• Indian paint industry market assessment

• Future outlook

• About the company

• Presence in India

• International presence

• Role of channel partner

• Channel design decision

• Selection of channel member

• Channel structure

CONTENTS

• Alternate channel structure

• Different channels for high end customers

• Distribution task

• Terms of credit, payment mode and mark up

• Channel pricing

• Seasons and specification of inventory

• Stocking norms & practices

• Innovations

• Trade promotions

• Recommendations

CONTENTS [contd...]

• IN INDIA THE TOTAL MARKET SIZE OF THE PAINT INDUSTRY IS ABOUT 1400 MILLION.

• THE “ORGANIZED SECTOR “ OF THE INDUSTRY IS ABOUT 55 MILLION.

• THE “ UNORGANIZED SECTOR “ WHICH IS ABOUT 45 % HAS ABOUT 2400 UNITS.

INDIAN PAINT MARKET- MARKET ASSESMENT

SECTORS

ARCHITECTURAL – 70%Decorative – ( housing &

construction sector )

INDUSTRIAL – 30%(Automotive & consumer

durables)

INDIAN PAINT INDUSTRY

DECORATIVE SEGMENT [70%]

PREMIUM RANGE[high end

acrylic emulsions]

METROS AND LARGE CITIES

MEDIUM RANGE [enamel paints]

SMALL CITIES

DISTEMPER RANGE [low end paints]

SUB-URBAN AND RURAL AREAS

INDUSTRIAL SEGMENT [30%]

AUTOMOTIVE SECTOR [about

2/3rd share]

CONSUMER DURABLES MARINE

PAINTS OTHER OEM’S

MARKET SHARE OF MAJOR PLAYERS IN INDIA ( ON THE BASIS OF SIZE )

DECORATIVE:APIL Dominates the Decorative segment with 38% market share.GNPL the no.2 in the decorative segment with 14 % market share.Berger & ICI have 8% & 9% shares respectively.J&N and Shalimar with 1 & 6 % respectively.

INDUSTRIAL :GNPL Dominates the Industrial segment with41% market share. APIL has a 15% market share.Berger & ICI have about a 10 % and 9 % market share.

ON THE BASIS OF PRODUCT

FUTURE OUTLOOK

• Ratio of industrial paint to decorative paint is expected 50:50.

• Demand for paints for new housing is app. 30% , rest from repainting.

• In decorative coating segment, growth is being observed in exterior coating segment.

• Premium product in this category are doing well due to superior quality and durability.

ABOUT THE COMPANY

• Established in 17th December, 1923.

• Head Office in Kolkata.

• manufactures and markets a range of decorative & industrial paint products.

• 14 manufacturing facilities in India and more than 153 depots, besides 4 facilities overseas.

• Workforce of over 2500 employees and a countrywide distribution network of 20,000 dealers.

YEAR HIGHLIGHTS

1923 Setup on a 2 acres of land in one of India's first industrial towns close to Kolkata in Howrah, Bengal.

1947 Mr. Alexender Vernon Nible, first managing director bought over Hadfield's (India) Limited and thus the name changed to British Paints (India) Ltd.

1965 Share capital of British Paints (Holdings) Limited was acquired by Celanese Corporation, USA

1973 Marine and decorative segments under the Leadership of it first Indian Managing Director Mr. Dongargaokar Madhukar.

1983 British Paints (India) Limited, changed its name to Berger Paints India Limited.

90’S The COLOUR BANK tinting system was launched consumer could select from a range of over 5000 shades.

2003-04 and in 2005 the Company ventured into Russia through a foreign subsidiary.

2011 The Company's consolidated sales turnover for the year was Rs 2328.12 crs.

PRESENCE IN INDIA

HowrahManufacturing Capacity : 11,200 MTBerger Paints India Limited14 & 15 Swarnamayee RoadP.O. Botanic Garden, Howrah 711 103Phone : +91 33 2668 4706 / 4709 / 6212 / 6213, Fax : +91 33 2668 2956.

