Company OverviewIndias largest paint company and Asias third largest paint companyTurnover of Rs 96.32 billion. Asian Paints operates in 17 countries , consumers in over 65 countries 24 paint manufacturing facilities in the world servicing. The company has come a long way since its small beginnings in 1942. Company operates in Decorative coatings and Industrial coatings segments across India and in the geographies of Asia, Middle East, Caribbean and South Pacific Islands through its subsidiaries and joint ventures.In Decorative paints, Asian Paints is present in- Interior Wall Finishes, - Exterior Wall Finishes, - Enamels - Wood Finishes.

Business OperationsPaints IndiaDecorative Coatings IndiaIndustrial Coatings India Chemicals India International Operations

International Presence

Today the Asian Paints group operates in 17 countries across the world and is the largest paint company in eleven countriesAsian Paintsin South Asia (India, Bangladesh, Nepal and Sri Lanka)SCIB Paints in EgyptBerger in South East Asia (Singapore), Middle East (UAE, Bahrain and Oman), Caribbean (Jamaica, Barbados, Trinidad & Tobago)Apco Coatings in South Pacific (Fiji, Tonga, Solomon Islands and Vanuatu)Taubmansin South Pacific (Fiji and Samoa)

International OperationsContributes 13% to the group turnover Began by establishing presence in Fiji in 1978

Manufacturing Facilities

Country No.CountriesManufacturing PlantsCompany LocationSouth Asia1India10Bhandup, Ankleshwar, Patancheru, Kasna, Sriperumbudur, Rohtak, Khandala, Sarigam, Baddi & Taloja2SriLanka1Asian Paints3Nepal1Asian Paints4Bangladesh1Asian PaintsSouth East Asia5Singapore1Berger InternationalSouth Pacific6TongaAsian Paints7Fiji1Asian Paints & Taubmans8Samoa Islands1Taubmans9VanuatuAsian Paints10Solomon IslandsAsian PaintsMiddle East11Oman1Berger International12Bahrain1Berger International13Dubai1Berger International14Egypt2SCIB PaintsCaribbean15Jamaica1Berger International16Barbados1Berger International17Trinidad & Tobago1Berger InternationalTotal24

Supply Chainstate-of-the-art supply chain system using technology to integrate all its plants, regional distribution centres, outside processing centres and branches in India. All the company's paints plants in India, two chemical plants, 18 processing centres, 350 raw material and intermediate goods suppliers, 140 packing material vendors, 6 regional distribution centres, 72 depots are integrated.Information TechnologyThe successful deployment of ERP, CRM, Business Intelligence and Portal software from leading solution providers and integrated SCM systems has helped improve efficiency in the business as well as increase the transparency and accuracy of information across the company.Research and Development-Supports Manufacturing in process cycle time reduction & improves productivity by alternate / break through processes-Provides solutions to environmental issues by minimizing waste at the time of generation and also in recycling-Aids Marketing in providing technical tools/USPs to demonstrate and push new products-Support Materials by providing new Raw Materials as alternate to current one to give them negotiating power and also alternate vendors for supply chain flexibility.-Has set up a new Research & Technology centre at Turbhe

Shareholding Pattern

Promoter and Promoter Group52.79%Indian52.79%Foreign--Public7.21%Institutions27.18%FII18.64%DII8.54%Non Institutions20.03%Bodies Corporate5.69%

Asian Paints V/S Nifty

Peer Analysis

STPSegmentCaters to all segments with brand Royale aimed at premium segment and rest at mass market.Target GroupHome-owners, industries-hotels, education, healthcare, agro & manufacturing equipment and automobile etc. infrastructure, govt. buildingsPositioningA complete array of products to cater to everyone.

SWOT analysisStrengthsMarket leader: Asian Paints is the largest paintCapacity expansion plansManufactures PANWide distribution networkImportance of brand image as barriers to new entrantsGoo Superior technologies deployed to achieve maintain the competitive edgeThe company has strong financials.WeaknessesIndustrial business performing below parIn decorative paints Industry Customer tastes and perceptions change very fast and products may become obsolete with change in trends International presence restricted to small pocketsSeasonal demand and hence in off season it can lead to cash flow problem.OpportunitiesFast growing Indian economy:Shorter repainting cyclesGrowth in the tier II and III townsSteady growth in industry volumeFiscal incentives provided by the governmentThreatsCompetition from the world majorsCompetition from the unorganized sectorSlowdown in the economic growthRaw material scarcity and volatlility in prices.Industry growth depends on two factor- Repaint Activity- Construction

Porters 5 Forces

Threat of new entrants (High) : Brand, distribution network, working capital efficiency, technology, high capital costs, strong input cost.Bargaining power of Buyer (Low to Medium) : Customers are more price sensitive because for them number of options are available and decisions are made based on quality, price and differentiating factors. Unorganized market has also have a large chunk of market. High due to availability of high choices. Industrial segment is low margin also buyers of these segments are knowledgeable about their needs. Therefore, price comparison is done effectively by the customers. Which limits the bargaining power of buyers.

Porters 5 ForcesBargaining power of suppliers (High) : Supplier of this material has solid bargaining power (Major raw material is crude based, facing global supply shortage of raw material Titanium Dioxide.Availability of Substitute (Low to Medium) : In the rural areas lime wash is conventionally used substitute for paints. One alternative option for decorative walls available today isWallpaper.Competitive Rivalry (Low to Medium) : About 80% of organized market is created to by the four players. Also, the presence of unorganized market does provide room for competition.

CORPORATE GOVERNANCE

The Corporate Governance philosophy of the Company is based on the following principles:Satisfaction of the spirit of the law through ethical business conduct Transparency and a high degree of disclosure levels. Truthful communication about how the company is run internally. A simple and transparent corporate structure driven solely by the business needs. Strict compliance with Clause 49 of the Listing Agreement as amended from time to time. Establishment of an efficient corporate structure for the management of the Company's affairs Management is the trustee of the shareholders' capital and not the owner

FCCBs / ECBs

Company does not have exposure to FCCBs ECBs.

Did not accepted any fixed deposits 2011-12

Does not have any outstanding GDRs/ ADRs/ Warrants/ Convertible Instruments as on 20011-12

Growth StrategiesAsia-Pacific paint industry was valued at USD40bn accounting for roughly 30-35% of the global paint industryIndian paint industry accounted for a mere 9%Raising Above the Bell CurveDomestic InternationalDomestic7th Decorative paint plant at Khandala (MH) 300,000 KL Rohtak has been increased from 150,000 KL to 200,000 KL per annum

PE prospective Risks that the funds are hesitating to take.Execution riskTechnology riskCorporate RiskPolitical risk

BEST GOVERNED COMPANY in 2011

Du Pont Analysis

Du pont analysisOPERATING EFFICIENCYASSET USAGE EFFICIENCYFINANCIAL LEVERAGEROE08FY10.4%3.5710.493.9109FY8%3.8912.093.7710FY14.4%3.3016.928.0711FY11.7%3.2321.268.0812FY11.5%3.1327.6910

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