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Asian Paints

Brief overview

Asian Paints is India's largest paint company and ranked among the top ten Decorative

coatings companies in the world with a turnover of INR 66.80 billion. Asian Paints alongwith its subsidiaries have operations in 17 countries across the world with 23 paint

manufacturing facilities, servicing consumers in 65 countries through Berger International,

SCIB Paints Egypt, Asian Paints, Apco Coatings and Taubmans.

i. Brief History:1945

The Company was incorporated as a private limited company under

the name of Asian Oil and Paint Company Pvt. Ltd. It was converted into an public limited company

in 1973. The Company manufacture a wide range of surface coatings catering to different end-uses. It

also manufactures vinyl pyridine latex used in the manufacture of rubber tyres. The company expanded

its products range, developed its own technology, set up a distribution network penetrating in smallerTowns and ploughed back a large part of earnings into creation of new facilities.

1965

The name was changed from Asian Oil and Paint Company Pvt. Ltd. to Asian Paints (India) Pvt. Ltd.

1974

A major modernisation programme was undertaken to streamline the paint production facilities by

improving the layout of machines, addition to balancing equipment and replacement of old machinery.

The Company embarked on phased modernisation of resin manufacturing facilities as well. The Bhandup plantof the Company is reportedly the largest single paint factory in the country and one of the most up-to-date with

sophisticated machinery and equipment for manufacturing a wide range of paints and other products besides

adequate resin manufacturing capacity to meet its entire requirements.

1975

Bonus Equity shares issued in the prop. 1:2 in 1961, 1:3 in 1962, 1:1in 1966, 1:2 in 1969, 2:3 in 1971 and 1:2

in 1975.

1978

1,00,000 Bonus Equity shares issued in the prop. 2:3.

1982

The main objects of the public issue of capital during August,Were to fulfill the listing requirements of theStock Exchange and to provide part of the finance for the increased operations.

1983

- Equity shares subdivided. 10,00,000 Bonus shares issued in prop. 2:5, 16,85,185 No. of Equity shares issued

(prem. Rs 13 per share) through prospectus in August 1982. Out of these, 84,259 shares and

33,704 shares were reserved for preferential allotment to the employees

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and to the business associates of the company respectively. 15,67,222 shares offered to the public of which

4,21,296 shares were offered to NRIs on repatriation basis.

1987

- The Company commissioned a plant for the manufacture of synthetic

rubbers lattices with a capacity of 1,200 tonnes per annum. The

Company received a letter of intent to manufacture 9,000 tonnes ofphthalic anhydride. The project would be based on imported Van

Heyden low energy process technology with engineering package from Davy

McKee of Cologne, West Germany. The project was commissioned in March

1990.But, a fire accident in the succeeding month damaged a storage tank,

near by pipes and support structures. The plant was repaired and

restarted only in August 1990.The Company jointly with Tamil Nadu Industrial

Development Corporation (TIDCO) promoted a joint sector Company under the namePentasia Chemicals Ltd. (PCL), for the manufacture of 3,000 TPA of

pentaerythritol and 1,800 TPA of sodium formate. The projectcommissioned in March. The 41,48,148 Bonus equity shares issued in prop. 1:2.

1998

- As at 31st March, a sum of Rs 1008 lakhs was outstanding against loans from Financial

Institutions.

- The new initiative to install 350 colour worlds received encouraging response and made

significant contribution to performance. Three new products, NC range of wood finishes,

ACE exterior emulsion and Asian wall putty were launched.

- Asian Paints, the Rs.737.20 crore paints major, has launched a new marketing thrust withthe introduction of a one-stop colour shop for paints complete with a software for consumers

to choose and select their different shade combinations.

- Asian Paints, India's No.1 Paint Company recently, launched their latest offering `Asian

Paints Colour World'.

- Credit Rating Information Services of India Ltd (Crisil) has Assigned a `AAA' rating to the

proposed non-convertible debenture (NCD) obligation of Asian Paints Ltd (APL).

- Two subsidiaries of Asian Paints - Pentasia Chemicals and Pentasia Investments - have

been merged with the parent company following the approval of the Board for Industrial &

Financial Reconstruction (BIFR).

- Asian Paints Limited, the largest paint company in India, launched its first exclusive

showroom in Mumbai.

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1999

- The company has joint venture companies in the overseas market. All these ventures are

doing well and have a strong hold in their respective markets.

