A

PROJECT REPORT ON

EXERCISE “DOOSRA KADAM”

COMPANY:

CO-ORDINATOR’S NAME:- Mr. ANKUR JAIN, MANAGER, Q A.PHONE NO:- 01202344111. E-MAIL ID:- ankur.jain@asianpaints.com.

HR REPRESENTATIVE :- Mr. RAJDEEP BHATTACHARYYA, MANAGER, HR.PHONE NO :- 01202344021E-MAIL ID:- rajdeep.bhattacharyya@asianpaints.com.

TEAM MEMBER’S NAME:- DEEPAK KUMAR THAKUR (TEAM LEADER)

DUSHYANT SINGH

NARBIR SINGH

LOVEKUSH PANDEY

PANKAJ KUMAR

TABLE OF CONTENT

INTRODUCTION

COMPANY PROFILE

PRODUCT DETAILS

COMPETITOR DETAILS

FINANCE

OPERATIONS

MARKETING & SALES

SUPPLY CHAIN MANAGEMENT

HUMAN RESOURCE MANAGEMENT

SAFETY, HEALTH & ENVIRONMENT

MAJOR ACHIEVMENTS BY ASIAN PAINTS

BIBLIOGRAPHY.

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INTRODUCTION

THE INDIAN PAINT INDUSTRY

The paint industry of India is 100 years old. Its beginning can be traced to the setting up of a factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II, the industry consisted of just a few foreign companies, and some small, indigenous producers. The war led to a temporary stoppage of imports leading to many more local entrepreneurs setting up manufacturing facilities. Nevertheless, foreign companies continued to dominate the industry. Even now, they remain active contestants, though their foreign shareholdings stand reduced, with two of them having become totally Indian. Currently, the industry has a sales turnover of about Rs.3, 600 crore. In terms of volume, it corresponds to 5 lakh tonnes. The industry is composed of two sectors, the organised and the unroganised. The organised sector controls 70 per cent of the total market. The remaining 30 per cent is in the hands of the unorganised sector, consisting of 2000 odd small-scale units. The industry is not capital intensive. It is however working capital intensive. The demand for paints is fairly price-elastic and is linked to economic and industrial growth. Demand is somewhat seasonal in nature-low during monsoon months, high during festival seasons.

THE MAIN SEGMENTS

The industry comprises two main segments decorative/architectural and industrial paints. The decorative/architectural paint segment accounts for 70 per cent of the total paint market while the industrial paint segment accounts for the remaining 30 per cent. The industry is, however, expected to undergo a structural shift towards industrial paints in the next few years, when its share is expected to go up to 50 per cent in line with the global trend. Industrial paints thus holds greater growth potential in the coming years. Actually, with the decorative segment gradually bottoming out, companies are already increasing their focus on industrial paints. Industrial paints are technology intensive. The industrial paints segment can be further classified into automotive paints, marine, powder coatings, high performance coatings, and others. Original equipment manufacturers (OEM) of products such as automobiles, furniture and white goods such as refrigerators are prime consumers of industrial paint. The automobile industry accounts for 50 per cent of the industrial paint market. A good part of the demand is from shipping and heavy industry. Navy being the largest customer in shipping.

THE MAIN PLAYERS

Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar are the leading companies in the organised sector. The top six manufacturers account for about 80 per cent of the market in the organised sector in value terms. AP is the industry leader, with an overall market share of 33 per cent in the organised sector. Threat of global competition is minimal in the industry. AP dominates the decorative segment, with a 38 per cent market share. Goodlass, a Tata company, is number two with a 14 per cent market share. Berger and ICI have 9 per cent and 8 per cent shares, respectively, in this segment followed by Shalimar, with 6 per cent.

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Goodlass dominates the industrial paints segment, with 41 per cent market share. AP is a poor second here, with a 15 per cent market share. Berger, ICI, and Shalimar are the other substantive players in the sector, with 10 per cent, 9 per cent and 8 per cent shares, respectively. The dominance of Goodlass in industrial papints is largely the result of its technical associated with the Japanese paint major, Kansai Paints, which has a 29.5 per cent equity stake in the company. Goodlass has a lion’s share of 70 per cent in the OEM passenger car segment, 40 per cent share of two-wheeler OEM market and 20 per cent of commercial vehicle OEM market. Goodlass also holds 20 per cent of the white-goods segment.

COMPANY’S PROFILE

Asian Paints is India's largest paint company and ranks among the top ten decorative coatings companies in the world today, with a turnover of Rs.66.80 billion. It was formed as a partnership firm by four friends in 1942. The company has an enviable reputation in the corporate world for professionalism, fast track growth, and building shareholder equity.Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1968. Today, Asian Paints becomes the 10th largest decorative paint company in the world.Asian Paints is more than twice the size of its nearest competitor.It is one of the most admired companies in India. Asian Paints operates in five regions across the world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the four corporate brands viz. Asian Paints, Berger International, SCIB Paints and Apco Coatings. Asian Paints has 23 paint manufacturing facilities in 17 countries with a combined total manufacturing capacity of around 370 million liters per annum. The company is servicing 65 countries through Berger International Limited and in 5 markets in the South Pacific through Apco Coatings. In Australia it also owns the Pacific Paints brand, in Fiji & Samoa Islands it also operates through Taubmans, and in 6 countries through Asian Paints.

