Operational Analysis of

Submitted to: Mr A Ramesh Submitted by: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Divyen Jain (11111009) Kumar Animesh (11111017) Geetika Nehra(11111010) Mundra Yash(11111022) Jashan Yadav(11111015) Chetty Arun(11111007) Abhishek Sharma(11111002) Anupriya Tripathi(11111003) Mudit(11111021) Mehul(11111020)

COMPANY BACKGROUND......3 PRODUCT LINE......3 CAPACITY UTILIZATION .....4 HUMAN RESOURCES.....5 QUALITY ISSUES.........5 SUPPLIER BASE ....6 INVENTORY MANAGEMENT.........6 LOGISTICS MANAGEMENT.........7 ENERGY MANAGEMENT........8 CO-ORDINATION & COMMUNICATION BETWEEN PLANTS, OFFICES & VENDORS .8 PRODUCT FAILURES, IF ANY.........9 WASTE AND SCRAP MANAGEMENT.....9 ENVIRONMENTAL MANAGEMENT......10 TECHNOLOGY UPGRADATION MANUFACTURING ....10 R & D..........11 OTHER INITIATIVES......11 PROFITABILITY ......12 FUTURE OUTLOOK ......12 EPILOGUE ........14

TABLE OF CONTENTS

Asian Paints India Ltd. was founded in 1942 as a small partnership firm & now is India's largest paint company. It ranks amongst the top ten decorative coatings companies in the world today, with a turnover of Rs.54.63 billion. Asian Paints operates in 22 countries and has 28 paint manufacturing facilities in the world servicing consumers in over 65 countries. Asian Paints product range includes Decorative Paints,Industrial Paints & Automotive Paints. Besides, the Company operates around the world through its subsidiaries Berger International Limited, Apco Coatings and SCIB Chemicals. Asian Paints has its presence in almost all the segment through its brands Royale in the premium segment, Apcolite in the mid-segment, Gattu, Tractor, Utsav and 3-Mango etc. in the lower segment.

C O MP ANY B AC KG RO U ND

PRODUCT LINE
Ancillaries:
Asian Paints Decoprime Wall Primer WT Asian Paints Decoprime Wall Primer ST Asian Paints Acrylic Wall Putty Asian Paints Wood Primer Asian Paints Exterior Wall Primer Asian Paints Knifing Paste Filler Asian Paints Wood Stains Asian Paints Exterior Sealer Asian Paints Utsav Floor Colour Asian Paints Utsav Primer (ST) Asian Paints Utsav Primer (WT) Asian Paints Utsav Metal Primer Red Oxide Asian Paints Utsav Stainer

Decorative Paints:
Exterior Walls Asian Paints Ace Asian Paints Apex Stretch Asian Paints Apex Ultima Interior Walls Asian Paints Tractor Acrylic Distemper Asian Paints Tractor Synthetic Distemper Asian Paints Utsav Synthetic Distemper Metal Surface Asian Paints Luxury Ultra Gloss Enamel Asian Paints Premium Semi Gloss Enamel Asian Paints Utsav Enamel Wood Surface Asian Paints Utsav Enamel Asian Paints Luxury Ultra Gloss Enamel Asian Paints Premium Semi Gloss Enamel

Automotive:
2K Nexa Auto color Deltron Delfleet Bilux range of Products Aspa range of Products

Floor Coatings:
APCOFLOR

Road Markings:
APCOTRAK APCOTRAK WBR THERMOLINE

Decorative Paints:

C AP AC I T Y U T ILI ZAT I O N

Decorative Paints business contributes around 94% in the total paint business. The company ranks no. 1, in the country in this segment with around 8500 colours to offer to its customers. It has 5 manufacturing plants operating all over the country, which is strategically located in-order to cater to the widely spread, market: Plant Bhandup, Mumbai Ankleshwar, Gujarat Patancheru, Hyderabad Kasna, NOIDA Sriperumbudur, Chennai Kothak Total Capacity Capacity 30,000 p.a. 1,00,000 p.a. 80,000 p.a. 80,000 p.a. 50,000 p.a. 1,50,000 p.a. 4,90,000 p.a. KL KL KL KL KL KL KL

In Decorative paint segment, the Company operates in 4 main segments i.e. interior wall finish, Exterior wall finish, Enamels and Wood Finishes. Besides, the company outsources around 25-30% of its total production.