- In its first-ever acquisition overseas, Asian Paints Ltd (APL) has acquired a 76 per cent

equity stake in Sri Lanka-based Delmege Forsyth & Co (Paints) Ltd.

2000

- Asian Paints has launched two variants in polyurethane (PU) wood finish under the brand

name Opal.

- The Company has proposed to issue bonus shares in the ratio of three shares for every fiveshares held.

- Asian Paints has opened a manufacturing plant in oman in partnershipwith a local

company.

- Asian Pains has acquired the entire paints business of Pacific Paints Company based in

Australia for over Rs 1 crore.

- Asian Paints has lifted the lockout at its factory in Uttar Pradesh.The Company suspended

operations at Kasna in July after the workers resorted to a sit-in-strike.

2001

- Asian Paints has introduced Utsav Enamel for the festive season.

- Asian Paints has appointed senior parnter of the solicitor firm Crawford Bailey & Co, R AShah and Deputy Director, National Chemical Laboratory Dr Swaminathan Sivaram as

directors on the company's board.

- Asian Paints India Ltd has posted a marginal drop in net profit at Rs29.62 crore for the

quarter ended September 30, 2001.

2002

-Approves voluntary delisting of shares from the following stock exchanges:

1. The Ludhiana Stock Exchange Association Ltd.2. The Calcutta Stock Exchange Association Ltd.

3. The Stock Exchange, Ahmedabad4. Madras Stock Exchange Ltd.

5. The Delhi Stock Exchange Association Ltd.

6. The Hyderabad Stock Exchange Ltd.

7. Vadodara Stock Exchange Ltd.

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-Revamps its international operations, transferres shares in its subsidiaries in Fiji, Tonga,Solomon Island, Vanuata, Australia and the Sultanate of Oman to the Mauritius based

subsidiary Asian Paints International

-Executes agreement for purchase of 60% equity capital of SCIB Chemicals S.A.E., Egypt

-Launches its million joint venture with Bangladesh-based Confidence Cements in whichthe holds 51 per cent stake

-Acquires controlling stake of 50.1 per cent in Berger International,Singapore, for Rs 58

crore, appoint Jalaj Dani as CEO

2003

-Board recommends issue of bonus shares by capitalisation of Reserve in the ratio of 1

equity share for every 2 equity shares held on therecord date

-Asian Paints, via its Singapore-based subsidiary Berger International - inks a technology

and brand licensing agreement withPT Abadi Coatings Solusi, an Indonesian paint company

-Shareholders approve the Scheme of Arrangement proposed to be made between PentasiaInvestment Ltd with Asian Paints India Ltd and the consequential reduction of share capital

of Asian Paints India Ltd.

-Berger International starts restructuring exercise to curtail cost

-Acquires Taubmans Paints (Fiji) Ltd. through its subsidiary in Fiji, Asian Paints (South

Pacific) Ltd (APSP)

-Acquisition of 9.2% shares in ICI India Ltd.

-Asian Paints bags Ken Sharma award

2004

-10th Asian Paints Star Screen Weekly Awards- aura of mystery

-Asian Paints launches paint solutions for kids'

2005

-Berger Intl partners with Filipino firm Dutch Boy

2006

-Asian Paints - APICL's new mfg plant at Baddi commences commercial production

2008

-Asian Paints launches new campaign

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2009

- Asian Paints Ltd has submitted the disclosure under Regulation 7(3) of SEBI (Substantial

Acquisition of Shares & Takeovers) Regulations,1997 to BSE

- Asian Paints Ltd has appointed Shri. S Ramadorai as an Additional Director of the

Company pursuant to Section 260 of the Companies Act,1956.

ii. Challenges faced by Asian paintsHighly dynamic: The paints and coatings industry is highly dynamic. It is very difficult for the

company to cope up with these rapid changes.

Price sensitivity: There is Strong price sensitivity in the industry. The rising raw material prices and

the resultant squeeze in profit margins are issues which the company has to deal frequently. To

aggravate the situation, the cuts in price of product are being accompanied by increase in the raw

material prices. Resins prices have been rising in the past few years for almost all kind of paints. Thus,the company are getting squeezed from both directions resulting in thinning of their profit margins.

Increasing demand of the buyers : The Paints are sold through direct sales as well through

distributors. While architectural paints mainly follow the retail channels, industrial paints are sold

directly to end-use companies. It has been observed that these buyers, both direct end-users and retail

channel, are becoming increasing powerful with their growing bargaining power. The End-users aredemanding higher quality paint for the same or a lower cost. The company is continuously being

forced to reduce prices, and those who fail to do so are losing out to the closely fought competition.