A talent pool of over 5500 employees employed across 27 countries brings in a unique blend of mindsets and skills. The Group's principal activities are to manufacture and market paints. VISION

Asian Paints aims to become one of the top five Decorative coatings companies world-wide by leveraging its expertise in the higher growth emerging markets. Simultaneously, the company intends to build long term value in the Industrial coatings business through alliances with established global partners.

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MANUFACTURING FACILITIES IN INDIA:-

Bhandup, Maharashtra. Kasna, Uttarpradesh. Sriperumbudur, Rohtak, Haryana. Ankleshwar, Gujrat. Patancheru. Sarigam. Baddi, HP.

MANUFACTURING FACILITIES OVERSEAS:

SOUTH ASIA:- INDIA SRI LANKA BANGLADESH NEPAL

SOUTH EAST ASIA:- SINGAPORE

SOUTH PACIFIC:- TONGA FIZI SAMOA ISLANDS VANUTUA SOLOMON ISLAND

MIDDLE EAST:- OMAN BAHRAIN DUBAI EGYPT

CARIBBEAN:- JAMAICA BARBADOS TRINIDAD & TOBAGO

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PRODUCT DETAILS

Asian Paints produces a wide range of paints for decorative and industrial use. It also manufactures intermediate products like Phthalic Anhydride and Pentaerythritol. The chemicals business which contributes 5% to overall sales of the group is managed for value. APIL's product range includes Wall paints, Metal paints, Wood Finishes, Primers, Wall puttys, powder coating and others.

Apart from offering the customers a wide range of decorative and industrial paints, it even custom-creates products to meet specific needs.

Following are few of the famous products of Asian Paints.

DECORATIVE PAINTS:-

EXTERIOR WALLS

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Asian Paints offers a range of emulsion paints for your exterior walls. You can choose from ACE, Apex, Apex Ultima, Apex Duracast and more, based on the specific demand of surface area.

INTERIOR WALLS

DistempersDistempers offer strong performance to the interior wall surface in terms of protection and adhesion. Tractor Acrylic Distemper, with better durability, is one of the best performing distemper made by Asian Paints.

EmulsionsInterior emulsions are advanced water based paints with better quality and shade range. Adhesion to wall surface, anti fungal properties and durability is more in emulsions. Check out products range for more information.

METAL SURFACES

Suitable for metal surfaces, this enamel product brings a suitable effect. With different surface preparation and undercoat system, read the directions for usage carefully before application.

WOOD SURFACES

Clear FinishClear Finishes act as protective coatings providing a high degree of resistance from water, dirt, grime, chemicals and abrasion, along with enhancing the natural beauty of the wood.

Opaque FinishWood Palette, the range of opaque wood finishes from Asian Paints brings you a high gloss, tough scratch proof coloured wood finish that brings new style and sophistication that’s beautiful and stays that way under heavy usage.

Enamels

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These are essentially enamel paints suitable for wood surfaces. With different surface preparation and undercoat system, read the directions for usage carefully before application.

ANCILLARIES PAINTS:- Asian Paints Decoprime Wall Primer WT

Asian Paints Deco-Prime Wall Primer (WT) can be used as primer for painting of water-based wall finishes such sa distempers & plastic emulsion paints.Its special features are easy brushing,excellent covering,alkali resistance,quick drying & good sealing properties.It is specially fortified with fungicides.

Asian Paints Decoprime Wall Primer ST

Asian Paints Deco-Prime Wall Primer (ST) is suitable for use as primerfor masonary topcoats like distempers, emulsions,lustre & matt wall finishes.It helps in providing a suitable surface for applicationof subsequent coats of putty & finish paint.It seta fast,has good sealing properties,good resistance to wall alkalinity, moisture & fungus.

Asian Paints Acrylic Wall Putty

Asian Paints Acrylic Wall Putty is water_based putty.It is one of the best product of its kind available in the market.It provides a very strong durable foundation & brings out the best performance from the finish paints.both in looks & durability.

Asian Paints Exterior Wall Putty

Asian Paints Exterior Wall putty is a specially designed product based on white cement, redispersible polymer & functional additives for application on exterior rough plasters to give a smooth finish.

Asian Paints Wood Primer

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Asian Paints Wood Primer is specially formulated to protect wood.It has an excellent sealing & filling properties which protects wood from swelling due to absorption moisture.Wood Primer penetrates wood fibre & gives excellent adhesion to substrates & also serves as a sound base for application of undercoats & finishing coats.It also protects the finish coat from exudation of resinous matter oozing out from wood.

