Paints Industry & A: Asiatic Paints Essay Example

for Asian Paints to become one of the top five cosmetic coatings companies globally by leveraging our expertise in emerging markets. At the same time, we aim to create long-term value in the industrial coatings business through partnerships with established global companies. The diversification of products has already been addressed. In terms of internationalization, our strategy is to primarily enter high-growth emerging markets and we have developed an emerging market business model.The following steps are followed:
- Introduce new products suited to local demands
- Introduce and continuously strive to improve the technology aspect
- Focus to improve operations, especially supply chain, for maximum efficiency.

Corporate Policy:
- According to the Asian Paints corporate doctrine, the following values are prescribed:
- Satisfaction of the spirit of the law through ethics in business
- Full transparency in all workings
- Truthful communication regarding how the company is run
- Simple and transparent corporate structure driven by business needs
- Establish an efficient structure to manage the company's affairs.

Group Subordinates:
Apco Coatings is a subsidiary of Asian Paints in the South Pacific islands. Asian Paints operates in Australia, Fiji, Tonga, Solomon Islands, and Vanuatu under the trade name of Apco Coatings. Asian Paints Industrial Coatings Limited has been established to cater to the powder coatings market, one of the fastest growing segments in the industrial coatings market. Over the years, Berger expanded its operations globally to cover various geographies.

In 1994, Berger units were incorporated into Berger International Limited (BIL), headquartered in Singapore and listed on the Singapore stock exchange. In November 2002, BIL became a part of the Asian Paints Group. Currently, Berger is renowned for its

superior quality and groundbreaking products. BIL operates in the Middle East, Caribbean, and South East Asia.

Founded in 1979, SCIB Paints has become a well-known pigment company in Egypt and is among the top five in the industry. In August 2002, SCIB Paints joined the Asiatic Paints group. Asiatic PPG Industries Limited was established in March 1997 as a joint venture between Asiatic Paints (India) Limited and PPG Industries, Inc. USA. The purpose of this joint venture was to cater to the pigment requirements of Indian automobile manufacturers and brought together two leading companies with expertise in engineering, fabrication, and customer outreach. In September 2003, Taubmans Paints Fiji, which ranks as the fourth largest pigment company in Fiji, became part of the Asiatic Paints family.

Taubmans Paints is the dominant player in the sales industry nationwide and is also a leader in the nearby Samoa Islands. They have two manufacturing facilities, one located in Suva, Fiji and the other in Samoa. Their strategy focused on increasing product awareness and aiding customers in making informed choices about AP products. The company implemented several key initiatives, which are explained below. Color World Stores were specialty AP stores equipped with an in-store Shade Display Unit that showcased over a thousand unique shades and pre-mixed combinations. This allowed customers to visualize how their rooms would appear with those colors before purchasing the paint.

Asiatic Paints collaborated with academic institutions in India and prioritized the Indian consumer when designing these sunglasses. An interactive computer system allowed customers to customize the colors and select their preference. Additionally, these stores provided shade strips, which showcased the customer's chosen colors through an automated paint dispenser. Customers

could take these strips home and assess if the colors suited their space. With approximately 15000 stores and machines throughout India, the company anticipates a substantial boost in sales from these establishments. AP recently inaugurated its main store in Mumbai, known as the Color Shop.

The shop, which is the first of its kind in India, offers a lifestyle concept to customers rather than selling paint. Inspired by the Indian color festival 'Holi', it provides comprehensive solutions such as helping customers choose colors based on their preferences, offering volume and price estimates, and even providing a home painting service. This unique approach influences customers' purchasing decisions, as they may not find the same customized colors from competitors. Recently honored with the 'Store of the Year' award by the Retail Design Institute in India, this shop is known as APHS (Asiatic Paints Home Solutions), a full-service paint offering by Asiatic Paints.

The painting service was initially introduced as a pilot project in Hyderabad in 2000. Over time, it has gained popularity and is now available in 13 Indian cities. This service provides customers with a convenient and hassle-free way to get their painting jobs done. What sets it apart in the Indian market is that most painting jobs are usually handled by small and unreliable companies, which can be challenging to work with. The trusted brand name of Asian Paints has also played a crucial role in attracting customers.

The company also offered a one-year guarantee with this service, which is uncommon in the paint industry.