Technological changes: Another challenge on the resin front is that the introduction of newer

technologies and newer types of resins are pushing out few conventionally used resins.

Government regulations: A governmental regulation against paints containing volatile organic

compounds (VOC) is a major factor in throwing out certain kinds of paints from the market. This will

definitely affect the resin situation in the market and would require the co mpany to adjust accordingly.

Competitors actions and strategies: Companies have to be proactive and cannot sit back and wait for

other companies to act. If it does not act fast then it will surely lose out in the market in the medium

run, if not the short.

Substitutes: There is an increasing demand for more trendy and easy-to-use alternatives to paints.

Colourful patterned wallpapers and wall panelling are being preferred by some for architectural use

instead of regular emulsion paints. In terms of industrial use, the use of coatings for office equipment is

decreasing significantly. Equipment suppliers prefer to use metallic finishes and oxidation process to

give a more matt and sleek look to the equipment. Also, these metallic options are considered mor e

hassle-free as there are no issues of paint chipping, re-painting etc.

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iii. The products launched in the Indian market :

The following are some of the products launched in the Indian market:

a. Ancillaries

y Wall Primer WT

Description: 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 isspecially fortified with fungicides.

y Wall Primer ST

Description: 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.

y Acrylic Wall Putty

Description: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.

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y Exterior Wall PuttyDescription: Asian Paints Exterior Wall putty is a specially

designed product based on white cement, redispersible polymer &functional additives for application on exterior rough plasters togive a smooth finish.

y Wood Primer

Description: Asian Paints Wood Primer is specially formulated to protect wood. Ithas 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.

y ExteriorWall Primer

Description: 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 does not chalk & can be applied on freshly plastered surfaces that are

adequately cured. It does not require any water curing.

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b. Decorative products :

I. Exterior walls

Product Name: Asian Paints Apex Ultima

Description:Asian Paints Apex Ultima Advanced Anti Algal Weather Proof Emulsion is a

water-based,modified acrylic, anti algal, high performance exterior wall finish. It incorporates

the latest state-of-the-art technology to provide long-lasting exterior performance even in the

most extreme tropical conditions of india. Its unique advanced anti algal chemistry ensures

that exterior walls are provided with power-packed resistance aganist algae and fungi growth.

Its has very good dirt pick up resistance and dirt cleaning propertiesCost Range: Premium

Finish: Rich Sheen

Availability: Across all Colour World Dealers.

y Product Name: Asian Paints Apex

Description: Apex Weatherproof Exterior Emulsion is a water-based 100% acrylic,

exterior wall finish. A high performance, long-lasting exterior paint specially formulated

to withstand extreme tropical conditions of high rainfall, humidity and heat, Apex

provides excellent resistance against the growth of algae and fungi on the walls. It offers

excellent protection against alkali and UV degradation too.

Cost Range: Mid-Range

Finish: Rich Sheen

Availability: Across all Colour World Dealers.

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y Product Name: Asian Paints Duracast Rough Tex

Description:Asian Paints Duracast Rough Tex an exterior finish composedof high

quality exterior durable acrylic modified resin specially designed as an intermeditate

coating.its unique texture pattern has an distinctive appeal.

Cost Range: Premium

Finish: Rich Sheen

Availability: Available through Asian Paints Project Sales Only.

y Product Name: Asian Paints Duracast Rough Tex

Description:Asian Paints Duracast Rough Tex an exterior finish composedof

high quality exterior durable acrylic modified resin specially designed as anintermeditate coating.its unique texture pattern has an distinctive appeal.

Cost Range: Premium

Finish: Rich Sheen

Availability: Available through Asian Paints Project Sales Only.

y Product Name: Asian Paints Apex Dholpur Tex

y Description:

y Cost Range: Premium

y Finish: Rich Sheen

y Availability: Across all Colour World Dealers.

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y Product Name: Asian Paints Duracast Swirltex

y Description:

y Cost Range: Premium

y Finish: Rich Sheen

y Availability: Across all Colour World Dealers

II. Interior paints

y Distempers

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

y Emulsions

Interior 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. Checkout products range for more information.

y Enamels

It is a premium brand from Asian Paints, it is superior in terms of performance

and gives you that Perfect Finish for your walls. Apart from the above features

which emulsions offers, Asian Paints also has an exclusive product range in

special effects finishes. You can check our Royale Play products for more

information

III. 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.

IV. WOOD SURFACES

y Clear Finish

Clear Finishes act as protective coatings providing a high degree of resistancefrom water, dirt, grime, chemicals and abrasion, along with enhancing the naturalbeauty of the wood.