Asian Paints Exterior Wall Primer

Asian Paints Exterior Primer is water-based wall coating suitable for application on exteriors as an undercoat to exterior emulsions.It has a good opacity & whiteness, which helps improve the appearance of the emulsion top coat.Exterior Wall Primers doesnot chalk & can be applied on freshly plastered surfaces that are adequately cured.It doesnot require any water curing.

INDUSTRIAL PAINTS

Protective Coatings

Offers an extensive range of high performance, heavy-duty coatings for protection of assets in aggressive industrial environments

Floor Coatings

Offers a wide range of coatings and floorings for concrete floors and hygiene wall coatings

Road Markings

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The range includes hot melt thermoplastic road marking material, cold applied retro-reflective and water / solvent based paint for marking roads.

GEOGRAPHICAL MARKETS

The countries that Asian Paints has presence are as follows:

South AsiaBangladesh, Nepal, India and Sri Lanka.

South East AsiaChina, Malaysia, Myanmar, Singapore and Thailand.

Caribbean IslandsBarbados, Jamaica, Trinidad and Tobago.

Middle EastEgypt, Bahrain, UAE and Oman.

South PacificFiji, Solomon Islands, Tonga, Vanuatu and Samoa Islands.

FINANCIAL ANALYSIS & DETAILS

Consolidated Cash Flow StatementFor the year ended 31 st March, 2010 Particulars 2009-10 2008-09

A. Cash flow from operating activities 1257,24 619.14Profits before tax and prior period items

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Adjustment forDepreciation 83.56 74.38Impairment of goodwill - 1.24Prior period items(Net) (0.22) (0.27)Profit on sale of investments (62.72) (0.13)Profit on disposal of subsidiaries (1.15)Gain on disposal of assets (7.88) (6.54)Interest expense 28.47 26.32Interest incomes 11.06 5.69Dividend income (22.62) (14.08)Effect of exchange rates on translation of operating activities

(17.29) 32.06

Operating profits before working capital changes 1246.33 724.43Adjustments for:Increase in stock (191.35) (59.94)Increase in trade and other receivables (50.88) (92.22)Increase in payables 376 4.05Cash generated from operations 1380.10 581.32Income tax paid (net of refund) (316.94) (191.92)Net cash generated from operating activities 1063.16 389.40

B. Cash flow from investing activities Purchase of fixed assets (395.31) (310.05)Proceeds from sale of fixed assets 12.06 21.75Purchase of investments (54.36) -sale from investment 98.66 0.21Interest received 11.40 5.23Dividend received 22.62 14.08Cash outflow on additional stake in subsidiary - (1.27)Cash inflow arising out of disposal of subsidiary 5.91 -Net cash used in investing activities 299.02 270.05

C. Cash flow from financing activities Repayment of long tem loans (14.55) (2.56)Repayment of short term loan (52.97) (1.56)Interest paid (28.47) (26.32)Dividend paid (235.89) (199.93)Net cash used in financing activities (331.88) (230.37)D. Net increase/decrease in cash and cash equivalents

432.26 (111.02)

Cash and cash equivalents as at 31st March 2009 210.37 308.88Net effect of changes in exchange rate on cash and cash equivalents

(5.16) 12.51

Cash and cash equivalents as at 31st march 2010 637.47 210.37

Consolidated Profit and Loss AccountFor the year ended 31 st March 2010

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(Rs in Crores)

Particulars 2009-10 2008-09IncomeSales and operating income 7106.56 6044.51Less: Exice duty 425.62 580.61Sales and operating income 6680.94 5463.90Other income 140.50 51.01

6821.44 5514.91ExpenditureMaterial cost 3757.96 3370.64Employee cost 436.28 371.52Manufacturing, admin and selling expenses 5453.32 4793.83

Profit before interest, depreciation, tax and exceptional items

1368.12 721.08

Less: interest 28.47 26.32Less: depreciation 83.56 74.38Profit before tax and exceptional items 1256.09 620.38Add/less: Exceptional items 1.15 (1.24)Profits before tax and prior period items 1257.24 619.14Less: prior period items (net) (0.22) (2.27)Profit before Tax 1257.02 616.87Less: Provision for tax: Current tax 373.18 179.34

Deferred tax 5.54 16.32Fringe benefit tax - 7.36

(Excess) Tax provision for earlier year (5.61) (5.63)Profit after tax 883.91 419.48Less: minority interest 48.27 21.64Net profit attributable to shareholders 835.64 397.84Add: balance brought forward from previous year 230 200Amount available for appropriation 1065.64 597.84AppropriationsDividend to shareholders of parent company:Equity shares- interim dividend 81.53 62.35 - Proposed dividend 177.45 105.51Tax on dividend 43.33 28.88Transfer to general reserve 163.33 171.10Balance carried to balance sheet 600 230

