Strategic Analysis of Asian Paints-1
Strategic Analysis of Asian Paints-1
Strategic Analysis of Asian Paints-1
Strategic analysis of
Asian Paints
NAME ROLL NO. EMAIL ID
Asian Paints is the 9th largest paint company in the world, #1paint company in India and 3rd largest paint company in Asia
with 50+ years of market leadership in India. In addition, 27 paint manufacturing facilities across globe, serving its
consumer base in 65 countries with operations in 16 countries, and Market capitalization of ₹143,179 Crores as on 31st
March 2019 standing among top 10 companies in the world. The company generated Revenue of ₹16,391.78 crores as
against ₹14,153.71 crores in the previous year – a growth of 15.8%.
Company is listed in BSE (Part of BSE 30 S&P SENSEX Code: 500820) and NSE (Part of NSE NIFTY 50 Code:
ASIANPAINT).
The Company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to
home décor (with the acquisition of the Sleek Group and Ess Ess in 2013 and 2014, respectively), bath fittings and
providing of related services.
With the vision of “Clear Goals for a Clear Future” The Company has come a long way since its small beginnings in
1942. It was set up as a partnership firm by four friends who were willing to take on the world's biggest, most famous
paint companies operating in India at that time. Over the course of 25 years, Asian Paints became a corporate force and
India's leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the
market leader in paints since 1967. Today, it is double the size of any other paint company in India. Asian Paints
manufactures a wide range of paints for decorative and industrial use. Asian Paints is the holding company of Berger
International.
Paint is a liquid that, after application to a subtrate in a thin layer converts in to thin layer to a solid film –most commonly
used to protect color and or provide texture.
The domestic paint industry is estimated to be a ₹50,000 Crores industry with the decorative paint category constituting
almost 75% of this market. The decorative paint market includes multiple categories depending on the nature of the
surface like exterior wall paints, interior wall paints, wood finishes, enamels as well as ancillary products like primers,
putties, etc. The industrial paint category constitutes the balance 25% of the paint market and includes a broad array of
segments like automotive coatings, marine coatings, packaging coatings, powder coatings, protective coatings and other
general industrial coatings. The domestic paint industry still continues to have a sizeable 30-35% share of unorganised
players which primarily cater to the low end of the product basket. The paint industry continues to see the emergence of
small to medium level new paint players who continue to put pressure at the low-end emulsions.
Asian Paints is the leading Paint manufacturing company in India with a market share of over 54 percent.
*As on 7/7/19
Apart from its core Paints business, Asian Paints also operates in Home Improvement business where it has launched its
modular kitchen brand called ‘Sleek’ and also bath fittings brand called ‘Ess Ess’. But Home Improvement contributes to
only 2-3 percent to Asian Paints revenue. Rest comes from its core business of decorative and industrial paints.
Asian Paints is a clear leader in India in decorative paints market. Decorative paints make up 80% of the paints market
whereas the share of industrial segment is only 20%, much lesser than the Western markets. Asian Paints has positioned
itself much ahead of its competitors in the decorative paints segment with more than 55% of the organized market share.
The unorganized industry is rapidly declining in India with currently having 30% of the market share of decorative paints.
3. Industry Analysis –The Five Competitive Forces (Michael E. Porter) that shape the Paint Industry for
current and Future:-
Result: Favourable
In commodity business, which the paint industry is increasingly tending to become, volume matters more than
value. Firms are finding it increasingly difficult to pass cost increase to customers. In the industrial paint
segment of paint industry 65% of the share of product goes to the general engineering and the balance 35% to
the automobile industry, both these industries are experiencing sluggish growth and so there is an increase in
buyers’ bargaining power.
Result: Unfavourable
There does not seem any threat of substitute so major in both segments of paint –decorative and industrial
paint.
Result: Favourable
Raw materials (solvents, resins, pigments and additives) constitute around 50% of total production cost and
hence have significant impact on margins in an industry that is increasingly becoming a commodity business
in decorative segment, and so there is moderate bargaining power of suppliers.
Result: Unfavourable
There are existing rivals of Asian paints such as Nerolac, Berger etc.
Due to increased rivalry there is cost pressure upon companies and moreover weaker companies are forced to
leave the market.
Asian paint increased its advertisement expenditure along with research and development to compete this.
Result: Unfavourable
FIVE FORCES ANALYSIS
Entry Barriers
Threat of Substitutes
Attractiveness Remarks
Low High
1 2 3 4 5
Attractiveness Remark
Low High
1 2 3 4 5
Attractiveness Remark
Low High
1 2 3 4 5
Attractiveness Remark
Low High
1 2 3 4 5
Attractiveness Remark
Low High
1 2 3 4 5
Attractiveness Remark
Low High
1 2 3 4 5
Contribution Oil
to cost refining
Attractiveness Remark
Low High
1 2 3 4 5
Attractiveness Remark
Low High
1 2 3 4 5
Barriers to entry
Barriers to exit
Power of buyers
Power of suppliers
Threat of substitutes
Government action
Overall attractiveness
4. Internal Analysis
Marketing factor
Manufacturing/Operations factor
Human Resources
Information Technology
Only company in India to have integrated Supply Chain Management (SCM) solution from i2 Technologies and
Enterprise Resource Planning (ERP) solution from SAP
Customer relationship management (CRM) tools are being used in Asian Paints helpline and Home Solutions
initiatives
Efficiency of business is increased because of transparency and accuracy of information across the country
At Asian Paints, R&D plays an important role in developing new products and innovations, and reducing costs by
value re-engineering of formulations
It consists of 140 strong R&D teams consisting of many qualified scientists. They have always backed the company’s
vision and business plans. They have successfully managed to develop high-end exterior finished and wood furnishes
in-house.
