Analysis of Asian Paints Integration of Supply Chain Management

11/26/2015
AnalysisofAsianPaintsintegrationofSupplyChainManagement
Analysis of Asian Paints

integration of Supply Chain
Management
In this paper, we have analyzed the Asian Paints strategic decision of being a
superior technology driven company to achieve a competitive edge. The focus on
technology is visible in various decisions taken by Asian paints namely in
harnessing the powers of state-of-the-art supply chain system using cutting edge
technology to integrate all its plants, regional distribution centres, outside
processing centres and branches in India. Asian Paints is the only company in
India to have integrated Supply Chain Management (SCM) Solution from i2
Technologies, and Enterprise Resource Planning (ERP) solution from SAP.
Introduction - Paints Industry & Asian

Paints
India's paint industry can be classified into decorative paints, which account for
75% of the market, and industrial paints, which make up the remaining 25%.
Asian Paints is India's largest paint company. The leaders in the organized paint
industry in India are Asian Paints with over 40% market share, Kansai Nerolac
(20%), Berger Paints (19%) and AkzoNobel (12%). Asian Paints is a market leader
in the decorative segment while Kansai Nerolac dominates the industrial and
automotive segment. Asian Paints is a market leader in the decorative segment
while Kansai Nerolac dominates the industrial and automotive segment[1].
Asian paint is ranked at No 10 among the top Decorative Coatings Companies in
the World. Asian Paints and its subsidiaries has operations in 22 countries across
the world and 27 paint manufacturing facilities, servicing consumers in 65
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countries.Asian paints was started by Champaklal Choksey, Chimanlal Choksey,

Suryakant Dani and Arvind Vakil as "Asian oil and Paints company" .Within three
years, their turnover reached 3.5 lacs. In April 2009, it reported its turnover for
year 2008-09 as Rs 5463 Crores[2]. Asian Paint is listed in Bombay Stock
Exchange[3]and in National Stock Exchange[4].
The three main promoters of the company are the Dani, Choksi and Vakil
Families.Out of the 14 member board of directors, 7 belongs to the founders
family[5]. Mr Aswin Choksi is the chairman of the board of directors and Mr P.M.
Murthy is the MD and CEO. In an interesting decision, Mr. Murthy was asked to
come out of retirement and run the company as CEO in April 2009[6].
Asian Paints aims to become one of the top five Decorative coatings companies
world-wide. They intend to achieve this through alliances with established global
partners[7].
One of the main issues with company could be that it has to compete with the
same established global players in the international market with whom it has
alliance in domestic market.
As far as the social issue are concerned All the paint plants have achieved 'zero
industrial discharge' capability.
Asian Paints product lines

Ancillaries: Primers, Filler strainers and wall putty
Automotive: for automotive application
Decorative paints : Walls, metal and wood surface
Industrial: Protective coating, floor and road coatings
Ancillaries
Wall Primer
Primer
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Wall Putty
Redoxide Oil Primer (Rust Protector)
Thinner Melamyne Brushing
Wood Stains
Knifing Paste Filler
Exterior Sealer
Wood Filler
Floor Colour
Asian paints PPG
Deltron
Delfleet
2K Nexa Autocolor
Decorative Paints
Royale
Emulsion
Wood finish
Utsav
Industrial Products
Protective Coatings
Floor coatings
Powder Coating
Road Marking
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Phthalic
Resource Based View of Asian Paints
Resources in Management
Planning and Controlling

Strategic Planning
Vision: Asian Paints aims to become one of the top five Decorative coatings
companies world-wide by leveraging its expertise in the higher growth emerging
markets. Simultaneously, the company intends to build long term value in the
Industrial coatings business through alliances with established global partners.
The diversification in terms of products has already been covered.
Internationalization:
The international market strategy of Asian Paints is to mainly enter the high
growth emerging markets. For this they have developed an emerging market
business model. As per this the following steps are followed
Introduce new products suited to local needs
Introduce and continuously strive improve the technology aspect
Focus to improve operations especially supply chain for maximum efficiency
Corporate Policy:
As per the Asian paints corporate philosophy, the following values are prescribed
Satisfaction of the spirit of the law through ethics in business
Full transparency in all the workings
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Truthful communication regarding how the company is run

