and governance processes, is adequate and functioning

properly. In addition, the objectives of internal audit department include advising and

recommending senior management for improvements in internal control and risk management

systems.

To maintain the independence of audit department from other BPBL departments and offices, the

department reports administratively to the Managing Director and functionally to the Audit

Committee. To permit the rendering of impartial and unbiased judgment essential to the proper

conduct of audits, internal auditors will be independent of the activities they audit. To maintainobjectivity, internal audit is not involved in day-to-day control procedures. Instead, each business

unit is responsible for its own internal control and efficiency.

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Budget and Cost Control

BPBL has its Budget and Cost Control (BNCC) function to undertake the financial planning and

operational monitoring across the company. A complete set of MIS providing insightful analysis

on operations in both a planning environment as well as actual transactions is generated to

support management .Control and monitoring extends to the co ordination of the actions planned

on the basis of the review of the MIS in order to support the functional departments to bring the

desired results.

Planning function is operated for annual and quarterly timeframe and also at each business

change scenario to reflect the change in financial performance compared to the annual

projection. The planning function includes feasibility study of the new projects under the

company business diversification program.

A full fledged monitoring on the operation on a monthly time frame is operated under the BNCC

function. Monitoring function is sometimes exercised as and when required basis in addition to

the monthly routine.

The business operations in the following dimensions is monitored under the Budget and costcontrol domain:

a. Volume management ( Sales, Production and capacity utilization).b. Contribution Management( Profitability of the products resulting from actions related to

Product Pricing , RM sourcing , RM usage parameters etc).

c. Expense Management.d. Working capital Management.e. Fixed asset Management.

BNCC team is formed keeping the above dimensions in mind and has highly skilled

professionals at different managerial level.

BNCC extensively uses the company information system (SAP) and plays a significant role in

maintenance and development of the system. BNCC is basically the central point in company

MIS management.

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BPBL has thus set up a BNCC department which plays an active role in management to take care

of its control and monitoring objective with the close monitoring of the operations usingfinancial management techniques and information system (SAP) and by maintaining a planning

process which is capable to response in a dynamic business situation.

Supply Chain

Supply chain as a competitive edge to the business growth by ensuring effective service and

support to technical, sales and marketing by focusing on systems, process and people which add

value in the long term to top and bottom line growth of the company. Supply chain management

(SCM) at BERGER is the process of planning, implementing and controlling the operations of

the supply chain as efficiently as possible. Supply Chain Management spans all movement and

storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to

point-of-consumption. In essence, Supply Chain Management integrates supply and demand

management within and across companies.

Berger defines SCM as the two-way management of the flow of goods, services and information

from suppliers to manufacturers, wholesalers, distributors/dealers, storesto the end user. SCM

is especially critical for the paint & coating industry because of the ease of spoilage.

A consumer products company remains profitable only if it has the right product at the right

price in the right place at the right time. However, getting these stars to line up only happens

when "the entire supply chain works as one." Seen that way, SCM becomes a branding issue.

When BERGER places its logo on a product, the logo represents "a seal of quality." Protecting

that quality makes BERGER responsible for its entire supply chain. Consumers don't care if a

supplier or distributor had a problem. "If something goes wrong in the supply chain, it ruins

things for the consumer/end user,".

Our mission is to:

Optimize and consolidate resources and processes for a low-cost but efficient Develop and manage simplified and effective supply network to achieve a high level of

service

Create a continuous improvement culture driven by performance measures and reward

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Now a days, Supply Chain management is considered as the Company's "Growth Enabler" and

"Cost Optimizer" for which BERGER has restructured the Supply Chain of Berger Paints

Bangladesh Limited as per followings to enhance the overall effectiveness as well as efficiencyat both functional and operational level.

1. Demand & Supply Planning Unit2. Customer Service & Distribution Unit3. Logistics Unit4. Purchasing Unit and5. Vendor Development Unit

Financial Accounting and Treasury

BPBL reports certain amount of money as earnings on its invested capital". This statement,

naturally a question, comes as obvious, how BPBL did so? The answer of this question lies in a

series of accounting transactions, followed by the principles that form the basis of a true and fair

statement of Financial Statements.

Our team is responsible to deal with all the financial transactions complying all policies and

practices of the Company and generate required number of external and internal reports for all

stakeholders.

Zero tolerance of treasury management, efficient receivable and payable management, minimize

the corporate risk is our core area of work. The responsibility of treasury department is the

management and control of future cash flows, optimal use of all available resources and the

management of the risk related to those cash flows / resources. Correct accounting transaction is

important for the treasury department because of the potential effect on organization's financial

results. If all the cash flows are known, the risks related to these expected cash flows need to be

assessed. An efficient and effective treasury management can manage and control various risks

i.e. market risk, credit risk and liquidity risk.

Handling all these areas, ensure us a better Working capital management and efficient financial

management on day to day basis. Minimizing risk and maximizing net return of all stakeholders

are the key focus of BPBL Finance and Treasury team by ensuring good corporate governance

and practice.

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2.6 Contribution of the unit to the industry

Bergers Presence IN India

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Bergers Presence All Over The World

Apart from operations in Russia, with a production facility at the Berger manufacturing unit

atKrasnodar, Berger has also expanded its footprint in Nepal by setting up a second unit. Today

Bergers sister company in Bangladesh is the dominant leader with 65% market share. Inkeeping

with the companys dynamic growth plan, Berger has also acquired Bolix SA of Poland,a

leading provider of External Insulation Finishing System (EIFS) in Eastern Europe. As

Bergercontinues to grow internationally, it also continues to be the second largest paint companyinIndia. Berger is the lone supplier of Nuclear Power Plants with its Protective Coatings. The

automotive sectors, be it cars or bikes, is primarily ruled by Bergers automotive

coatings.Luxury cars including Mercedes make use of Berger products. Companies like Nokia

uses Bergers services as well. Berger has tied up with Becker of Sweden to manufacture coil

coatingsfor steel surfaces

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Market Share of Industrial Paints

Market Share of Decorative Paints

0%

50%

30%

10%

5%

5% Types of industrai paints

AutomotivePaints

HighPerformanceCoating

Powder Coating

Coil Coating

Marine Paints

0%

50%

30%

10%

5%

5% Types of industrai paints

AutomotivePaints

HighPerformanceCoating

Powder Coating

Coil Coating

Marine Paints

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Industrial Sector Composition

0%

10%

20%

30%

40%

50%

60%

Market share (%)

Market share (%)