Building Brand Name

The company made significant investments in consumer research to establish its brand name. In 2002, the company began marketing its paint under

the Asian Paints brand name instead of the paint's name and also redesigned its logo, prominently featuring the company's name. The company also leveraged the emotional connection that consumers have with their homes to popularize its brand name among Indian consumers.

Asian Paints recognized that Indian customers have a preference for painting their homes before important occasions such as festivals and weddings. They understood that painting symbolizes a fresh start. In order to target this specific consumer group in the Indian market, Asian Paints introduced its new tagline "Celebrate with Asian Paints." This was the first step taken by the brand to establish an emotional connection with consumers in a category that typically involves low engagement. Additionally, the company invested a significant amount of money in advertising and brought in popular Bollywood celebrities to attract end customers, hoping that they would choose Asian Paints for their home painting needs.

Joint Ventures

Asiatic Paints and PPG Inc, USA, a major player in automotive coatings globally, have established a 50:50 joint venture named Asian PPG Industries. This joint venture aims to meet the growing demands in the Indian automotive coatings market. Additionally, Asiatic Paints has created a fully owned subsidiary called Asiatic Paints Industrial Coatings Limited. This subsidiary focuses on serving the rapidly expanding powder coatings market. In order to enhance its expertise in powder coatings, Asiatic Paints has partnered with Canada-based Protech Chemicals, one of the top 10 powder coatings companies worldwide.

Human Resources with Sub clas

Asiatic pigments has a workforce of more than 4700 employees spread across 23 states, bringing diverse perspectives and skills to the table.

The company only

hires from top schools and values hiring the highest quality individuals. To improve communication, last year they implemented HR aid desk, Employee self service, and e-learning applications. Developing employees is a key focus area for Asiatic pigments. While every employee is responsible for their own development, there are also specific activities designed to ensure collaboration and growth. E-Learning was introduced as a new concept to meet the diverse developmental needs of the organization. With multiple locations worldwide, e-learning will benefit employees.

In the year 2009-10, the PMS (Performance Management System) was stabilized. The PMS follows a 360 degree assessment method. An open and collaborative work culture brings out the best in employees. A sense of ownership and freedom to experiment at work fosters creativity and innovation in individuals. The organization provides excellent training to develop leaders and enhance competencies internally.

Asian Paints believes in promoting internal candidates to advance within the company and take on bigger roles and responsibilities. This approach is based on a result-oriented market penetration strategy, client positioning, trust, respect, and job resolution. The company values the commitment, discipline, and ownership of its employees as they drive growth.

The company's non-financial indicators

1. Raw Material: The paint industry heavily relies on natural materials, requiring more than 300 different raw materials for pigment production. Most of these raw materials are derived from petroleum. Titanium dioxide is the largest consumed raw material accounting for about 30% of manufacturing costs. Additionally, petroleum-based raw materials make up 40-50% of total consumption. Fluctuations in crude oil prices therefore impact prices and profitability in the pigment industry.
2. Research and development: Research and development have played a significant role in Asian
   

Paints' growth.

Asian Paints has recently established a new Research & Technology centre in Turbhe, on the outskirts of Mumbai, India. The company has integrated all of its plants, regional distribution centres, outside processing centres, and branches in India into a state-of-the-art supply chain system, utilizing cutting-edge technology. The integration includes all of the company's pigment plants, two chemical plants, 18 processing centres, 350 suppliers of raw materials and intermediate goods, 140 packaging material sellers, six regional distribution centres, and 72 terminals. Asian Paints has been using advanced i2 solutions for over a decade to create a strategic supply chain. These solutions cover sales forecasting, master production planning, raw material planning, distribution planning, and shop floor scheduling. The implementation of i2's advanced planning solutions enables the company to decide which products should be produced at which manufacturing plants.The scheme incorporates variables like cost, demand volume, capacity, current stock levels, and environmental requirements. It is optimized across multiple objective measures including capacity, demand satisfaction, safety stock requirements, stock optimization, and transit costs. The procurement of raw materials includes both domestic sellers and international providers.

Asian Paints utilizes a sophisticated materials planning system to manage its supplies. The system continuously improves the quantity of materials, routings, and substitute parts since raw materials make up a significant portion of the company's value chain. This results in a complex situation when it comes to procuring substitute materials during the planning process. To handle this complexity, Asian Paints relies on i2's factory planning software. This software helps manage various factors including the inflow and usage of raw materials, the selection of substitute materials from different suppliers, and potential production paths to ensure

optimal decision-making in choosing raw materials. Additionally, i2's advanced scheduling software is used to define weekly timing requirements at the plant, unit, and machine levels. Asian Paints often experiences a significant increase in demand for its products towards the end of each month.