Simple and transparent corporate structure driven by the business needs
Establish an efficient structure to manage the company`s affairs
SWOT Analysis
Organization
Strategic Planning
AP has acquired short-term
competitive advantages by using its
distribution strength and logistical
efficiency in order to raise the Cost of
doing business for all its competitors
to attain this advantage.
The advantage is short-lived and
ultimately imitable.
Moreover, AP has established such an
extensive network that getting
incremental advantage would be very
difficult.
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difficult.
Futuristic approach should be gaining
competitive advantage through
channel control or occupying mind
space.
Organizational Structure
Depot
Regional Office
RDC
Plants
Head Office
DM Office
Fig. 1 Organizational Structure of
Asian Paints
Continuous line: flow of instruction/authority
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Dashed line: flow of information
Group Subsidiaries
Apco Coatings is a subsidiary of Asian Paints in the South Pacific islands. Asian
Paints operates in Australia, Fiji, Tonga, Solomon Islands and Vanuatu under the
brand name of Apco Coatings.
Asian Paints Industrial Coatings Limited has been set up to cater to the powder
coatings market which is one of the fastest growing segments in the industrial
coatings market.
Over the years Berger expanded its operations across oceans, to cover numerous
geographies. In 1994, Berger units were brought under the single umbrella of the
holding company 'Berger International Limited (BIL)' with headquarters in
Singapore, which was also listed on the Singapore stock exchange. In November
2002, BIL became a part of the Asian Paints Group. Today, the name of Berger is
synonymous with quality and innovation. BIL has presence across three regions
viz. Middle East, Caribbean and South East Asia.
Founded in 1979, SCIB Paints today is a reputed name and ranks amongst the top
five paint companies in Egypt. SCIB Paints became a part of the Asian Paints
group in August 2002.
Asian PPG Industries Limited, a joint venture between Asian Paints (India) Limited
and PPG Industries, Inc. USA with 50:50 equity sharing was established in March
1997 with the objective of providing solutions to the paint requirements of Indian
Automobile manufacturers. The joint venture brought together two leading
companies with strengths in technology, manufacturing and customer insight.
Taubmans Paints Fiji, the fourth largest paint company in Fiji, became a part of
the Asian Paints family in September 2003. Taubmans Paints is the dominant
player in the project sales segment in the country and is a leader in the
neighbouring Samoa Islands. It has two manufacturing facilities, one in Suva (Fiji)
and the other in Samoa.
Manufacturing/Operations factors
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Manufacturing/Operations factors
Size advantage in relation to competitors.
Finesse in production planning ,scheduling ,matching with marketing
requirements
In-house production -outsourcing -high reliability suppliers - superior quality
assurance.
Four production location -spread benefits
Information Technology
Asian Paints, at a very early stage of
its growth, recognized the importance
of IT and how it could use the
technology to its advantage. In 1983,
it was the first company in India to
use computer technology on its shop
floor. The use of computers provided
an automated way of generating
details of dispatches to the depots.
AP also invested in branch
computerization which helped zonal
distribution centers to get daily stock
position levels. This information was
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position levels. This information was

tracked and analyzed to determine
the performance of the dealers, thus
helping forecast sales, take corrective
actions in case of low sales and
incentivize the high performing
dealers. Also, around 1994, Asian
Paints installed terminals which
connected factories to depots and
helped in accounting and planning
procedures.
Asian Paints was also one of the first paint companies to use Supply Chain
Management (SCM) and Enterprise Resource Planning (ERP) software for
streamlining and automating its processes. It selected the SCM solution offered
by i2 Technologies and later also started using SAP's ERP solution, much before
other companies adopted similar solutions. This helped the company to connect
to all their vendors and suppliers.
One of the biggest advantages of

implementing these solutions was the
accurate demand forecasts - this
helped them bring down inventory
stock costs and working capital costs.
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stock costs and working capital costs.