PondicherryManufacturing Capacity : 18,000 MTBerger Paints India Limited53-56 Pandasozhanallur VillageNettapakkam Commune, Pondicherry 605106Phone : +91 431 2699143 / 9574Fax : +91 431 2699171.

Vallabh Vidya NagarManufacturing Capacity : 17,000 MTBeepee Coatings LimitedPlot No. 433 / Part G.I.D.C.EstateVithal Udyognagar, Anand via Kheda District, GujratPhone : +91 2692 236140 / 6207 / 6334.

GoaManufacturing Capacity : 6,000 MTBerger Paints India Limited316 & 317 Kundaim Industrial EstateKundaim, Panda, North GoaPhone : +91 382 2395 610 / 6407 /6212EMAIL Id: bilarn@satyam.net.in.

PRESENCE IN INDIA

Rishra (BAICL)Berger ICAI103 G.T. Road, RishraDistrict : Hooghly, West Bengal 712248Phone : +91 33 2672 0641 / 0642 / 0643

JammuBerger Paints India LimitedSIDCO Industrial Growth CentreSanba, Jammu, Jammu & Kashmir 184 121Phone : +91 1923 246451 / 6458 / 6459

INTERNATIONAL PRESENCE

CONVERGING PLATFORMS: Simplify and facilitate the transactions by bringing the channel members together.

EASIER & ECONOMICAL :Easier and economical to work with intermediaries.

WIDESPREAD LOCATIONS: Reaching out directly to the consumer becomes difficult due to widespread geographical locations.

ENCASHING ON THE INTERMEDIERIES EXPERTISE : It is easy for manufactures to encash on the experience of the wholesaler + specialization+ infrastructure+ sales force.

ROLE OF CHANNEL PARTNER

CHANNEL DESIGN DECISION

• Traditionally most of the paint companies follow manufacturer wholesaler retailer consumer channel.

• Berger eliminates one of the intermediaries cutting down the chain, following A Direct Marketing channel which helps you to contact the customers directly.

• Direct Marketing channel helps you to support accurate segmentation & sharper targeting of the market segment.

CHANNEL DESIGN DECISION

• Cost effective :as it eliminates the cost to the various channel members.

• Facilitates special attention : It allows Berger to facilitate special attention to key accounts.

• Saves time & hassle free purchase.

SELECTION OF CHANNEL MEMBERS

BERGER chooses its channel members based on the following criteria :

Dealer should have a sound financial record.

Dealer should have a goodwill in the market.

Dealer should have his infrastructure & logistics.

Dealers should be aware about the company background, products and services.

14 MANUFACTURING PLANTS ACROSS INDIA

153 DEPOTS IN INDIA/ GODOWN

RETAILER

BULK BUYER ( INSTITUTIONAL DEVELOPERS

DIRECT PROJECT INSTITUTIONAL / CORPORATE

DIRECT CUSTOMER

CHANNEL STRUCTURE

CHANNEL STRUCTURE

DELHI OR EACH STATE

DEPOTS/ STORAGE

MANUFACTERING UNITS

NORTH SOUTH EAST WEST

+300 DEALERSFROM EACH ZONE

20,000 dealers all over India 1200 plus dealers on new Delhi alone14 products1200 shades & depots in Delhi, badurpur, mayapuri, wazir gunj, mandor

ALTERNATIVE CHANNEL STRUCTURE

• EXCLUSIVE CHANNEL : Product / service sale of only one manufacturer/ producer showroom / outlets / franchises.

• SELECTIVE CHANNEL : product/ service sale of different brands

/ products in limited locations ( done through a selected retailer by most paint companies).

• INTENSIVE / RETAIL CHANNEL : product / service sale of FMCG / consumer goods/ wider market coverage .

• Government/ defence canteens or Subsidised stores.

• On Commission bases : with the painter.

