ASIAN PAINTS

LIMITED

Asian paints is the largest paints company in India

and one among the top ten decorative paint
companies in the world.

Background

Asian Paints Limited was established in 1942 as a

partnership firm by four friends Champaklal H.
Choksey, Chimanlal N. Choksi, Suryakant C. Dani
and Arvind R.Vakil to manufacture paints in a
garage in Mumbai (Bombay). From its humble
beginnings, the company has moved on to become
the largest paints company in India with a market
share of 30 per cent.The company with a turnover
of US$ 535 million on standalone basis and US$
640 million on consolidated basis (including
turnover of all its subsidiaries) is one of the top ten
decorative paints companies in the world. Its reach
and dominance in the Indian market can be gauged
from the fact that it is more than twice the size of
its nearest competitor in India and it has been the
market leader in paints industry in India since 1968.
The company operates in 22 countries and has 29
paint manufacturing plants in the world which
service consumers in over 65 countries.The
company operates around the world on its own
and also through its three subsidiaries Berger
International Limited, Apco Coatings and SCIB
Chemicals.The company aims to become one of
the top five decorative paint companies in the
world and has embarked on an aggressive strategy
of expanding its global operations.
The promoters hold the majority stake in the
company (46.8 per cent of the equity stake).The
next largest shareholders are the foreign
institutional investors (19.5 per cent stake),
followed by Indian public (16.5 per cent stake).
Domestic banks, financial Institutions, mutual funds
and insurance companies hold 13.4 per cent stake.
Corporate bodies and non-resident Indians hold
the remaining stake.
Products and brands
Asian Paints has a wide range of products, which