For e.g., white color was always in
high demand, so these was always
kept in stock. The Retails outlets
could blend the whites with other
tints to meet the requirements of
customers. Warehouses that were
situated nearby used to supply the
requested paints within a day. This
helped minimize supply chain
inefficiencies. It is estimated that
these initiatives gave AP an estimated
savings of INR 100 million, 25% of
which came due to reduction in
finished goods inventory.
Research & Development
At Asian Paints, Research & Development has played a significant role in the
growth of the organization. The company has continuously invested in R&D. The
entire decorative coatings portfolio for the Indian market and for overseas
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ventures has been developed in-house. Our technologists not only develop new
products and improve upon existing formulations; but also act as a pillar of
support to other functions, viz
Supports Manufacturing in process cycle time reduction & improves productivity
by alternate / break through processes
Provides solutions to environmental issues by minimizing waste at the time of
generation and also in recycling
Aids Marketing in providing technical tools/USPs to demonstrate and push new
products
Support Materials by providing new Raw Materials as alternate to current one to
give them negotiating power and also alternate vendors for supply chain
flexibility
It consists of 140 strong R&D team consisting of 7 doctorates and around 115
qualified scientists, has always backed the company's business plan and
demands of the market place. Asian Paints' R&D team has successfully managed
to develop High-end exterior finished and wood finishes in-house.
Supply Chain
Asian Paints has harnessed the powers of state-of-the-art supply chain system
using cutting edge technology to integrate all its plants, regional distribution
centres, outside processing centres and branches in India. All the company's
paints plants in India, two chemical plants, 18 processing centres, 350 raw
material and intermediate goods suppliers, 140 packing material vendors, 6
regional distribution centres, 72 depots are integrated.
The supply chain runs through a wide spectrum of functions right from materials
planning to procurement to primary distribution. It has played a pivotal role in
improving operational efficiencies and creating agile procurement, production
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and delivery systems. It has also enhanced the flexibility of operations, lowered
output time and reduced delivery costs, while improving customer-servicing
levels and profitability.
The Supply Chain Management is backed by IT efforts that help the company in
demand forecasting, deriving optimal plant, depot and SKU combinations,
streamlining vendor relationships, reducing procurement costs and scheduling
production processes for individual factories.
Licensing of Product
Asian Paints Ltd has put in place a new business strategy to generate additional
revenues by licensing out its brands and technology. As part of a massive review
of its global business, the company has taken a re-look at its operations across all
its plants. As per the new business strategy, Asian Paints out-licensed the brand
name and the paint manufacturing technology. The company licensed out its
brand and technology to PT Abadi, a leading paint company in Indonesia also.
Asian Paints also licensed its technology to Berger Paints, Pakistan.
Merger & Acquisitions

Asian Paints (India) Ltd acquired 50.1 per cent stake in Berger International Ltd
(BIL), a holding company incorporated in Singapore. BIL has no operations in
India in 2002.
As part of its strategy to transform itself to a global player, Asian Paints acquired
Taubmans, promoted by Axo Nobel, for $1.42 million in 2003. The acquisition
increased the market share of Asian Paints to over 50 per cent from the current
40 per cent.
Asian PPG bought ICI India unit for 520 million rupees in 2007 expanding its
presence in India. The company became become the largest player in the auto
refinish (paints) market in India.
Organization & Environment
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Organization & Environment

Customer Focus
Over the last 10 years, the average Indian customer has become more involved in
the painting activity. AP realized this earlier than its competitors and devised
marketing strategies to develop its brand image in the customer's mind and
hoped to convert this increased 'mind share' into 'market share'. This was done in
two ways; one was to explain the advantages of their products directly to the
customer and offer them more services. The second was to improve AP's brand
value and image among customers.
Increasing product awareness