Industrial Paint:
In this business, the company caters to automotive, powder, protective coatings, road markings segment, floor coatings and General Industrial Paints. Most of the industrial paints business is operated by two companies viz. Asian PPG Ltd. and Asian Paints Industrial Coating Ltd. The company ranks first in the automotive paints business in domestic market. The company ranks second in protective segment and first in the road-marking segment. Recently it has entered in floor coating segment. The company operates through following plants: Automotive Coating Non Industrial Coatings Powder Coating Baddi, Himachal Pradesh Sarigam, Gujarat 1800 MT 3600 MT 14,000 KL

Chemicals:
Chemical business includes manufacturing of Phthalic Anhydride (PAN) and Pentaerythritol (PENTA). Asian Paints Ltd., has its PAN manufacturing plant at Gujarat (capacity 25,200 MT) and PENTA manufacturing facility at Tamil Nadu (capacity 3000 MT). The company consumes nearly 50% of its production as captive consumption and sells the remaining in the open market. This business contributes around 3% to companys consolidated revenues. Of the above mention total capacity of Asian Paint Plants the total utilization of all the plants is 75 80% of the total capacity. The plants do not utilize the total capacity of the plants and the other excess paint is being outsourced from other companies.

Asian Paints believes that people are its strongest assets, for a company can go only as high as its people aim. It is people who innovate and invent, and who engineer the efficiencies that make a business succeed. It is they who drive growth and lead to greater heights. At Asian Paints, human resources systems are designed to create a focused, performance oriented and agile company. A talent pool of over 4700 employees employed across 23 countries brings in a unique blend of mindsets and skills. 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. Besides encouraging achievers from within the organization, company also absorbs the best talent from some of the best management and technology institutes in the country.

HU M AN RE SO U RC E

Company hire people who are best suited to the job and whose personal goals are in alignment with companys corporate purpose. Thus, the task is cut out for every individual within the framework of result-orientation, market insight, customer perspective, trust, respect and problem solving. The commitment of its people and their sense of discipline and ownership continue to drive growth for the company.

QUALITY ISSUES

The company has various manufacturing units which are located at Mumbai, Ankleshwar, Patancheru, Kasna, Cuddalore, Rohtak, Raigad, Buladshahar and Sriperumbudur. Each plant is headed by the Factory Manager. Bhandup plant is the oldest plant with an installed capacity of 30000 Tonnes per annum. All plants are awarded with ISO 9000 & ISO 14000 certification.

Asian Paints has won many awards & recognitions which include: Forbes rated it under 200 'Best Small Companies of the world' in 2002 and 2003 and amongst the top 200 'Under a Billion Firms' of Asia in 2005, Best small company in India by Asia Money in 2002. Golden peacock environment management award national quality award by union labour ministry. Best supply chain award by i2 solutions. Five star rating by British safety council in 2003 & 2005. Awarded the "Sword of Honour" by the British Safety Council for all the paint plants in India. This award is considered as the pinnacle of achievement in safety across the world. Ranked 24th amongst the top paint companies in the world by Coatings World - Top Companies Report 2006. The Asset - one of Asia's leading financial magazine ranked Asian Paints amongst the leading Indian companies in Corporate Governance in 2002 and 2005. Received the Ernst & Young "Entrepreneur of the Year - Manufacturing" award in 2003.

SUPPLIER BASE Mostly the Alkyd resin used in the manufacturing of paints is manufactured by Asian Paints itself, but as the quantity manufactured by it is not enough, the company outsources from many other companies one of it is Piyanshu Resins Pvt. Ltd., Hyderabad Baba Containers is one of the suppliers of 20lit tins to the company. Asian Metal Containers is one of the suppliers of the printed tins to the company.

 Titanium Dioxide (TiO2) is the largest consumed raw material for manufacture of paints. It constitutes around 30% of the total manufacturing cost. TiO2 is available in two grade i.e. rutile (imported and mainly used by the Indian paint industry) and anatase (manufactured domestically). Travancore Titanium Products, Kerala & Kerala Minerals and Metal Ltd., are some of the suppliers of the TiO2 to the company. Besides TiO2, there are other petroleum based raw materials which constitute around 40-50% of total raw material consumed. Hence any movement in crude oil prices will impact the profitability of the company. These products are mostly supplied by HPCL and BPCL. Sudarshan Chemicals is major suppliers of pigments to the industry. Alpha Chem are the suppliers of driers to the company. 20microns ltd., Vimal Minerals, Himalaya minerals are the suppliers of Extenders to the Company. Indofil chemicals, Pidilite Industries, Fine Organics ltd., are the few suppliers of additives to the company.But of all the above the majority of Raw Materials for Asian Paints is being imported from other countries.

INVENTORY MANAGEMENT

Asian Paints have been always on an upper hand when compared to others in terms of inventory management. The inventory cost for Asian Paints is lowest in the industry. Asian Paints average inventory level equals only 28 days sales, while the industry average is 51 days sales. This right away provided a 45 per cent edge in inventory costs to Asian Paints compared to its competitors. Asian Paints stock of finished goods was just 7 per cent of its net sales while for the others in the industry it was nearly twice that level. What is particularly striking in this achievement is that Asian Paint offered customers and dealers a high level of service in product delivery compared to its competitors and yet kept the inventory costs down by 45 per cent compared to the competitors.