Time to time incentives are given by Berger according to performance of the dealer and market demand.

IN STORE DISPLAYS: POINT OF PURCHASE , Berger paint banners, demonstrations on colour wall etc provided by company.

TEMPORARY PRICE REDUCTION: They get margins plus incentive promotion scheme to maintain the dealer.

CONTESTS: Dealer to dealer contests are held to promote push strategy and best dealer gets the reward. Berger paints does the same in various geographical areas.

SAMPLING: Allowing the dealer to experience the product or service by providing samples of various paints.

TIEING UP WITH INSTITUTIONAL PROJECTS:A tie up with any of the project in the near by areas.

SCHEMES: Promotional schemes and benefits such as Gift vouchers and Seasonal discounts sponsor trips to the dealers or Giving them a chance to earn profit by selling the products on the earlier rates instead of the revised rates.

HOW DOES BERGER PUSH ITS PRODUCTS FORWARD

Offering customer solution :Through customer helpline.

A MENU OF PRESET DESIGNS: Helping you to get designer solution for your room.

A wide variety of colour palette and pre-set designs for your room.

Insuring customer satisfaction by a before photograph of the site and an after photograph of the site.

Offering a chance to create a customised colour palette.

Issuing a completion certificate along with a “friendship ka faida” booklet.

DIFFERENT CHANNEL FOR HIGH END CUSTOMERS

Products for high end/low end customerHigh end Medium end Low end

Berger luxolBerger silkLuxury emulsion

Bison emulsion Dis-temper

• The task of the each member of the distribution channel is quite different but the motive is same for every member i.e. to provide the product to the consumer.

• The manufacturers task is to provide product to the wholesaler.

• The wholesalers task is to provide the product to the retailer.

• The retailers task is to provide the product to the consumer.

DISTRIBUTION TASK

Terms of Credit

TERMS OF CREDIT

Most manufacturers give 7 to 10 days credit period to wholesalers as company does not want block payments more than that period.

The credit period is extended for certain wholesaler depending upon how they meet their targets and can be extended up to 21 days.

Cheque is a preferred mode of payment by the manufacturer however.

Payments from customer is through cash.

PAYMENT

MARK-UP

The typical mark up on any product by a retailer is 7-10 % and by a wholesaler is 1-2 %.

There is less mark up on running products such as Berger enamel.

More mark up on less running products such as silk.

New products allow you to have a higher mark up as the price doesn’t not have an earlier price point.

Further, a healthy competition allows you to have a mark up on the products.

CHANNEL PRICING– Berger Paints

Manufacturer

Wholesaler

Retailer

Consumer

UNKNOWN

1-2 % Gross Margin received by wholesaler on sale to

retailer

7-10% Gross Margin received by retailer on sale to

consumer

Cost to produce = Rs 220/litre

Cost to produce = Rs 225-230/litre

Cost to produce = Rs 240/litre

Cost to produce = Unknown(As manufacturer is a seller)

Source : 6 Direct Interviews with the retailers

Typical seasons for the paint industry

After monsoon until November.

From 15th march to 15th July.

Off season is April.

Dealers collect their margins at the time of sale of products.

Margin\discount provided by company is between 3.5 to 5%.

Margin and discount

SEASONS AND SPECIFICATION OF INVENTORY

PRODUCTS Cost to manufacturer

per meter

Cost to wholesalerPer meter

Cost to retailerPer meter

Mrp(Rs.)

Red oxide primer(421)

Unknown 1853.57 1890.64 2022.98

Berger kidz DL

Unknown 1438.94 1467.71 1570.45

Jadoo white Unknown 405.03 413.13 442.04

Snow white Unknown 3894.73 3972.62 4250.70

Matt wo(181) Unknown 247.28 252.22 269.87

MARGIN SHEET

Source : Price list and 6 Direct Interviews with the retailers

Terms of Credit

Specification of inventory

STOCKING NORMS AND PRACTICES

A stock typically depends on sale: on as and when sale happens.