1065.64 597.84Earning per share –basic and diluted-before exceptional item

87 41.61

Earning per share after exceptional items (face value of Rs 10 each)

87.12 41.48

Consolidated Balance Sheet as on 31 st March 2010

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(Rs in Crores)

Particulars 2009-10 2008-09Funds employedShareholder’s fund 95.92 95.92Share capital 1614.06 1107/25Reserves and surplus 1709.98 1203.17

Loan fundsSecured loans 63.70 103.70Unsecured loans 165.53 204.92

229.23 308.62Deferred tax liability (Net) 56.23 53.31Minority interest 94.45 75.57Total 2089.89 1640.67

Application of fundsGoodwill on consolidation 36.73 50.55

Fixed assets Gross block 1500.39 1461.41Less: depreciation 627.57 648.38Net block 872.82 813.03Add: capital work in progress 407.23 92.11

1280.05 905.14

Investments 624.11 78.40Current assets, loans and advancesInterest accrued on investments 0.21 0.55Inventories 955.88 768.95Sundry debtors 542.52 571.92Cash and bank balances 105.83 210.37Other current assets 64.63 49.12Loans and advances 174.62 197.80

1843.69 1798.71

Less: current liabilities and provisionsCurrent liabilities 1379.65 1014.68Provisions 315.04 177.45

1694.69 1192.13

Net current assets 149 606.58Total 2089.89 1640.67

Financial Ratios

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Ratios Mar ‘10 Mar ‘09 Mar ‘08 Mar ‘07 Mar ‘06

Gross profit ratio 18.11 11.90 14.62 13.32 13.09

Net profit ratio 14.29 7.97 10.28 9.11 7.59

Current ratio 0.89 1.13 1.02 1.24 1.15

Quick ratio 0.37 0.58 0.47 0.59 0.55

Fixed assets turnover ratio 4.68 4,17 3.97 3.81 3.46

Inventory turnover ratio 7.95 9.80 8.03 8.27 8,80

Total debt/equity 0.04 0.05 0.08 0.14 0.11

Dividend per share 27 17.50 17.00 13.00 12.50

Return on long term funds 62.95 49.35 58.11 52.70 51.08

Operating ratio 19.24 13.16 15.83 14.77 14.95

AnalysisLooking at various accounting ratios of Asian Paints, we can get a good picture of the

company’s financial position. A same trend can be noticed in all the ratios, i.e. they are increasing with every year. For example, the Gross Pts and Net Pts Ratio have been increasing since 2006, except for ’09 due to recession. This shows that the company’s profits have been increasing.

Similarly, fixed assets and inventory turnover ratio of the company show intensive utilisation of fixed assets and efficient management of inventory.

Return on capital employed ratio and its dividend per share shows that the management have well utilised the funds and investments made by creditors and owners and the business given great returns to its investors. Company’s operating ratios have also been low which shows their higher operational efficiency. Lower the operating ratio higher will be the operating profit.

However, the company’s liquidity position is not as good. Liquidity refers to the ability of a firm to pay its short term obligation as and when they become due. The company’s liquidity ratio of past few years has been quite low which don’t show a very good picture of company’s liquidity.

OPERATIONS

The paint industry is raw material intensive. Paint involves the mixing of various raw materials in various proportions. The raw materials are of a wide variety. On an average, raw materials account for 60% of net sales (industry average). In case of small-scale units it forms up to 70% of the net sales.

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Raw materials are divided into three major groups, namely, pigments (titanium dioxide, zinc oxide etc.), solvents (mineral turpentine) and resins and additives.

Pigments are finely ground solids of different shades to give colour, durability, consistency and other properties to paint. It is also one of the major raw materials, accounting for one-third of the total raw materials cost.Amongst the vital pigments used in the process of paint manufacture is Titanium dioxide (TiO2) and the industry consumes around 60% of TiO2. This pigment is available in two grades: anatase and rutile, of which anatase is exclusively used in interiors while rutile is preferred in exteriors.

Solvents are volatile organic compounds (VOC) used to dissolve, suspend or change the physical properties of other materials. They are generally used to bring down the viscosity of paints to the desired level, which also reduces the cost of paint formation. They constitute 70%-75% of the paint liquid and ultimate escapes into the atmosphere when the fluid dries. Solvents such as ethylene glycols and alcohols are finding wider use as co-solvents in new water-borne formulations.

Binders are generally oils, resins and plasticisers that give paints its protective property. Most resin manufacturers make alkyds, polyesters, emulsion polymers, epoxy resins, amino resins, powder coating resins etc.

Additives are added in small proportion to the paint to improve its performance characteristics in various ways. Skinning inhibitors, fungicides, wetting agents, driers are included in this category.Around 600 raw materials are required by the industry and all raw materials are not directly related to crude oil. The basket of raw materials is quite exhaustive. Raw materials, which constitutes around 60 per cent of total cost for the paints industry is an important factor for maintaining operating margins. The industry imports around 25 per cent of raw materials. But the most important raw material is titanium dioxide, which accounts for around 25-30 per cent of raw material costs.

