asian-paints 2013

8/13/2019 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

asian-paints 2013

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