This strategy was aimed at helping the customer in making the right choice and in
the process of doing that select AP products. A few key initiatives taken by the
company are explained below.
Color World Stores: These were specialty AP stores which had an in shop 'Shade
Display Unit' which displayed over a thousand unique shades along with readyto-use combinations. Customers had the advantage of seeing how their rooms
would appear in those colors before they bought the paint. Asian Paints worked
with academic institutions in India and kept the Indian customer in mind while
designing these shades. An interactive computer system allowed the customer to
change the colors and select the one they liked. Also, these stores gave the
customers shade strips, on which the colors selected by the customer were
printed by an automated paint mixer machine. Customers could take away these
strips back to their homes and see if the color suited the room. There are about
15000 such stores and machines across India and the company believes that a
substantial amount of sales will be coming from these stores.
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Color Store: AP recently opened its flagship store in Mumbai. The store, the first
of its kind in India does not sell any paint but sells a concept of a lifestyle to the
customers. The store was inspired by 'Holi', the Indian color festival and provides
a complete solution to customers including help in selecting the colors based on
customer's inputs, volume and price estimates and also includes a home painting
service. This has a direct impact on the customer's minds who will then buy paint
from dealers. By customizing the colors for the customer, in a way AP is locking
the customer as the customer may not get the same color/shade from a
competitor. This store was recently awarded the 'Store of the year' by the Retail
Design Institute in India.
Asian Paints Home Solutions (APHS): This is an end-to-end paint service provided
by Asian Paints. Started as a pilot project in 2000 in Hyderabad, this service has
gained momentum over the years and is now available in 13 Indian cities. To the
customer, this provides a hassle free painting service. In the Indian context, this
was unique as the actual paint job is usually done by small paint service
companies, which were not that reliable and sometimes difficult to deal with. The
trusted brand name of Asian Paints was helpful in attracting customers as well.
Also, the company gave a 1 year warranty with this service, something which is
not common in the paint industry.
Building Brand Name

The company aggressively invested in consumer research efforts in order to build
its brand name. In 2002, the company started marketing its paint under the Asian
Paints brand name instead of the name of the paint and also changed its logo
which strongly portrayed the name of the company. The company also played
with the psyche of the Indian consumer to popularize its brand name by
exploiting the emotional connect a consumer has with his / her home. It realized
that Indian consumers preferred painting their homes before festivals and other
important family functions such as marriages. Painting the home signified a new
beginning, and, fittingly, Asian Paints brand unveiled its new tagline "Celebrate
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with Asian Paints" to tap into this consumer demographic of the Indian market.
This was the first step the brand took in establishing an emotional connection
with the consumer in a low-involvement category.
The company also invested a lot of money in advertising and roped in famous
bollywood stars to attract the end customers with the hope that they will buy
Asian Paints to paint their homes.
Joint Ventures
Asian Paints along with PPG Inc, USA, one of the largest automotive coatings
manufacturers in the world has begun a 50:50 joint venture, Asian PPG Industries
to service the increasing requirements of the Indian automotive coatings market.
Another wholly owned subsidiary, Asian Paints Industrial Coatings Limited has
been set up to cater to the powder coatings market which is one of the fastest
growing segments in the industrial coatings market. This wholly owned subsidiary
of Asian Paints has entered into a tie-up with Canada-based Protech Chemicals
which is one of the top ten powder coatings companies in the world for
technological know-how in the area of powder coatings.
Competitors
Company Name
Net Sales
Net Profits
Net Profit Ratio (%)
Asian Paints
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5,367.72
774.5
14.4
Kansai Nerolac
1,814.71
165.5
9.119914
Berger Paints
1,510.96
88.76
5.874411
Akzo Nobel
937.7
159.3
16.98838
Shalimar Paints
333.25
3.56
1.068267
Jenson Nicholson
37.47
-7.61
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-20.3096
Hardcastle
13.63
0.58
4.255319
Killick Nixon
4.32
-1.57
-36.3426
Reputation:
Environment and Safety:
Asian Paints approaches the environment issue from the perspective of waste
minimization and conservation of resources.
It attempt is to reuse, recycle and eliminate waste, which results in less and less
waste being generated. Accordingly, the material losses in manufacturing have
been reduced substantially over the last few years.
It has ISO 14001 certification for environment management standards.
It has achieved 'zero industrial discharge' capability. These have been achieved by
the installation of upgraded effluent treatment facilities and installation of
reverse osmosis plants in conjunction with appropriate recycling and reuse
schemes. Our emulsion manufacturing facility has
Quality Policy:
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We shall provide products and services that meet stated standards on time, every
time.
We accept Zero Defect as a quality absolute, and shall design and operate our
quality system accordingly.
We will organize our work practices to do a job right the first time, every time.
We are committed to continuous improvement in quality in all business
processes and shall track such improvement through measurable indicators.
Leadership
Name
Designation
Ashwin Choksi
Chairman / Chair Person
P M Murty
Managing Director & CEO
Amar Vakil
Director
Dipankar Basu
Director
Deepak Satwalekar
Director
S Sivaram
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Director
Abhay Vakil
Director
Ashwin Dani
Vice Chairman
Mahendra Choksi
Director
Tarjani Vakil
Director
Mahendra Shah
Director
R A Shah
Director
S Ramadorai
Director
Ina Dani
Non Executive Director
Human Resources with Sub