PRODUCTION PLANNING:-

Production planning is a centralised activity carried out by the Material planning department for all the plants of the company.

Trade paints are classified under two categories:-

Made to stock. Made to order.

SUPPLY CHAIN MANAGEMENT

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The material function of supply chain of decorative business unit (DBU)/Industrial Growth Business Unit(GBU) located at the Vakola office of Asian Paints consists of Purchase department comprising of Material Planning and Distribution , the development initiatives comprising of RM-PM vendor development, New product supports, New initiatives.

DISTRIBUTION SYSTEM

At the time AP entered the Indian paint business, distribution was the most crucial task for any new entrant. Both physical distribution and channel management posed formidable challenges. The foreign companies and their wholesale distributors dominated the business. The foreign companies appointed a few traders as their wholesale distributors and allowed them to perpetuate a situation of monopoly. Each distributor was assigned a large territory and was given the right to operate as the exclusive channel of the company in the assigned territory. The trade terms were also very liberal. The companies also extended virtually unlimited credit to the distributors. The credit outstandings for the supplies made throughout the year were required to be settled by the wholesale distributors only at the year-end, at Diwali time.

These distributors had neither the compulsion nor the motivation to invest in distribution infrastructure. They were not required to move out to semi-urban and rural areas. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development. Also, they were shutting the doors on any new paint company seeking an entry into the business. In other words, these distributors controlled the paint business and were making it impossible for a new paint company to enter and establish itself n the business. AP sized up the scenario correctly and formulated a unique distribution strategy. In the normal course, a firm entering the industry in this scenario would have opted for the low risk strategy of gaining a limited access to the wholesale traders and be satisfied with a small share of the existing business. But AP went in for a strategy that differed totally from the existing pattern. AP’s strategy in fact, meant the polar opposite of the established/existing pattern.

AP Creates a Large Network of DealersAn extensive network of dealers and a matching physical distribution infrastructure play a crucial role in the decorative paints segment. This is essential for ensuring easy accessibility of the product to customers. In this, Asian Paints scored over its competitors with a massive network of 15,000 dealers spread over 3,500 towns across the country. AP has the largest distribution network among all the players. Goodlass has a network of 8,000 dealers.

AP Established a Network of Company DepotsAP established a large chain of company operated depots/stock points throughout its vast marketing territory, from where the retail dealers could conveniently pick up their requirements. AP’s basic strategie is a liberal approach in the matter of stock points/depots. It also meant that the depots had to be company operated. After all, AP did not have any wholesale distributors to whom the responsibility for operating the stock

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points could possibly have been assigned. AP established a network of 30 company-run depots, spread through out the country and serviced its retailers from them. The number of depots varied from city to city. For example, Bangalore had just one depot while Mumbai had four depots. The depots typically supplied to about 200-300 dealers.

AP creates a Marketing Organisation that Matched its Distribution IntensityEffective control of the large number of depots, each having substantial stocks of 2,000 odd distinct items necessitated a matching marketing organisation structure. AP set up a marketing organisation consisting of four regional sales offices, 35 branch sales offices and a large number of sales supervisors and sales representatives spread all over the country. The marketing organisation of the company is presented in Exhibit 4. It can be seen from the chart that a very extensive structure has been created in the consumer division. It is primarily meant for taking care of the massive distribution task involved in this sector. Each branch sales office has its own depots and the various items are stocked in the depots under the control of the concerned branches. The branches service the dealers and customers in their territories.

These are supported by six regional distribution centres, which cater to 55 depots. Each depot has a branch manager for supervision of several salespersons who cater to more than 14,500 dealers in the more than 3,500 big and small cities all over the country. AP faced many challenges.

LOGISTICS

As demand in India is dispersed and spread over a wide geographical area, Asian Paints strategy to focus on building an extensive distribution (nearly 15,000 retail outlets) and logistics management network has paid it rich dividends. As a result of its wider reach and better logistics management, it has been able to market brands aggressively, thereby outperforming the industry year after year

In this rapidly changing Business Environment, what gives companies like Asian Paints the Competitive Advantage...The answer is LOGISTICS. We can actually compare logistics to the most precious element on this planet WATER. It’s the ability of water to reach and occupy all available space and quench thirst, similarly it’s the ability of logistics to reach wherever the consumer demand exists.

Logistics is a process of planning, implementing and controlling efficient and cost-effective flow of materials and information from point of origin to point of consumption. Hence, Logistics is nothing but the process of strategically managing the movement and storage of materials, parts, and finished inventory from suppliers, between enterprise facilities and customers.

Typically 10-15% of a companies turnover is spent on logistics, depending on the nature of product and the distribution pattern adopted.