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y 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 sophisticationthats beautiful and stays that way under heavy usage

y Enamels

These are essentially enamel paints suitable for wood surfaces. With differentsurface preparation and undercoat system, read the directions for usage carefullybefore application.

c. Automotive

y 2k Nexa autocolour

2K Nexa Autocolor works in partnership with its customers to improve the profitability and

well being of their businesses.

Valued by body repair shops, dealers and industry influencers in over 140 countries, NexaAutocolor brand is a market leader in markets including the UK, Spain, France, Malaysia,

China, Brazil, and Argentina. Its no different in India ! The Nexa Autocolor brand, a leader

internationally in the refinish market, has a history of more than 100 years experience in the

paint industry. This experience has enabled us to gain a thorough understanding of our

customers needs and the issues our customers face on a daily basis. Technical and training

teams of PPG collaborate globally to develop innovative products, processes and programs tohelp our customers continually improve the efficiency and profitability of their business.

Manufactured at PPGs plant in Stowmarket, England, Nexa Autocolor stands for innovationin paint chemistry and leads the industry with products such as Aquabase, the first

waterborne basecoat.

y Deltron

A premium 2-pack polyurethane based automotive refinishing system. It comes as a fullyintegrated package of products, right from bare metal pretreatment to plastic component

systems through to polishing and finishing compounds. It is available in more than 40000shades. Its comprehensive range takes care of all kinds of painting needs.

Deltron is available on a mixing system with a range of tinters, which when mixed together in

different proportions offer a wide variety of shades to the customer. These tinters aremounted on a mixing rack that is installed at the shops of each Deltron dealer

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y Delfleet

The latest advance in fleet coatings technology. Delfleet is PPG's premium paintsystem for meeting the demanding needs and exacting specifications of OEM

commercial vehicle manufacturers and fleet maintenance operations.Incorporating

the very latest fleet coatings technology, this premier fleet coatings system is

supported by one of the most comprehensive colour-matching systems in the

industry. Whether it is superior chemical resistance or top-of-the-line gloss and

durability, customers seeking a paint system configured to very specific

performance needs will find that Delfleet offers a wide selection of topcoats,

clearcoats and primers to choose from. Moreover, painters will find that a Delfleet

system is easy to apply and achieves exceptional colour match

d. Industrial

y Protective CoatingsProtecting industrial assets is increasingly becoming critical owing to rising asset costs,

harsh weather conditions and mounting chemical pollution. Therefore asset owners are

looking at specialised protective coatings specific to their requirements. We perceive this to

be just the right environment for Asian Paints to demonstrate its growing technical

strength.Protective Coatings from Asian paints offer a choice of high-performance, heavy-duty coatings, designed to protect assets against the specific corrosive environment they are

exposed to. Asian Paints Protective Coatings are tested under extreme conditions to ensurethat they are durable and can withstand the vagaries of the different climatic conditions.

Today the range of coatings find use across diverse industries such as nuclear, thermal orhydel power plants, chemical, petrochemical or fertilizer plants, refineries, sugar, pulp and

paper industry, offshore structures, pharmaceuticals etc.

y Floor Coatings

Concrete floors represent a significant investment for any industry. Despite this, it isoften the most neglected and abused part of the structure. Apart from themechanical abuse, spillages of various kinds of chemicals also occur oftenweakening the reinforcement and concrete surface. The need to protect the surfacewith a suitable coating is quite obviously there. An increasing awareness of the limitations/drawbacks of concrete flooring is nowresulting in wider acceptance of floor coatings. Limitations include the accumulationof dust due to the formation of laitance and difficulty encountered during cleaningowing to surface texture. Furthermore, the presence of cracks and surface porosityallows various oils to seep in, resulting in unappealing patches. Weakening of the

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THE FOLLOWING ARE THE MAJOR COMPETITORSOF ASIANPAINTS:

GOODLASS NEROLAC

Goodlass Nerolac Paints Ltd. [GNPL] with its two wholly owned subsidiaries

Saurashtra Paints Ltd., Ahmedabad and GNP Madras Ltd., ranks second in the

industry . The company has a tie up with Kansai Paint Company of Japan, a world

leader in paints, which holds 65 per cent stake in GNPL. Having derived maximum

income in industrial paints from Maruti Udyog Ltd. (MUL) until recently, the

company has now widened its client base to include many other automobile

manufacturers like Mitsubishi Lancer, Hyundai Motors and Telco.