During the busy holiday seasons in various parts of India, there is often a high demand. i2's advanced distribution planning system is the solution that Asiatic Paints relies on to handle these rushes. This system also ensures that products can move smoothly in the complex and ever-changing marketplace. To successfully implement this re-engineered solution, Asiatic Paints sought assistance from i2 for deployment support, change management, and continuous improvement. The company also looked to i2 for help in streamlining process workflows, reducing planning cycles, and developing overall solution architectures. By leveraging inventory management and the supply chain, AP has built a much stronger organization.

It has truly allowed AP to capitalize on accomplishments and strengths in the marketplace. Savings, service, and growth have been the focus. A decade after the i2 supply chain opportunity assessment showed that i2 solutions would pay for themselves within a year, AP has significantly improved its debt-to-asset ratio and is now almost debt-free. Supply chain efficiencies have been utilized to implement a aggressive growth strategy. Through the implementation of i2 SCM solutions, the company has reduced its days of finished goods inventory from 56 days in 1999 to less than 30 days currently.

During the initial execution stage, the company's finished goods stock list decreased from 56 days to 40 days, resulting in improved cash flow. This decrease in stock has allowed AP to make growth-oriented acquisitions. The company previously used

an end-service-level metric, but with the implementation of i2 solutions, they have shifted towards a more proactive and accurate order-fill analysis method. As a result, they have achieved high service levels of 87-90% for SKU sales at the location level.

The company's enhanced master planning system has enabled them to achieve greater success than their rivals. They effectively handle the volatility in the fluctuating pigment market and optimize their inventory size. With a better material planning system, they create more complex and effective pigment formulation. Furthermore, the system helps them choose the most appropriate seller and manufacturing methods for different situations. By implementing modern distribution planning on a weekly basis, Asiatic Paints has been able to reduce their inventory deployment.

This feature allows them to customize distribution programs according to their needs. It helps them adjust more easily to changes in market demand, regulatory pressures, and business requirements. They also adapt more effectively to new manufacturing processes. The advancements in supply chain management and implementation systems have allowed the company to grow rapidly. Within ten years of adopting the technologies, the company has quadrupled in size.

In addition, Asiatic Paints has also reduced its on-hand inventory in order to better serve its customers. To improve the efficiency of its supply chain processes and provide a seamless plan-do-check-act model for supply chain executives, the company has implemented the i2 platform. Customized planning and execution workflows have been developed to enhance supply chain efficiencies. The ability to deliver the right product at the right time and place has become a key differentiating factor for Asiatic Paints, leading the company ahead of its competitors.

Where Asiatic Paints are heading and how they

can leverage:

The exterior pigments market is expected to be a high growth area for at least the next five years.

Asiatic Paints has recently entered a new country with its exterior emulsions. In this country, Snowcem is the leading market player in both the cement pigments market (with a 26% market share) and the textured finish market (with a 50% share)

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. If Asiatic Paints were to acquire Snowcem, it would gain complete dominance in the entire cosmetic sections market, including the exterior pigments segment. Additionally, Asiatic Paints could consider upgrading Snowcem's customers to their more advanced exterior emulsions. Acquiring Snowcem would align with AP's strategy of offering value-added services, allowing them to provide a comprehensive solution to any customer.

FUTURE PLANS:

Asiatic pigments' main focus is to strengthen its dominant position in India by introducing new products that align with market developments in both cosmetic pigments and industrial coatings.

In terms of product development, the company is currently focusing on water-based pigments. Their goal is to become one of the top five cosmetic pigment companies worldwide. To achieve this, they will continually seek opportunities for growth in existing and new markets, both in organic and inorganic forms. Additionally, the company recognizes the importance of thoroughly studying the rural sector. They may need to reconsider certain brands in the rural market in order to have the greatest impact.

The company is also exploring opportunities to build long-term value in the Industrial coatings business through collaborations. They are focusing on improving the operations of all their subsidiaries in India and abroad. As part of this effort, they have launched E-Strides, an ERP initiative that covers all overseas

ventures for sharing global knowledge, best practices, and better operational control. The company aims to be one of the top three players in each market they currently operate in or plan to enter in the future.