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Having exhausted all options in the areas of product differentiation, pricing, promotional strategies and advertising warfare, corporations are increasingly turning to logistics. Hence efficient management of logistics is critical for the profitability of any company. To gain a competitive advantage over its competitors, a company needs to be flexible and adaptable to the market demand. In this changing scenario the following are the needs of the hour:

The company needs to reach the customer at the right time ensuring the availability of the product on shop shelves

This calls for reduction in lead time, operating costs and inventory levels

And Improved asset productivity to leverage core competency

Modern business concepts advocate "let experts do the job". A paradigm shift could be towards partnering with the professional in the field, which will positively impact the bottom-line. This can definitely be achieved through Outsourcing.

Outsourcing logistics is the new weapon in the corporate arsenal. It is an easy access to World-Class Logistics capabilities and better control over the distribution system through an external agency offering specified services, which could be constantly improved upon.

SOME LOGISTIC FUNCTION OF ASIAN PAINTS

(a)Order processing:

Most paint companies are hit by the fact that they do not make the raw materials themselves. For example, phthalic anhydride (PAN) is manufactured from orthoxylene and which goes into the production of paints along with titanium dioxide. Asian Paints is the only paint company that manufactures PAN. The other paint companies have to import their stock. Since PAN prices generally outpace international orthoxylene prices by almost 50% paint companies end up paying a fortune when prices rise. In such a situation Asian Paints benefits by selling PAN in the open market.

(b)Transportation Management

The company has outsource its transport management to Dynamic Logistic Pvt. Ltd.

(c)Inventory Management

The company prefers to maintain low inventory levels due to having large no. of suppliers at bay. The company has 350 raw material and intermediate and goods suppliers.

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(d)Warehousing

The company has 72 warehouses scattered all over the India.

(f)Packaging

The company has 140 packing material vendors.

(g)Acquisition

The acquisition gives Asian Paints a foothold in an emerging market and also opens the possibility of exporting to neighbouring countries. Asian Paints has already made its presence felt in the emerging markets after its acquisitions in Singapore (Berger International) and Egypt (SCIB Chemicals SAE). These acquisitions immediately give access to both emerging markets and those in which Berger International has a strong presence. In the industrial coating segment, the company acquired Hawcoplast Chemicals in November 2001 for Rs 22 crore, which provided it with a presence in the growing powder coating segment.

MARKETING AND SALES

Sales and marketing is organized under three strategies business units viz.A: Through sales and marketing of deco SBU.B: THROUGH MARKETING of industrial GBU.C: Through business development group of international BU.

sales and marketing of deco SBU mainly sells the trade paints marketing of industrial GBO mainly sells specialty coatings chemical resistant paint and general industrial liquid paint for general industrial liquid paints for industrial applications ,oil coating and road marketing paints and business development group of international BU is responsible for marketing support services and expand .

The sales and marketing of DESCO SBO set up consists of branches /depot/stock point’s located allower the counter which sell finished across products to various dealers. Branch /stock points are also termed as units. Each unit is headed by, an area manager or an executive. Area manager report to divisional manager of the four divisions via: - north, south, east and west.

Marketing of industrial GBU setup consist of five zonal offices headed by zonal manager who are supported by officer’s .zonal managers who are supported by officers. Zonal –west1, west 2 and north report to regional sales manager who reports to general manager sales and marketing . zonal managerial south and east report to chief managerial south and east report to chief managerial sold directs to end users. Some qualities are also sold through the dealer network.

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Marketing activities pertaining to trade paints are handled by the group brand managers/brand managers and coordinated from Mumbai with the support of various units marketing activities relating to industrial paints are handled by the chief manager industrial sales and marketing group product manager and coordinated from Mumbai with support from field units.Sales and marketing is organized under 3 strategic business units viz.A . Through sales and marketing of deco SBU B. Through marketing of industrial GBUC. Through business development group of international business unit{ IBU}while reviewing the contracts , the following requirement of the customers are analysed:

1. Quality2. Quantity3. Price4. Delivery

The new product introduction process consists of the following stages:-A: idea generation stageB: feasibility stageC: design and development stageD: validation stageE: pre-launch stageF: post-launch stage

Each stage is signed off by the NPI team also called the project team. The team consists of the following people:1: marketing manager.2: group brand manager.3: product brand manager.4: development manager-technical.5: distribution manager/manager-new products support.

Product: Asian Paints Colour World is the brand name for the one-stop colour shop of Asian Paints, which are unique paint shops where shades are generated with the help of a computer with software to choose and select 1,511 shade combinations, designed to reach consumers in a direct `dil se' style.

Advertising Objective: Position Asian Paints Colour World as the ‘one stop paint shop’ with all the colors one could want. The advertising should create enough interest in potential consumers to ensure that they come to the Asian Paints Color World outlet or at least call the Asian Paints helpline.

