MERGER OF ASIAN PAINTS AND

PIDILITE INDUSTRIES LTD

Submitted by:
Group 11 & 12
Asian Paints – Company Profile
• Founded in 1942 by Abhay Vakil & Champaklal H.
Asian
Choksey Paints,
• Indian multinational paint company headquartered in Causeway
Paints (Asia)
Mumbai
• Revenue as of March’19 : Rs. 16671 Cr
• Operating Profit : Rs. 3308 Cr
• Holds largest market share of 53% in paint industry
• Competitors : Berger Paints, Shalimar Paints, Kansai Apco
SCIB Paints,
Nerolac Paints, Akzo Nobel Coatings & Global Kadisco
Taubmans
Presence Asian Paints
(South
(Africa)
Pacific)
Products Services

• Interior Walls • Interior Design services

• Exterior Walls • Home Painting services
• Waterproofing • Experience Retail Asian Paints
Berger
• Wood Finishes Stores (Middle
• Metal Finishes • Colour Consultancy East)
• Adhesives Online
• Large Projects
Pidilite Industries – Company Profile
• Founded in 1959 by Balvant Parekh
• India-based adhesives manufacturing company Pidilite
headquartered in Mumbai Lanka,Adarsha
Business
• Revenue as of March’19 : Rs. 6286 Cr (Asia)
• Operating Profit : Rs. 1490 Cr
• Near-monopolistic market dominance of over 70%
market share in case of Fevicol & M-Seal
• Competitors : Berger Paints, Asian Paints, Kansai Pidilite Crown Paints,
Nerolac Paints, Jubilant Industries Innovation ET General
Centre Trading
(Singapore) (Africa)
Global
Products Services Presence

• Adhesives Technology • Waterproofing solutions

• Wood Finishes & • Mechanical, Electrical
Paints & Plumbing (MEP)
• Waterproofing • Original Equipment Pidilite USA, Pidilite MEA
• Automotive Manufacturing (OEM) Pulvitec do Chemicals
• Technical Textiles Brasil (Middle East)
• Tile Adhesives &
Grouts
 Process in the Merger and Acquisition

Protection of
minority interest to
The Central The proposal for the
be recognized The Reserve Bank
Government has a merger or
under the law, only of India has specific
The process may be role to play in this acquisition has to
The merger would shareholders/ tools for fast track
initiated through The approval of the process and it acts be sanctioned by a
be governed by the creditors having debt restructuring
common High Court is highly through an Official 3/4th of the
Indian Companies significant stake at known as the CDR
agreements desirable for the Liquidator (OL) or shareholders or
Act, 1956, under a level to be Mechanism
between the two commencement the Regional creditors present at
Sections 391 to 394 prescribed under (Corporate Debt
parties Director of the the General Board
law should have the Restructuring
Ministry of Meetings of the
right to object to Mechanism)
Company Affairs both the firms
any scheme of
merger
 Key Legislation following to the Merger and Acquisition

• Primary legislature • the SEBI ( Substantial • Regulates the dealing of • The Competition
concerning all mergers, Acquisition of shares and distressed assets under Commission of India
primary/secondary takeovers) Regulations corporate insolvency regulates combinations
acquisitions or private 2011, govern M&A resolution process and governs M&A
equity funding transactions involving transaction likely to cause
acquisition of a an appreciable adverse
substantial stake in a affect on competition in
public listed company India

Insolvency and
Companies Act Competition
SEBI Bankruptcy
2013 Act, 2002
Code, 2016
Drivers of Merger and Acquisition

According to a study by Chemical Industry Association (CIA) found that equity firms believe that their
increasing participation in the chemical industry will drive a more entrepreneurial value for investors,
improve cash management, financial discipline and management quality and impose better corporate
governance

It is found that consolidation in the specialty chemicals industry will have significant impact on the
coatings sector over the coming years

Going by the trend the companies can merge to improve size, scalability, and operating model through
consolidation
Industry Analysis-Industry
Adhesive
Analysis- Adhesive
• Threat of new entry is • threat of
High Threat of substitution is low
•No. of international substitution • consumers prefer
companies have buying adhesives
entered from the market as
• 3M product quality is
• Henkel good and it is
• HB Fuller readily available

Competition
Supplier
power
• Adhesive Market is projected to reach USD 136.76 million
by 2023
• The major factor driving the market studied is the
• Buyer power is • supplier power is
• increasing demand from the packaging industry
• the growth of automotive production low low
• Building and construction being a major end user • consumers lose • large number of
segment for adhesives will also boost growth in the out on price Buyer suppliers
India adhesives industry bargaining power power • not able to
• Challenges in the procurement of raw material are because of the exercise much
expected to hinder the market's growth superior quality control over the
https://www.mordorintelligence.com/industry-reports/india-adhesives-and-sealants-market advantage prices
Industry Analysis- Paints
Industry Analysis - Paints
• Moderate • Low
• Scale, reach and • In urban market
Threat of
brand are major substitution there is no
barriers substitute to paint
• No major • Use of limestone
regulatory hurdles , rural areas

Threat of Supplier
• Indian paints industry by value and volume, which new entry
Competition
power
is expected to grow at a CAGR of around 12%
during 2018-19 to 2021-22
• Growth drivers • Moderate
• Increase in Income • High
• Customers buy in • Major raw
• Growth of infrastructure and automobile sector bulk so they have
• Increasing penetration in the rural market materials include
some influence crude oil
• The market of industrial paints is highly • No alternative to Buyer
technologically oriented where the majority of power • Crude price
paint move based on
players have technical collaborations with the • More options
foreign players demand and
supply
Benefits to Asian Paints

Asian Paints has entered into the branded adhesives space by launching three offerings, namely, Loctite Quick,
Loctite Rapid and Loctite Tough. Merger will lead to eliminating competition and increasing operational synergy.

This merger would be considered both horizontal and vertical in nature

For Asian Paints, matching Pidilite’s distribution strengths will not be easy when it comes to reaching out to
kirana outlets.

Asian Paints can tap into the existing distribution of paint dealers, a lot of adhesives are also sold through
kiranas, which will be a key challenge for Asian Paints.

Pidilite has a strong presence in such outlets with a 70 per cent share in adhesives.

Distribution network of Asian paints will increase which will result in increasing revenue
Advantages to both the parties
• For Asian paints the merger would help to increase the stronghold in
adhesive segment which they entered in 2016
• The merger would also help asian paints to vertical synergies as
pidilite manufacture 19.6% of its special chemicals to paint and its
allied industry.
• Pidilite would gain advantage of 36000+ strong hardware shop dealer
network of Asian paints.
• Help to strengthen their place as a market leader in both paints and
adhesive
• Synergy of pidilite brand and asian paints distribution network
• Reduction of operational cost as economy of scale would be achieved
exorbitly
• Similar International presence of both companies would help to
strengthen oversee market
 Major Challenges
Challenges

Goodwill and brand valuation

Dilution of adhesive brands of
would pose a most significant
Asian paints on which millions
threat in valuation of the
are spent for promotion
merger.

Too many non - core

Asian Paints distribution
bussiness subsidiaries would
arrangement with Germany’s
require robust management to
Henkel Adhesive Technologies
function.
Thank You