categories
Asian paints has a talent pool of over 4700 employees employed across 23
countries bring in a unique blend of mindsets and skills. They recruit only from
the top schools and believe in getting the people from the highest calibre in the
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company. To enable better interface, initiatives like HR help desk, Employee self
service, and e-learning applications were done during the previous year. People
development is a key area of focus for Asian paints. Though every employee
plays a part in his own development, focused activities are also carried out for
ensuring synergy and growth. E-Learning was introduced as new concept, to
meet the ever growing diverse developmental needs of the organization. With the
multiple locations throughout the globe, the present of e-learning will help the
employees. The year 2009-10 also saw the stabilization of the PMS that was put in
place during the previous year. They do follow a 360 degree method of appraisal.
An open and interactive work culture brings out the best in the people. A sense of
ownership and freedom to experiment at their workplace brings out creativity
and innovation in every individual. Excellent training is provided to develop
leaders and re-strengthen competencies from within the organization. They
believe in encouraging achievers from within the organization to climb up the
hierarchy and take up bigger roles and assignments. Thus, the task is cut out for
every individual within the framework of result-orientation market insight,
customer perspective, trust, respect and problem solving. AP looks forward to the
commitment of the people and their sense of discipline and ownership continue
to drive growth for the company
Resources - A bird's eye view

Specific Level \ Concrete Level
Tangible Assets
Fixed assets
Equipment (Eg - Machinery, hard- and software), facilities, plant, land
Current Assets
Inventory
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(Eg- raw materials, semi finished goods)
Finances
Assets
Investments, cash reserve, trade receivables, factoring
Capital
Equity Capital, liabilities (loans, leasing, salaries and wages), financial incentives
(eg- social contributions, private use of company's car)
General Characteristics
Location, areas, type of product and services, size (eg- turnover, market size,
goodwill, physical value, competition position)
Non-Financial indicators of the

company
1) Raw Material: Paint is a raw material intensive industry. It takes over 300
different raw materials to produce paint, most of which are petroleum-based.
Titanium dioxide is the largest consumed raw material. It constitutes
approximately 30% of the total manufacturing cost. Besides this, there are
petroleum-based raw materials, which constitute 40-50% of the total raw material
consumed. Hence any movement in crude oil prices impact prices and
profitability in the paint industry.
2) Research and development[8]: At Asian Paints, Research & Development has
played a significant role in the growth of the organization. It has set up a new
Research & Technology centre at Turbhe on the outskirts of Mumbai (India).
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3) Supply chain[9]: Asian Paints has harnessed the powers of state-of-the-art

supply chain system using cutting edge technology to integrate all its plants,
regional distribution centres, outside processing centres and branches in India.
All the company's paints plants in India, two chemical plants, 18 processing
centres, 350 raw material and intermediate goods suppliers, 140 packing material
vendors, 6 regional distribution centres, 72 depots are integrated.
Finances
Assets
Investments, cash reserve, trade receivables, factoring
Application Of Funds
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Investments
274.55
334.39
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422.88
234.77
703.69
Inventories
348.79
434.07
538.97
546.71
763.14
Cash and Bank Balance
28.17
42.47
41.33
128.05
28.58
Total Current Assets
562.07
712.5
832.2
985.78
1,123.15
Net Current Assets
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89.75
166.06
17.94
137.44
-168.36
Market capital of the company = Rs 17,357 Cr
Volume of the shares traded = 24,372
Trading turnover = Rs 43.57 Cr
Trading turnover/ market capital = 0.0025
This is a very low figure which indicates that the share of the company are traded
very less as compared to market average
Capital
Equity Capital, liabilities (loans, leasing, salaries and wages), financial incentives
(eg- social contributions, private use of company's car)
in Rs Crore
Mar '06
Mar '07
Mar '08
Mar '09
Mar '10
Total Share Capital

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95.92
95.92
95.92
95.92
95.92
Equity Share Capital