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Target Customers Demographics

Region: India, urban population Occupation: Service/working professional/self-employed Gender: Male Religion: Insignificant Social class: Upper Middle and upwards SEC: B and upwards Family life cycle: Middle aged

SEGMENTS

Segment InformationAsian Paints (India) Limited has identified two segments in line with the Accounting Standards on Segment Reporting (AS-17). These are Paints and Others. Others include the Chemicals business of the company viz. the manufacturing of Phthalic Anhydride & Pentaerythritol.

Paint sales for the company recorded growth of 11.4 % at Rs. 14590.3 million compared to Rs. 13096.7 million in the previous financial year. Segment results of the paints business increased by 17.9% to Rs. 2579.9 million from Rs. 2188.4 million in 01-02. Sales from the Chemicals business registered growth of 32.2% at Rs. 1147.56 million compared to Rs. 868.19 million in 01-02. It is for the first time that the Chemical business has recorded sales of over Rs. 1000 million. Segment results of the chemical business increased by 190.8% to Rs. 182.9 million from Rs. 62.9 million in 01-02.

The company’s decorative business is the largest contributor to the revenue of the company. In the decorative business, Asian Paints is the leader in all segments. All product categories of the Decorative business registered good growth with exterior finish sales increasing by over 30%. The total number of Color World installed by the company across the country is 3200 as on Mar 31, 2003.

The company products are broadly divided into two segments:-

Decorative Business Unit (DBU): Major segments in the decorative include exterior wall paints, interior wall paints, wood finishes and enamel. Decorative paint's market size stands at around Rs 32.5 bn. Asian paints is the market leader in this segment. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (September-December) is significant, as compared to other periods. This segment is price sensitive and is a higher margin business as compared to industrial segment.

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Industrial Business Unit (IBU): Three main segment of the industrial sector include automotive coatings, powder coatings and protective coatings. Industrial paint's market size stands at around Rs 9.5 bn. Goodlass Nerolac is the market leader in this segment. User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment.

MARKET STANDING

Asian paints are the market leader in India’s paint industry with a commanding market share of about 39% in the organized segment. It is among the top 10 players in decorative segment in the world. The unorganized sector is a strong force and controls almost 35 per cent of the industry involving estimated 2,500-3,000 players. A decade earlier, the unorganized segment used to have a much higher share of the market but this is slowly changing. Today's consumer is evolving and has become quality and brand conscious. In addition, the reduction of excise duties from a high of 40 per cent to 16 per cent in the last decade has reduced the advantage of the unorganized segment. Increase in raw material costs will equally affect both the organized and the unorganized sector. Asian Paints has been the market leader in the Indian paint industry for over three decades. Today the company has a very high market share. The nearest competitor is half of there size. Yet, despite the dominant position in the market, Asian Paints has been able to consistently record an increase in market share. The company's market share has increased over 3 per cent in the past seven years.

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Comments –

46.9%20.3%

17.3%11.1%

0.4%3.9%

Asian Paints Nerolac Berger ICI J & N Shalimar

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1. The ware housing facilities are well maintained.

2. The company specially looks after the environmental aspects and tries to avoid pollution and pollutants by adapting eco friendly production methods.

3. The company keeps low inventories in off seasons, and high inventory in festival seasons.

4. The company has huge base of raw material suppliers, giving company bargaining power resulting in higher profit margins than competitors.

5. The company has succeeded in establishing themselves in rural parts of India by large distribution network, retail outlets etc.

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HUMAN RESOURCE MANAGEMENT:-

Asian Paints believes that people are its strongest assets, for a company can go only as high as its people aim. It is people who innovate and invent, and who engineer the efficiencies that make a business succeed. It is they who drive growth and lead to greater heights. At Asian Paints, our human resources systems are designed to create a focused, performance oriented and agile company. A talent pool of over 4700 employees employed across 23 countries brings in a unique blend of mindsets and skills. An open and interactive work culture brings out the best in our people. A sense of ownership and freedom to experiment at their workplace brings out creativity and innovation in every individual. Excellent training is provided to develop leaders and re-strengthen competencies from within the organisation. Besides encouraging achievers from within the organisation, we absorb the best talent from some of the best management and technology institutes in the country. We hire people who are best suited to the job and whose personal goals are in alignment with our corporate purpose. Thus, the task is cut out for every individual within the framework of result-orientation, market insight, customer perspective, trust, respect and problem solving. The commitment of our people and their sense of discipline and ownership continues to drive growth for our company.

ORGANISATION RESPONSIBILITIES AND JOB DESCRIPTION

HR provides specialist support required for organized training in the choice of appropriate training, methodology, selection & briefing of faculty & preparation of course material. A compendium of the entire brochure received for various training programmes are categorized & filled separately by the HR corporate centre.

