Asian Paints Ltd International Business Division

Asian Paints

INTRODUCTION

Asian Paints Limited was set up as a manufacturing unit in suburbs of Mumbai in the year 1942. APL has been leading the Indian market since 1967. In 1998 the company worked with Booz Allen Hamilton to craft a restructuring program and ultimately come up with a new vision. “To secure a place among the Top Five decorative paint companies in the world by the end of the decade.”

Asian Paints: A brief History

“To secure a place among the Top Five decorative paint companies in the world by the end of the decade.”

VISION 2008APL’s global aspirations

Start and Growth

1942 : A partnership was established

1945: The partnership changed to a company

1954: First Plant set up in MUmbai

1967 : APL becomes market leader

COMPANY TIMELINEAPL from 1942 to 2005

Initial Years

Formative Years

1978 : Entered Fijian Market through a JV

1982: Entered Tonga, an island in South Pacific

1982: Went Public; Share issues

1983: Entered Nepal

1985: Entered Solomon Islands

1995: AP enters Australia

1996: 50:50 JV with PPG for automotive Paints

Domestic Leadership and entry to Foreign Markets

Restructuring and New Vision

1998: Restructuring

1999: Entered Oman

2000: Acquired Pacific Paints in Australia

2002: Acquired SCIB chemicals in Egypt

2002: Acquired Berger International and its 11 subsidiaries in Singapore

Aggressive Global Strategy

Domestic LeadershipAPL’s Competencies

Identified need gapsPricing PoliciesProducts LineAP Helpline, Home SolNew Revenue Streams

Mainframe in 1971V-SATS in 1994Demand ForecastingReduce InventoryLow Working Capital

Avg Cap – 67,000 MTBargaining powerInvestment in R&DFormulation EfficacyReduced Cost

16,000 dealers18-20 % exclusiveIntangible AssetsB-School RecruitersTop Management

Customer Centric IT Infrastructure Supply and R&D Distribution and Talent

Feedback Collection Real Time Data High Bargaining Power Reach and Sales Force

Size of Paint Maker

Investment Potential

APL used the above model to identify the markets across the world where it planned to establish a footprint

Size of Economy

Nature of Competition

Size Economy

Investment Competition

APL

APL’s International StrategyParameters and Metrics

In order to to make the first cut;

• A GDP > 6 %

• Limited Comp and No MNC

• A market that would provide APL an opportunity to be among the Top 3 players within 5 years

A Focus in Emerging MarketsOpportunities to Expand

Emerging markets had similar supply chain and distribution system as India

Buying out a leading player would be less expensive in emerging markets rather than in developed markets

No single MNC had a presence across all emerging markets

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2

3

Growth Through JVsReady Made Platforms for Distribution, Brands and Capacity

Egypt

Singapore

Bangladesh

Berger$12.9 Million; access

to 11 countries

SCIB$ 5.33 Million

Greenfield Project$2.22 Million (No

attractive JVs)

Segmentation of Global MarketsFor faster roll out of products and better management

After the acquisition of Berger International;, APL extended its footprint to more than 70 countries. Consolidation of previous clutch of JVs and better management of all the acquisitions were the key to success for APL

Leadership Market Growth Markets Strategy Dept.

APL is a leader

Size: $ 100 Million

Sales: $ 55 Million

Future Growth

Size: 3.3 Billion

APL MS: 10 %

Drive Profitability

Size: $ 75 Million

Niche Player

• Market Knowledge

• Commitment Decisions

• Market Commitment

• Current Activities

Evaluating APL through UPPSALA model

The model states that additional market commitments are made in small incremental steps; choosing additional geographic markets with small Psychic difference; combined with entry modes with few additional risks. Different entry modes are• No Regular Expert (Sporadic Mode)• Export via Independent

Representatives (Export Mode)• Establishment of Foreign sales

Subsidiary• Foreign Production/ Manufacturing

Units

Country APL'sStake Population(Millions)

GDP(%)

MarketSize

PerCapitaUsage(inkgs)

APL'sMarketShare(%)

APL'sRevenues

APL'sRevenues(Forecasted)

CAGRVolume(MetricTonnes)

Value($Millions) 2006 2007 2008 2009 2010

Bahrain 100% 0.66 5.0% 8,240 13.30 12.49 45.0% 5.99 6.43 6.92 7.44 7.99 8.59 3.25

Barbados 100% 0.28 3.1% 3,250 15.24 11.73 48.0% 7.32 7.66 8.01 8.38 8.77 9.18 1.48

Fiji 51% 0.87 - 3,529 8.07 4.07 42.0% 1.73- - - - - -

Jamaica 51% 2.73 3.1% 9,500 35.90 3.47 76.0% 13.91 14.56 15.24 15.95 16.69 17.47 1.48

Nepal 51% 26.11 5.8% 5,097 5.25 0.20 34.0% 0.91 0.99 1.08 1.17 1.27 1.38 4.30

SolomonIslands 75% 0.50 - 198 0.93 0.40 70.0% 0.49- - - - - -

Tonga 51% 0.11 3.1% 280 0.67 2.62 62.0% 0.21 0.22 0.23 0.24 0.25 0.27 1.48

Trinidad andTobago 70% 1.14 3.7% 5,000 19.59 4.39 36.0% 4.94 5.21 5.50 5.81 6.13 6.47 1.95

Vanuatu 60% 0.20 4.5% 201 0.91 1.02 75.0% 0.41 0.44 0.47 0.50 0.53 0.57 2.69

Bangladesh 50% 136.59 5.8% 31,000 90.00 0.23 1.0% 0.45 0.49 0.53 0.58 0.63 0.68 4.30

China 100% 1,283.41 7.5% 1,620,000 2,421.00 1.26 1.0% 24.21 26.93 29.96 33.33 37.08 41.26 7.43

Egypt 60% 73.83 3.0% 140,000 150.00 1.90 5.0% 4.50 4.70 4.91 5.14 5.37 5.61 1.41

Malaysia 100% 22.83 5.3% 94,500 147.40 4.14 4.0% 5.90 6.36 6.87 7.42 8.01 8.64 3.62

Myanmar 60% 42.66 - 20,000 26.20 0.47 10.0% 1.57- - - - - -

Singapore 100% 4.24 4.2% 67,500 152.30 15.92 3.0% 4.57 4.86 5.16 5.49 5.83 6.20 2.39

SriLanka 100% 19.74 5.8% 16,005 34.73 0.81 9.0% 3.13 3.40 3.69 4.01 4.36 4.74 4.30

Thailand 75% 63.83 5.1% 105,000 176.50 1.65 2.0% 2.65 2.85 3.07 3.30 3.56 3.83 3.37

UAE 100% 2.45 4.5% 63,000 85.60 25.74 10.0% 8.56 9.14 9.75 10.41 11.12 11.87 2.69

Australia 90% 19.44 3.7% 210,000 550.00 10.80 0.5% 2.48 2.61 2.76 2.91 3.07 3.24 1.95

Oman 49% 2.45 4.5% 9,806 15.87 3.58 6.0% 0.47 0.50 0.53 0.57 0.61 0.65 2.69

Why These CountriesRevenue and CAGR are determinants of growth

Asian Paints Limited has a major shareholding in these countries

The revenues are not distributed among other shareholders and are retained by the parent company

The growth in revenues forecasted for the next 5 years in these countries is more than other countries

In China, the largest market of all the above, the company has the highest potential to grow its revenues and profitability

Thank You