ICIINDIA

ICI India Ltd. (ICIIL) is a part of the Imperial Chemicals Industries (ICI), UK .The

company has diversified interests and is not purely a paints company. ICIIL is

recognised as the fourth largest paints manufacturing company. The company, which

was a leader in the premium emulsion paint market, has now lost out to Asian Paints

in the same category.

BERGERPAINTS

Berger Paints India or Berger Paints India Ltd. or Berger Paints is an India-based

paint manufacturing company. It is a 70 year old company and is India's 3rd largest

paint manufacturer and second largest decorative paint player. The company is

headquartered at Kolkata In Decorative Paints, Berger has paints and paint systems

for every application - interior, exterior, every surface, concrete, plaster, metal and

wood - as well as special applications like water storage, etc.Berger acrylic brands

like Luxol Silk and Rangoli for interiors, and Weather coat for exteriors are quality

leaders in technology and represent decor statements that redefined the premium

category. Luxol Hi-Gloss is the national hallmark for excellence in paint enamel.

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Discover

y This forms the basis of fast growth.

y AP has identified opportunities abroad in developing countries similar to India

y To enter into these countries they adopted the presence of acquisition.

Develop

y Paint industry is primarily a product oriented industry up till now.

y Huge potential exist in the service side also.

y Introduction of the colour world, providing services in the painting and interior

decoration etc are steps taken to acquire the whole chain and becoming the full

service provider.

y Need to ensure value adding services are possible. This can be integrated to provide

an umbrella service.y Constant reminders to the customers to repaint or upgrade.

Market Overview

Growth in End-user Markets Likely to Fuel Asian Paints and Coatings Market

Since Chinas inception into the WTO in 2001, the Asian paints and coatings market has

reported tremendous growth. Due to the lack of environmental regulations in Asia, traditional

solvent-based coatings seem to dominate the coatings market in the region. However,

buoyant economic growth, globalization of end-user industries, and increasing foreign

investments have brought quality products to the market. 'Local manufacturers have

established tie-ups with leading multinational coating companies to serve their customers

better,' notes the analyst of this study. 'In order to sustain profitability in a market where

rising raw material costs and competitive pricing command profit margins, manufacturers

should start investing in cost-effective coatings technologies, for which the margins are

higher.'

The rapid growth in the end-user markets is expected to act as the key driver for the growth

of the paint market. Paint manufacturers cater to a variety of end-user industries; the

increasing influx of foreign investments into emerging markets has benefited most of the

industries. The construction industry has witnessed robust growth over the past few years.

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The growth of the automotive industry in Asia, which is primarily driven by China, has been

bolstered by India and Thailand. China is expected to emerge as the global production hub for

electronic goods. Asia accounts for 60 percent of the global ship building market, and rapid

growth in China, aided by moderate growth in South Korea and Japan, is expected to drive

the demand for marine coatings.

Mergers Combined with Stringent Regulations Likely to Boost Market Growth

There have been a number of mergers, acquisitions and technical co-operations between

MNCs and local suppliers in the Asian paints and coatings market. Mergers and acquisitions

have been beneficial for international manufacturers trying to penetrate the Asian market in

order to tap its potential. The local suppliers, in turn, benefit as they get access to superior

technologies and foreign markets. This enables them to support their customers who are

penetrating the overseas markets. Consolidation has resulted in the rapid advancement of

coating technologies, and is expected to drive the growth of the paints market in the next five

years. Numerous unqualified coating suppliers are finding it difficult to compete, as the focus

is shifting from lowering prices to consistent supply of quality products.

In addition, mature markets such as Australia, Japan, and South Korea have strict regulations

in place. Coating manufacturers in these countries invest consistently in R&D in order to

remain competitive in the market. In emerging markets such as China, India, and Southeast

Asia, the regulations are lax and the market is price sensitive. With growing consumer

awareness and consolidation in the market, manufacturers are investing in high-end

technologies. Regulatory bodies in these countries are expected to impose regulations in these

markets, slowly and gradually. 'With strict regulations in place, the paint manufacturers are

expected to move away from low-cost pricing strategy and focus more on quality products,'

explains the analyst. 'Regulatory standards are expected to drive product innovations in the

Asian coatings industry in the coming years.'

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