The General Manager- HR is responsible for the recruitment of all officer & executive in the Deco sales & Central function & training of all officers in Deco sales & central function & all executive. He lays down the standard for recruitment of officers & executive in Deco sale & central function & ensures that specified recruitment system & followed to meet organization level standard at each unit. He prepared corporate training plans for officer in Deco sale & central function & all executive & monitor process on the same.

The senior Manager- Plant personnel/executive- HR who heads the plant personnel department is responsible for the administration of the training system in the plant. He assist line executive in assessing the skill & ensures the availability of suitable manpower in term of both no. & skill. He also supervisor a continuous education effort to address the training requirement of the address the training requirement of the quality system & the development needs of individual.

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IDENTIFICATION & COMPILATION OF TRAINING NEEDS:-

Asian paints follow a 3i strategy for training. This strategy articulates the 3 main focus area of training in Asian paint.1. The first I – Integrating with company vision & functional strategy. The need here are identified through discussion with the BV head / functional head on what their business goals for the coming year are & what kind of training support they required.

2. The second I –Inspiring leadership & functional strategy. The programmes in the series depend. The programme in the series depends on the leadership curriculum being driven in the company.

3. The third I – improving career competencies. The programs in this series are identified based upon identified for all employees during the PFMS exercise.Identification of training need of an individual is done once a year based on the assessment of the immediate superior of:

1. Identification of knowledge /skill area vise-a-vis the current job.2. Identification of competencies required to assume a position of higher responsibility3. Identification for his personal growth.

Generic training need (group training need) are determine by the senior manager/ manager-plant personnel/executive –HR for officers &workmen in the plant senior manager-HR (corporate centre- T&D) for officers in corporate in Deco sales & central function & all executive & senior manager- HR (GBU) for non-plants officer in GBU.For plants officers & permanents workmen the generic training need are identified by the senior manager/manager- plant personnel/executive-HR, once a year in the last quarter in consultation with the general work manager, keeping in mind, the business objective of the plants for the year, the departmental objective & the plant settlement where job description are listed.

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KASNA PLANT

ORGANISATION STRUCTURE OF DECORATIVE PAINTS HR:-

GLOBAL BUSINESS UNIT HR:-

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RECRUITMENT / SELECTION POLICY:-

The selection procedure of Asian Paints is highly comprehensive. The procedure consists of three stages- the completion of the application form, the preliminary interview, and the final board procedure.

The First Stage- In the first stage, the applications are examined with utmost care to determine to what extent the candidate made the min qualification for job. Then a strict standard for rejection is used and attempts are made to expose a brief preliminary interview to as many applicants as feasible.

The Second Stage - It involves a preliminary interview consisting of 10 to 20 minutes and purporting to discover as to whether or not the candidate is worthy of further consideration.

The Final Board Procedure – It starts with the group methods of selection. The board consists of four member including the members including the personnel director, the director of the division for which the candidate is being considered, a senior manager of the same division, and another senior manager.After the completion of this discussion, there occurs a short interval during which the board members discuss among themselves their impression of the participants in a separate cabin.Each board member is then required to indicate his comments for each précis and summing up. And selected candidate are required to take a medical examination.

ENVIRONMENT, HEALTH & SAFETY

Environment, Health and Safety (EHS) is one of the primary focus areas for your Company. Company’s EHS policy is to consider compliance to statutory EHS requirements as the minimum performance standard and is committed to go beyond and adopt stricter standards wherever appropriate. Company focuses on pollution abatement, resource optimization and waste minimization, which leads to sustainable development. Company also gives priority and attention to the health and safety of its employees and trains all the employees to work as per prescribed procedures designed to meet all EHS requirements of the Company. Company endeavours to educate its customers and the public on safe use of its products, on a continuous basis. Asian Paints had achieved zero ‘ZERO-DISCHARGE’ of industrial effluent, minimization of waste through reduction at source and recycle/reuse are the key focus areas of AP.

All the six plants of AP including two chemical plants have ISO 14001 certification.

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AWARDS & RECOGNITION

Awarded the "Sword of Honor" by the British Safety Council for all the paint plants in India. This award is considered as the pinnacle of achievement in safety across the world.

Forbes Global magazine, USA ranked Asian Paints amongst the 200 'Best Small Companies of the world' in 2002 and 2003 and amongst the top 200 'Under a Billion Firms' of Asia in 2005.

Ranked 24th amongst the top paint companies in the world by Coatings World - Top Companies Report 2006.

The Asset - one of Asia's leading financial magazines ranked Asian Paints amongst the leading Indian companies in Corporate Governance in 2002 and 2005.

Received the Ernst & Young "Entrepreneur of the Year - Manufacturing" award in 2003.

LID Free paints. Introduction of “ROYALE PLAY” customized paints where customer can select

their choice of colors and customized it accordingly. Special Focus on Customer grievances and feedbacks.

BIBLOGRAPHY

Our primary source of data is personal visit to Asian paints Kasna plant.

Our secondary source of data www.asianpaints.com

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