Strengths:
Strong Growth: Asian Paints has shown a healthy growth of around 8 – 12 % in the past 5 financial years. This has made
sure that the company maintains the top spot as far as market share is concerned. It is double the size of any other paint
company in India.
o Strong Global Presence: Asian Paints has a wide footprint on a globe operating in 19 countries and have 27
manufacturing units around the world. Asian Paints serves in over 65 countries and is the third largest paints
company in Asia.
o A wide range of Products: The Product portfolio of Asian Paints allows them to cater to different segments and
industries, they are present in the Industrial coatings, Decorative paints, Ancillaries, Asian Paints Royale etc. This
allows them to penetrate different segments of business and sections of society that helps them maintain market
share.
o Brand Value: Asian Paints was ranked 20th in the Top 20 best brands in Interbrand report by Economic Times. It
also featured in the Top 20 World’s Most Innovative companies.
o Strong Supply Chain Management: Asian Paints has is a superior technologydriven company which has
focused on integrating Supply Chain Management (SCM) and Enterprise Resource Planning (ERP) solution from
SAP.
o Marketing campaigns – Asian paints has always had good marketing campaigns. It has continued its association
with Saif Ali khan over the years and had also roped in Soha ali khan for a beautiful campaign. From time to time
it has roped in other personalities for ads but Saif Ali khan has been a constant. Recently, Deepika padukone has
been chosen as their brand ambassador for Asian paints Royale play. Their brand mascot – GATTU is very
famous too and is one of the most popular brand mascots of India.
o Asian paints royale play – The Royale play was an amazing and breakthrough concept launched in the market
by Asian paints wherein painters from the company themselves will paint your house using unique designs and
colours. These painters were specially trained and consumers relied on them because they came from the house of
Asian paints. Deepika Padukone is the brand Ambassador for the sub brand.
Weaknesses:
o Low Market Share in Industrial and Auto Paint: Asian paints has a low market share in the industrial paint
(about 15 percent) and auto sector (about 20 percent) when compared to Kansai Nerolac and AkzoNobel.
o Slow International Business: Except for Bangladesh, Nepal and UAE, Asian Paints have been performing below
par in other overseas countries.
Opportunities:
o Growth in Industrial Sector: It has a chance to acquire market share in the Industrial as well
as automobile sector as well considering the current market situations.
o Growing Indian Economy: With growth in Indian Economy and developing infrastructure, Asian Paints has a
chance to increase revenue base and venture into smaller cities, to increase sales.
o Emerging Nations: Asian Paints’ vision is to become one of the top five decorative coatings companies in the
world. This can be achieved by focusing on the emerging economies of the world.
o Adapting to consumer psyche – Change is always constant. So although Asian paints is leading the market due
to Royale play, there are other factors which it can bring in to dazzle its customers and therefore keep the majority
market share. Off course, easier said then done.
Threats:
o The threat of Slowdown: Any Economic slowdown will have a direct negative impact on the construction
industry and consequently paint industry will also get affected.
o Unorganized sector: The unorganized sector still has about 35 percent of the market share and this can prove out
to be a deterrent to the growth of the industry.
o The scarcity of Raw materials: The raw materials required in the Paint industry control the pricing of paint and
scarcity can cause a jump in the prices, which can be a threat for the Paint Industry. On an average, raw materials
constitute ~56% of the total expenditure in paint companies. Titanium dioxide is one of the major raw materials
and price fluctuations in its cost have direct and substantial impact on the cost of production. Crude oil derivatives
are the other major raw materials and have similar impact. Apart from these a large number of other raw materials
are used for adding/giving specific properties to the wide product range offered by the industry.
End-User: The decorative paints segment products find use in households and construction whereas the industrial
segment products find use in automotive industry, consumer durables industry and other OEM’s.
Market Share
Research and Strategize around technology development, product development focussing also on creating sustainable
development products, as well as value re-engineering for productivity improvement and cost optimization.
4) Recommendations:
5) Bibliography:
https://www.asianpaints.com/content/dam/asianpaints/website/secondary-navigation/investors/annual-
reports/Asian%20Paints%20Annual%20Report%20FY2019.pdf
https://www.asianpaints.com/
https://en.wikipedia.org/wiki/Asian_Paints
https://www.equitymaster.com/research-it/sector-info/paint/Paints-Sector-Analysis-Report.asp
https://www.edelresearch.com/showreportpdf-26172/BRAVEHEART_SERIES_-_ASIAN_PAINTS_-
_THE_GROWTH_PALETTE-EDEL
http://bergerpaints.com.sg/
https://economictimes.indiatimes.com/asian-paints-ltd/infocompanyhistory/companyid-14034.cms