95.92
95.92
95.92
95.92
95.92
Reserves
526.36
648.16
832.58
998.55
1,461.30
Networth
622.28
744.08
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928.5
1,094.47
1,557.22
Secured Loans
31.88
66.9
36.7
24.59
25.59
Unsecured Loans
40.7
40.7
40.7
40.7
40.7
Total Debt
72.58
107.6
77.4
65.29
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66.29
Total Liabilities
694.86
851.68
1,005.90
1,159.76
1,623.51
The cost of capital for Asian paints is lesser than KansaiNerolac by nearly 6%,
which shows that market has more TRUST in Asian paints.
As the lending rates decrease, Asian paints can further lower its cost of capital by
increasing debt usage
As Asian paints diversifies its products and expands its presence in other
countries, the difference between the cost of capital for the two companies can
increase further
Above numbers indicates that Asian paints is consolidating its position as market
leader and has no immediate threat with its nearest competitor.
Salient features/Trends
In case of Asian paints the average tax are more or less equal to the corporate
income tax of 33.99%. This signifies the fact that it is not getting any subsidies
from the government.
There is a significant drop in CFO in last years. This can be attributed to two
events
i) Global economic meltdown which had an impact on both construction and
automobile business which are the main source of income for the company.
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ii) Increase in the value of oil prices and hence in the price of raw materials for
the company which are predominantly petroleum based products.
Considerable increase in Capex in last two years which means that the company
is looking for expansion (mostly outside India) which is a good sign for investors.
Excess cash has consistently been used to buy Investments except for last year.
Cash balance has decreased in last two years, which can be due to adverse
market conditions and investments purchases.
Indian paint industry is growing
Asian paints is retaining most of its profits which is supposed to pay high
dividends in the future
Asian paints is increasingly investing in total assets which should result in higher
dividends returns in future.
Asian paints is planning to invest in a plant at Rohtak (India).The plant is located
on 130 acres of land and will manufacture both water and solvent based paints;
including emulsions and resins. The project cost for the initial 1.5 Lakh KL
capacity will be Rs. 400 Crores and the plant is expected to start production by
early 2010(last quarter of year 2009-10).
Capacity increase at Asian paints in last 4 years:
Year
2006
2007
2008
2009
Capacity
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Sales
2678 Cr
3244 Cr
3915 Cr
4819 Cr
Expenditure
1967 Cr
2399 Cr
2868 Cr
3708 Cr
Net profit*(PAT)
187 Cr
272 Cr
375 Cr
362 Cr
The change in the value suggests that Asian paints has decreased its operating
leverage/financial/business risk. This is true as company has slowed down its
investment in new plants and in new markets for last year or so.
The company share has become little less risky than what it was in last 5 years
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One of the reasons for Asianpaints to sustain such low level of debt could be that
it wants to increase its flexibility for future Merger & Acquisition opportunity
Asian paints is a cash rich company which has a general reserve of Rs 998 Cr(as
per latest year balance sheet). This amount is sufficient to fund its operations and
expansion plans
Asian paints consistently pays a dividend which is higher than its peers. As the
company is a market leader in its segment by a huge margin, it has cash reserves
which are sufficient to funds its expansion and pay dividends at a constant rate
over the years.
To expand: Asian paints is expanding its operations[10]and has no plans of
shutting any of its plans in near future. In the newly constructed Rohtak
plant[11], the company will develop 43 Acres of green belt which can be used in
the future for expansion or real estate purpose.
To Abandon: Asianpaints exited its Mauritius Operations[12]in 2005 to
concentrate on emerging markets like Middle East.
To Time: The company showed a decrease in growth in south pacific
region[13]but has no intension of exiting. This indicates the fact that it might be
waiting for the market to pick up demand and then increase the capacity.
To Flexibility: Company is bringing in new Lead-free paints[14]which will help it
expand in global market and meet the stringent safety norms in western
countries. This will also help the company in case the Indian government
increases the safety standards in paints components in future.
Resources lacking
In the decorative range of paints Asian Paints is the market leader and has its
presence in almost all the segments. One of the major areas in which it does not
have a presence is the exterior cements paint area.
Strategic Decision of Leveraging I2
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Strategic Decision of Leveraging I2

