asian-paints 2013
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Company Overview
Indias largest paint company and Asias third largest paint company
Turnover of Rs 96.32 billion.
Asian Paints operates in 17 countries , consumers in over 65
countries 24 paint manufacturing facilitiesin the world servicing.
The company has come a long way since its small beginnings in 1942. Company operates in Decorative coatingsand 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.
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Business Operations
Paints India
Decorative CoatingsIndia
Industrial CoatingsIndia
Chemicals India
International Operations
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International Presence
Today the Asian Paints group operates in 17countries across the world and is the largest paintcompany in eleven countries
Asian Paintsin South Asia (India, Bangladesh,
Nepal and Sri Lanka) SCIB Paintsin Egypt
Bergerin South East Asia (Singapore), MiddleEast (UAE, Bahrain and Oman), Caribbean
(Jamaica, Barbados, Trinidad & Tobago) Apco Coatingsin South Pacific (Fiji, Tonga,
Solomon Islands and Vanuatu)
Taubmans in South Pacific (Fiji and Samoa)
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International Operations
Contributes 13% to the group turnover
Began by establishing presence in Fiji in 1978
Middle East
CaribbeanSouth Pacific Islands
Asia
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Shareholding Pattern
Promoter and Promoter Group 52.79%
Indian 52.79%
Foreign --
Public 47.21%
Institutions 27.18%
FII 18.64%
DII 8.54%
Non Institutions 20.03%
Bodies Corporate 5.69%
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Asian Paints V/S Nifty
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SWOT analysis
Strengths
Market leader: Asian Paints is the
largest paint
Capacity expansion plans Manufactures PAN
Wide distribution network
Importance of brand image as barriers
to new entrants
Goo Superior technologies deployed
to achieve maintain the competitiveedge
The company has strong financials.
Weaknesses
Industrial business performing below
par
In decorative paints Industry Customertastes and perceptions change very
fast and products may become
obsolete with change in trends
International presence restricted to
small pockets
Seasonal demand and hence in offseason it can lead to cash flow
problem.
Opportunities
Fast growing Indian economy:
Shorter repainting cycles
Growth in the tier II and III towns
Steady growth in industry volume
Fiscal incentives provided by the
government
Threats
Competition from the world majors
Competition from the unorganized
sector
Slowdown in the economic growth
Raw material scarcity and volatlility in
prices.
Industry growth depends on two factor
- Repaint Activity
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STP
Segment
Caters 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. buildings
PositioningA complete array of products to cater to everyone.
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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 pricesensitive 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 areknowledgeable about their needs. Therefore, price comparison is done
effectively by the customers. Which limits the bargaining power of buyers.
Bargaining 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 is Wallpaper.
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.
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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
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Growth Strategies Asia-Pacific paint industry was valued at USD40bn
accounting for roughly 30-35% of the global paintindustry
Indian paint industry accounted for a mere 9%
Raising Above the Bell Curve
Domestic
International
Domestic
7th Decorative paint plant at Khandala (MH) 300,000 KL Rohtak has been increased from 150,000 KL to 200,000
KL per annum
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International
Serving 65 countries through Berger International(Singapore)
Political turmoil in Egypt and Bahrain impacted
demand Bangladesh was impacted
sharp currency depreciation
liquidity crunch / pushed up interest rates
Paint sales of the overseas operations of thegroup for the year is ` 1138.6 cr as compared to974.5 cr
SA outperform sales has increased by 20.9%
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PE prospective
Risks that the funds are hesitating to
take.
Execution risk
Technology risk
Corporate Risk
Political risk
BEST GOVERNED COMPANY in 2011
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Du Pont AnalysisDu pont analysis
OPERATING
EFFICIENCY
ASSET USAGE
EFFICIENCY
FINANCIAL
LEVERAGE
ROE
08FY 10.4% 3.57 10.49 3.91
09FY 8% 3.89 12.09 3.77
10FY 14.4% 3.06 16.92 8.07
11FY 11.7% 3.2 21.26 8.08
12FY 11.5% 3.13 27.69 10
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