But large credit outstanding, running beyond two months or more, was a natural concomitant of the distribution strategy chosen by Asian Paint. The dealers are required to maintain stocks of all the SKUs that are on demand in the territory. It pushes up inventory levels at the outlets. They need credit. Asian Paints allowed 15-21 days credit for dealers located in the major towns and 22-30 days credit for dealers in upcountry regions. Asian Paints had to pull off a smart credit control strategy for survival. It resolved the thorny problem through an innovative dealer incentive scheme. Asian Paints stipulated that each of its dealers should pay for the supplies within a specified time norm and offered them as attractive incentive scheme for doing so. It consisted of two components: A special discount of 3.5 per cent. This was referred to as the discount for perfection in payments. It was passed on at the end of the year, provided each and every payment throughout the year was made within the stipulated time norms. A cash discount of 5 per cent. This was paid for all outright cash purchases. It was given whenever payments were received within 24 hours of the supply/invoice. In respect of outstation accounts, the payments have been made in advance

by draft in order to be eligible for the cash discount. The scheme was a grand success.Asian Paints credit outstanding always stood below 25 days, while the outstanding of the other major companies were in the range of 40 days and above. Systematic computerization also helped Asian Paints maintain the credit outstanding within limits. Asian Paints Apcolite, the largest selling brand of paint in the country, is available in 151 different shades and in eight different pack sizes. Being in the business of colours, Asian Paints utilized colour to achieve differentiation, and none of its competitors could match Asian Paints in this aspect. Simultaneously, AP also achieved the lowest cost position in the industry. Normally, when a firm consciously opts for the differentiation route with a wide product line, it automatically points towards higher inventory levels and consequently higher inventory and other costs. But Asian Paints, through its effective distribution management, inventory management and control of credit outstanding, in particular, managed to retain its inventory size and inventory costs at the lowest possible level. Asian Paints actually saved so much on inventory carrying costs that it almost earned its promotion budget through these savings.This is again praiseworthy because Asian Paints spends as much as 10 per cent of its sales on promotion, the highest in the industry.It has to spend so much in order to maintain its differentiation advantage. But strikingly, it has kept its total marketing costs the lowest in the industry.The two factors together i.e., the lowest cost position as well as the highest differentiation position has conferred a significant competitive advantage on Asian Paints. This are few of the techniques used by the Asian Paints to manage the inventory in a better way and to decrease the cost of the products manufactured so as to reduce the price of the goods supplied to the consumers.

The warehousing facilities are well maintained. The company specially looks after the environmental aspects and tries to avoid pollution and pollutants by adapting eco friendly production methods. The company keeps low inventories in off seasons, and high inventory in festival seasons. The company has huge base of raw material suppliers, giving company bargaining power resulting in higher profit margins than competitors. The company has succeeded in establishing themselves in rural parts of India by large distribution network, retailoutlets etc. Asian Paints has around 1,600 stock-keeping units (SKU; one SKU would mean a product of a particular pack and shade), of which around 300-350 are fast moving with extremely high liquidity at the counter. This puts great pressure on the demand forecasting and inventory management functions of the company.

LO G IST I C S M ANAG E M ENT

E NE RG Y M ANAG E M E NT
As energy cost is 16-18 % of total overhead cost, Energy is treated as major raw material and not only just an overhead expense so as to have special focus on lowering down cost. There are few Energy Conservation Achievements achieved by company: the

Incinerator flue gas waste heat recovery: The investment done for this project is Rs. 4 lacs. This has resulted in an energy saving of 34500 units per year. Direct discharge of Mill base from TSD to Mixer: It is a process improvement change and it had helped the company to conserve energy of 169456 units. Caustic barrel heating by steam: Electric heaters were eliminated by use of steam coil and power consumption is reduced by 45000 units per year. ETP Modernization: Investment done for this project was Rs. 20 lacs. It also has given advantage in the energy saving because numbers of mechanical equipment available in the conventional ETP have become redundant. The power units saved are 116.4 per day amounting to 42475 units/ year. Reduction in stripping time of CED Resin Batches: This has given power reduction of 325 units/ batch. In 04-05 Power unit saving was to the tune of 39000 units for processing 120 batches in year. FRP fan for Cooling Towers: Investment done for this improvement is Rs. 75000/- The total power units saved by this modification in two cooling towers are 16500 units in a year. Trimming of Dowtherm impeller: This improvement has resulted in reduction of power by 15 KW (48 KW earlier to 33 KW current). The pump runs 60 hrs in a month and hence the saving is of 10800 units in a year. Screw pumps in place of Diaphragm Pumps: These air operated pumps were replaced with electrically operated screw pumps. Thus the saving is 1.06 KW per batch. The numbers of batches produced as per production plan are 2800 which resulted in a saving of 3000 units in one year.