In the challenging Indian marketplace Asian Paints established a leaner, more
agile and cost-efficient supply chain and found it to be a clear advantage in
getting a competitive edge.
Asian Paints is India's largest paint company and is ranked among the top 10
decorative coatings companies in the world. The company provides innovative
solutions for decorative home improvement, industrial and automotive painting
requirements. Asian Paints has more than 25000 local retailers to resell its
products to home users, contractors and painters. The company also sells paints
and colors to original equipment manufacturers (OEM) and to large contractors
serving the OEM marketplace. To serve those demanding market segments, Asian
Paints produces more than 1,200 standard paint product SKUs and many madeto-order formulations, and operates about 80 sales offices.
AP manufactures products at five production locations owned by the company,
and at several contract manufacturers who make specialty or low-end finishes. To
manage the cash cycle as well as deliver the products to the customers without
holding a large amount of inventory, it is extremely important to integrate all the
manufacturing sites into a cohesive entity.
For the purpose of achieving a dynamic marketing and production environment,
a sophisticated and robust supply chain is mandatory. To accomplish this task AP
agreed on two key ideas: first, delivery of the products to the customer efficiently
without accruing a large inventory; and second, fund an bullish growth-byacquisition strategy by managing the cash-cycle to free up the funding.
Building a strategic supply chain

Asian Paints has leveraged advanced i2 solutions for supply chain master
planning, materials and distribution planning, production scheduling, and change
management since more than a decade. The processes from sales forecasting,
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master production planning, raw material planning, distribution planning and

shop floor scheduling were covered through the implementation of key solutions
from i2's advanced planning solutions.
These advanced master planning technologies are applied to decide which
products should be produced at which manufacturing plants. This strategy is
integrated with variables such as cost and demand volume, capacity, current
inventory levels, environmental requirements and other factors, and are
optimized across multiple objective levels like capacity, demand satisfaction,
safety stock requirements, inventory optimization and transportation costs.
The raw material is procured from domestic vendors and international suppliers.
These supplies are managed through the use of a sophisticated materials
planning system. Due to the fact that raw materials comprise 60 percent of its
value chain, bill of materials, routings and alternate parts are continuously
improvised. This leads to a complex alternate materials scenario during the
procurement planning process. Asian Paints uses i2's factory planning software
to manage a wide range of variables, such as the inflow and use of raw materials
among multiple possible alternates across multiple alternate vendors and
possible production routes to ensure optimum raw materials selection. Weekly
timing requirements on a plant, unit and machine-by-machine basis is set by
using i2's advanced scheduling software.
AP often experiences a "hockey stick" variation in monthly demand for its
products. During the festive seasons in different parts of India, often the demand
upsurge is also seen. A sophisticated distribution planning system from i2 is an
answer for Asian Paints to handle these surges. This also helps in smooth
movement of the products in the complicated and dynamic marketplace.
To ensure a smooth evolution to this re-engineered solution, Asian Paints
enlisted i2 to support deployment, change management and continuous
improvement. The company also relied on i2 for help in streamlining process
workflows, reducing the planning cycle and in formulating overall solution
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architectures. AP has used the advantages in inventory management and the

supply chain to build an organization that is much stronger. It has really allowed
AP to leverage skills and strengths in the marketplace.
Savings, service and growth