Company Products Established Founder Distribution Production plants

Asian Paints Decorative 1942 C.H. Choksey, 65 countries globally 29 plants

Ltd Paints, Industrial C. N. Choksi, in 22 countries
Coating segments S. C. Dani,
Arvind R.Vakil
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cover almost all the requirements of the decorative
paint and industrial coating segments.
Decorative paints include interior and exterior wall
paints, wood and metal paints, wood finishes and
ancillary products.The company is the market
leader in India in interior wall paints and has a wide
range of products for this segment ranging from
premium emulsion brands like Royale Luxury
Emulsion to economy distemper brands like Utsav
Acrylic Distemper. In the exterior wall paints
segment the company has been the principal driver
of growth ever since it launched its two winning
brands, Apex and Ace.
In wood and metal paints segment the company
again offers products across all price points
including Apco Premium Gloss Enamel in the
luxury segment, Apcolite in the middle segment and
Gattu Synthetic Enamel in the economy segment.
The company similarly has many products and
brands for the wood finishes as well as ancillary
uses like putty. Its main brands in wood finishes are
PU Wood Finish Exterior, Melamyne and Touch
Wood.
In the industrial coating segment, the company
directly operates in the protective coatings sub-
segment. It has a presence in the other two sub-
segments i.e. automotive coating and powder
coating, through Asian PPG Industries (a 50:50 Joint
Venture with PPG of USA) and Asian Paints
Industrial Coatings Ltd. (a 100 per cent subsidiary
of Asian Paints) respectively. Asian PPG Industries
services the conventional end of the market i.e. the
original equipment segment of the automotive
industrial coatings segment with its brands ASPA
and APCA, while Deltron and Bilux serve the high
end of the market. Some of the brands in the
powder coating segment include Apcoshield and
Hawcoplast. Other industrial coating offerings by
the company include Metacare range of industrial
coatings and Apcofloor range of floor coatings and
coatings for road markings.
The company is also a manufacturer of chemicals
phthalic anhydride and pentaerythritol, which are
raw materials for the paint industry.
Financial Analysis
Asian Paints has shown very strong financial
performance in the last five years. Its gross sales
have witnessed a CAGR of 14 per cent during the
period 2001 to 2005, with gross sales reaching US$
535 million in 2005.The company also earned US$
105 million in 2005 from its international
operations spread over 22 countries. Profit after
tax has grown at a higher CAGR of 14.8 per cent
in the same time period.
The company’s return on net worth and return on
capital employed have both increased substantially
over the years because of better control on raw
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 material costs, overheads and reduction in financial
expenses.The financial expenses have gone down
from 1.5 per cent of gross sales in 2001 to 0.12
per cent of gross sales in 2005 primarily because of
reduction in long term borrowings.
Asian Paints’ contribution in making
“Made in India” global
Asian Paints is one of the most globally diversified
companies of India.The company operates in 22
countries with 29 manufacturing facilities and
services consumers in 65 countries across the
world.The company operates in five regions all
over the world through its own operations and its
three subsidiary companies.
To increase its global market presence, the
company has focused on setting up overseas
Regions Countries
South Pacific Australia, Fiji, Solomon Islands,
Samoa,Tonga,Vanuatu
South-east Asia China, Malaysia, Myanmar, Singapore,Thailand
South Asia India, Bangladesh, Nepal, Sri Lanka
Middle East Bahrain, UAE
Oman Asian Paints and its subsidiaries
Egypt SCIB Chemical
Caribbean Barbados, Jamaica,Trinidad & Tobago
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ventures rather than exporting paint and coating
from India. In order to achieve its aim of becoming
one of the top five decorative paint companies in
the world, the company has been following a
strategy of entering fast emerging markets where
market penetration is relatively low and expected
growth rates are high.
The company started its global operations in 1977
when it entered Fiji through a joint venture.
Thereafter, Asian Paints (South Pacific) Ltd. was
formed in 1979 in Fiji and this company went on to
become the largest paints company in Fiji.This was
soon followed with five more joint ventures one
each in Tonga, Nepal, Solomon Islands,Vanuatu and
Australia.
The company’s joint ventures in Mauritius and
Oman commenced operations in 2000.These two
Operating company
Asian Paints and its subsidiaries
Berger International and its subsidiaries
Asian Paints and its subsidiaries
Berger International and its subsidiaries
Berger International and its subsidiaries
ventures were formed to act as hubs for increasing
the market presence of the company in Africa and
Middle East. However, the company exited
Mauritius recently, as the paints market in this
market was stagnant for many years and it did not
fit into the strategic plan of the company to be
present in fast growing markets.
The company has also focused on acquisitions to
add to its basket of markets. In 1999, it acquired a
controlling stake of 76 per cent in Delmege
Forsyth & Co, which was Sri Lanka's second largest
paint company at that time.This was the first
overseas acquisition by Asian Paints in its history.
This was soon followed by acquisition of the entire
paints business of Pacific Paints Company Pty
Limited, Australia in 2000.
In its pursuit towards globalisation of its
operations, the company made two significant
overseas acquisitions in 2002. It first acquired
50.1 per cent stake in Berger International
Limited and then went on to acquire 60 per cent
stake in SCIB Chemical, Egypt, the fifth largest
paints company in Egypt at the time of its
acquisition. The acquisition of Berger
International gave Asian Paints an entry in South
East Asia and this helped the company to increase
its geographic reach in 11 more countries
including China, Singapore, Thailand, Malaysia,
Myanmar, United Arab Emirates, Jamaica, Barbados
and Trinidad & Tobago. SCIB Chemical fitted well
within the company’s plans to expand its
operations in the emerging markets and serve the
consumers in the growing Egyptian market and
other promising markets in Africa.
To take its plans forward, the company set up a
manufacturing unit in Bangladesh in 2002 mainly to
cater to the opportunities available in Bangladesh.
The Bangladesh plant is a 71:29 joint venture
between Asian Paints and Confidence Cement Ltd.,
one of the largest cement producers in
Bangladesh.This venture has helped the company
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to consolidate its position in the South Asian
market.
The company through its subsidiary in Fiji, Asian
Paints (South Pacific) Ltd. also acquired Fiji’s
fourth largest paints company Taubmans Paints
(Fiji) Ltd., to consolidate its leadership position in
the country.This acquisition also included
Taubmans’ paints business in the neighbouring
Samoa Islands.
The company has set forth for itself a global vision
– “Think Global, Synergise Regional and Act Local”.
In this regard, the company has embarked on its
biggest international initiative called E-Strides, an
ERP initiative that would involve all its international
operations. Under E-Strides, the company is
reviewing its current business processes to improve
them in the context of changing business scenarios.
This involves a host of activities like benchmarking
processes with best practices, standardising them
to leverage global knowledge and providing
adequate controls.
Factors fuelling Asian Paints’ global
initiatives
Many factors, which have made Asian Paints a
household name in India, have also contributed
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immensely in its global expansion.The company is
an innovator and has introduced thousands of
colour shades for customers to choose from.
Apart from this, it has been a market creator like
in the case of exterior paints at a time when
exterior paints used to be mostly cement paints. It
has been following an aggressive marketing
strategy in India and this has helped it in entering
and competing with multinational companies in
global markets.
The company has diligently followed its vision -
“Think Global, Synergise Regional and Act Local” to
drive its performance. In 1999, the company
embarked on an ambitious plan to emerge as one
of the top 10 decorative paint companies in the
world. Once this goal was achieved, the company
set for itself a much higher target, to become one
of the top five decorative paint companies in the
world. Simultaneously, the company explored
opportunities of building long term value in the
Industrial coatings business through alliances with
established global partners. All the strategies and
policies of the company have been structured to
achieve these goals.
To capture the global markets, it has been
following the strategy of entering fast growing
markets with robust demand and low per capita
consumption of paints. Asian Paints has targeted
companies in emerging markets of Africa, South-
east Asia and South Asia, Middle East and Pacific
region. In order to increase the pace of
globalisation, the company has also focussed on
acquiring international companies with widespread
presence in the global markets like the acquisition
Berger International.
In order to capture the maximum market share
and to create new markets, the company
manufactures a wide range of paints, from acrylic
emulsions to synthetic enamels and from
automotive paints to industrial paints. Enabled by
vertical integration, it has also diversified into
specialty products such as Pentaerythritol and
Phthalic Anhydride.
Future Plans
The company plans to consolidate its dominant
position in India by launching new products in line
with the market developments in both decorative
paint and industrial coating segments. In order to
realise its aim of becoming a top five decorative
paints company in the world, the company plans to
constantly look for both organic and inorganic
growth opportunities in existing and new markets.
The company shall further explore opportunities of
building long term value in the Industrial coatings
business through alliances.
The company is focusing on further improving the
operations of all of its subsidiaries in India and
abroad and has already launched E-Strides, an ERP
initiative through which all the overseas ventures
are being covered for sharing of global knowledge,
best practices and better control on operations.
The company’s objective is to be among the top
three players in each market where it is currently
operating or plans to operate in the future.
Globalisation at a glance
• Ranked amongst the top ten decorative paints
companies globally, with a presence in more than
75 countries
• Manufacturing facilities in 22 countries across Asia
Pacific, Middle East and the Caribbean
• Historically has focussed on acquisitions for global
expansion – Delmege Forsyth (Sri Lanka), Pacific
Paints (Australia), Berger International, SCIB
Chemical (Egypt),Taubmans Paints (Fiji)
• Company strongly driven by its global vision –
“Think Global, Synergise Regional and Act Local”
www.apaints.com
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