The stock depends upon the group in which the paint falls such as an average selling paint for eg. Emulsion is kept more in stock while a distemper is stored average.

The kind of buyer based on geographical area.

Inventories extended in the starting of the season.

Increased at the time of Diwali.

On as and when basis keeping a minimum stock of 20 litres of a sub category of a paint.

Selling strategies B2C

• Berger paint have large area of Network of distribution. It has almost retail outlets through out the country situated in the different city of India. All the customer could easily access the product of Berger paint anywhere and any time.

• First of al Berger paint is bring different low cost product like Utsav group in the rural market.

• To enhance their sales in the market they are spending a huge amount of money in ad campaigns. Festive seasons includes price discounts on the items of Berger paints.

• They follow sales demonstration programme where they demonstrate their different product where a large no. of discount is given on the product, lucky coupons, free gifts are given to the customer.

• Moving vans are being employed to sell their product in different village.• The customers of Berger vary from a period to a big industry in order to enhance

its ales it gives price discount on bulk amount of purchase. The company give coupons inside the paint pack so that could be taken by the customer as a gift from the company.

• Berger paint always try to improve the packaging of the product. If the product would be fancy and stylish then it would increase the sales of the products.

Selling strategies B2B

• According to Primary research, the maximum dealers go for 200 containers for a month, this is done through average sales of the paints by the dealers.

• Dealers get 7-10% margin which accounts him their profits from Berger. According to this, they recommend the product accordingly and even place them at right places where the product sales can be maximized.

• Dealers get 5-10 days order cycle time margin which accounts him their profits from Berger. According to this, it shows that they are about to sell almost 70% of what they have collected 10 days back.

• Dealers get trade discounts which not only attracts dealers to company but it also accounts for extra added advantage in selling the product to the customers. The word of mouth publicity also forms an integral part of communication in this area.

• Dealers get Brochures and ads which serve them a purposes of looking and having records of variety of Berger paints. Trade meetings and personal visit also follow the trend.

• Specialty advertising: Giving Berger paint T-shirt, Caps and other small things to painter for their advertisement.

• Trade show: Berger paint always open its stall in the Industry trade so that it products would be promoted globally.

INNOVATIONS

• Pre painting audit of structure before painting starts. The surfaces to be painted are checked for surface porosity, moisture content, alkalinity, effervescence, water seepage, undulations, micro cracks, etc.

• Recommending appropriate painting system keeping in mind the wall surface and climatic conditions. Suggesting the kind of primer, topcoat, pre-primer coat (if any), etc. that should be used.

• Product and shade development along with preview facility so that we can provide tailor made discerning customers having specific requirements we tailor make products and shades as inputs for providing specific properties. Post selection of shades we give visual print to the building with the chosen shades through our preview facility through which one can find out how the building will look like before painting in virtual sphere through simulation software.

• Technical Services to provide solutions to overcome typical problems and on-site supervision.

• Recommending panel of contractors to undertake quality jobs and ensure on-time delivery.

• Various schemes provided by company to the dealers must be completely entertained by the help of personal meetings as most of the dealers are not well educated to understand the schemes.

• Frequency of advertisements on television should increase.

• Advertising campaigns for rural segment of the society should be targeted.

• Dealers and painters should meet at a regular interval of time as it helps to promote the brand as well as maintain the goodwill of the company in the market.

RECOMMENDATIONS

RECOMMENDATIONS

• Asian and Nerolac paints are used to do advertisements by painting of shops, whereas Berger paints just provide a hoarding to the dealers. Company should start painting of shops for dealers. It serves dual purpose, firstly it will attract customers and it also provides satisfaction to the dealers.

• There must be a demarcation between target of small dealers and big dealers, so that small dealers can also get motivated to complete their target.

• Berger should use competitive pricing for some its products which are competing with Asian and Elite paint products in the market.

THANK YOU

GROUP No.1