A decade after the i2 supply chain opportunity assessment demonstrated that i2
solutions would pay for themselves after one year of use; AP has drastically
improved its debt-to-asset ratio. It has almost become a debt-free company.
Supply chain efficiencies have been used to follow an aggressive growth strategy.
With the use of i2 SCM solutions, the company has reduced its days of finished
goods inventory from 56 days in 1999 to less than 30 days currently. During the
initial implementation phase itself, the days of finished goods inventory went
down from 56 days to 40 days. This has been a major reason behind the
company's improved cash flow. This has helped AP to invest in growth oriented
acquisitions.
Whereas earlier the company used an end-service-level metric, with the usage of
i2 solutions, the company has moved towards a more proactive and precise
order-fill method of analysis. A whopping 87-90 % service levels for SKU sales
have been achieved at the location level after complete adoption on i2 solutions.
This has enabled the company to achieve greater success than the competitors.
The volatility in the fluctuating paint market is dealt with effectively and the size
of inventory is optimized with the company's enhanced master planning system.
The company creates more complex and effective paint formulae with the
assistance of better material planning system. It further helps the company to
choose the most appropriate vendor and manufacturing methods for different
circumstances.
Modern distribution planning has facilitated Asian Paints to reduce the
deployment of the inventory. They do it on a weekly-basis. This also enables them
to adjust the distribution plans as per their needs. This assists them to adapt
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more easily to the variations of the market demand and the changing regulatory
pressures or business requirements. They also adapt better to the new
manufacturing processes.
The improvements of supply chain management and execution systems have
enabled the company to develop fast. Within ten years of the adoption of the
technologies, the company has grown over four times of its size. In addition to
that, the company has also reduced the on-hand inventory required to assist its
consumers
To further optimize the execution of the supply chain processes in conjunction
with the planning solution, and to provide a seamless plan-do-check-act
framework to the supply chain executives, Asian Paints deployed the i2 platform.
Highly customized planning and execution workflows have been developed to
enhance the efficiencies of the supply chain.
The company's ability to deliver the right product at the right time and to the
right place has become a differentiating factor for Asian Paints. The supply chain
has become one of the most crucial functions in taking the company ahead of the
competitors.
Where Asian Paints are going and

how they can leverage
The exterior paints market is expected to be the high growth area for atleast five
years into the future from now. This is the area that Asian Paints has entered now
with its exterior emulsions. Snowcem is the market leader in this area with a
market share of 26% in the cement paints and 50%[15]share of the textured
finish area.
If Asian Paints decides to takeover Snowcem, it would provide Asian Paints with
total leadership in the total decorative segments market including the exterior
paints market in its portfolio. It could also look at upgrading the customers from
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Snowcem's cement paints to the more advanced exterior emulsions that it has
begun offering.
The acquisition of Snowcem would also fit nicely into AP`s strategy of providing
value added services, as they would be able to provide a complete solution for
any customer, who approaches them
FUTURE PLANS
Asian paints primarily plans to consolidate its dominant position in India by
launching new products in line with the market developments in both decorative
paint as well as industrial coating segments. As far as product innovation is
concerned, it is looking at water based paints. The company nurtures an aim of
becoming a top five decorative paints company in the world, in view of this, the
company plans to constantly look for both organic and inorganic growth
opportunities in existing and new markets. The rural sector also needs to be
looked in thoroughly. They may need to reposition certain brands in the rural
market to achieve maximum impact. The company will also 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.
Global Foraying
To be amongst the top three, it needs to look into their global foray very carefully.
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Many factors, which have made Asian Paints a household name in India, have
also contributed immensely in its global expansion. The company is known to be
an innovator and has introduced thousands of colour shades for its customers to
choose from.
Also, 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 continuously 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 steeper target which was to become one of the top five
decorative paint companies in the world. 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 designed 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 especially targeted companies in emerging markets of Africa,
Southeast Asia and South Asia, Middle East and Pacific region. In order to
increase the pace of globalization, the company has also focused on
acquiring international companies which have a widespread presence in the
global markets like the acquisition
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Analysis of Asian Paints Integration of Supply Chain Management

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Analysis of Asian Paints

Introduction - Paints Industry & Asian

countries.Asian paints was started by Champaklal Choksey, Chimanlal Choksey,

Asian Paints product lines

Planning and Controlling

Truthful communication regarding how the company is run

Dashed line: flow of information

position levels. This information was

One of the biggest advantages of

stock costs and working capital costs.

Merger & Acquisitions

Organization & Environment

Organization & Environment

Increasing product awareness

Building Brand Name

Human Resources with Sub

Resources - A bird's eye view

(Eg- raw materials, semi finished goods)

Non-Financial indicators of the

3) Supply chain[9]: Asian Paints has harnessed the powers of state-of-the-art

Total Share Capital

Equity Share Capital

If you have a 2:1 degree (60%) or higher:

Apply Now (/includes/sections/content-ads/modals/freelance-writing.php)

Strategic Decision of Leveraging I2

Strategic Decision of Leveraging I2

Building a strategic supply chain

master production planning, raw material planning, distribution planning and

architectures. AP has used the advantages in inventory management and the

Savings, service and growth

Where Asian Paints are going and

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