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. Eight of the company's paints plants in India, 2 chemical plants, 18 processing centres, 350 raw material and intermediate goods suppliers, 140 packing material vendors, 6 regional distribution centres, 72 depots are integrated. Asian Paints always make sure the technology it implements is cost effective and increases employee productivity. It has deployed SAP R3, i2 supply chain planning suite, ERM employee platform formula management, product lifestyle platform, and so on. Its very essential to adopt new technologies, since IT is an enabler to service retailers. Also, the supply chain effectiveness has helped to capture more of the enterprise platform. The i2 software, which was deployed nearly in 2001, has helped to increase productivity from 3 tons to 8 tons. Considering today's competitive scenario, it is essential that organizations have the best technology in place to ensure good results. Asian Paints deploys technology that connects the entire field-force across all its branches in the country as well as globally. To ensure connectivity we have provided laptops and PDAs in the retail sales force areas. Laptops with data cards are a key driver for enterprises. We have implemented VSAT, which is an early adopter in far-flung locations. All the offices within the country and globally are connected through MPLS, VSAT, and radio, but the preferred medium is landline. Ninety percent of our offices have MPLS and we use radio strategically where last mile connectivity is required. It has VSATs for its operations in rural areas and there is a back up of two VSATs in every location of operations. Companys biggest requirement is that it expects its vendors to be competent enough to be able to forge a long-term partnership. They do not look for a vendor for a short period of time. All there partnerships-large platform applications such as SAP, i2, and so on-have been long-term. Therefore, while selecting a vendor, they spend a lot of time understanding their roadmap, their fit with companys strategies, their fit with companys IT architecture, and so on. After a careful selection, company makes sure that it implements the technology efficiently. The process does not stop here, it makes sure that the future roadmap is in companys interest and it has the capability to take us forward.

C O - O RDI NAT I ON & C O MM U NI C AT I O N B E T WE EN P LANT S, O F F I C E S & VE NDO RS

If we consider the case of Product Failures of Paint in Paint Industry then the Company had been a great failure in terms of Industrial Paints and then the company had done many R & D and then they had come up with the formulations used for the Industrial Paints. One more product issue is the content of Lead in the paints which is harmful and can be dangerous for the health of the consumers and also for the environment, so to overcome this issue the company had come up with the Lead free paints which

PRODUCT FAILURES, IF ANY

will not harm even the environment and also the consumers thus improving the quality and thus increasing the sales of the company.

Asian Paints has identified a total of 78 types of wastes from paint manufacturing facilities, out of which 18 are hazardous as per HW Amendment Rules, 2000.

WAST AG E AND SC R AP M ANAG E M E NT

Given below is the approach to waste minimization adopted by the company. (Options are not given in order of preference) Recycling a potential waste or portionof it 'on site' where it is generated Improving process technology and equipment that alter the primary sources of waste generation Improving plant operations, such as housekeeping, materials handling, equipment maintenance, automating process and packing equipment Redesigning or reformulating products Conducting waste audits and monitoring and tracking of waste generation The companys efforts have resulted into almost no wastage during production. There are almost no damages during transportation also.

Asian Paints approaches the environment issue from the perspective of waste minimisation and conservation of resources. It attempt is to reuse, recycle and eliminate waste, which results in less and less being generated. Accordingly, the material manufacturing have been reduced substantially over the last few years. It has ISO 14001 certification for environment management standards.

E NVI RO NM ENT AL M ANAG E M E NT

waste losses in

It has achieved 'zero industrial discharge' capability. This has 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 also achieved 'zero waste' status. It has adopted the principles of "green productivity". Some of its innovative schemes which enhance green productivity are dealer tinting systems which has resulted in large batch sizes ; bulk storage facility for monomers which reduces wastage; Use of natural gas which is a cleaner fuel ; solvent recovery plants have been set up which has resulted in zero reduction of solvent disposal ; Improved incinerating systems and reverse osmosis.

 Screw Compressor with Variable Frequency Drive: Total saving/annum = 7.03 lacs Hydrofoil Agitators in Medium Tank Yard: Total saving/annum = 1.16 lacs

T E C HNO LO G Y U P GRADAT I O N : M ANU F AC T U RI NG

Variable

Frequency drive in 2 Twin Shaft Dispenser machine: saving/annum = 1.31 lacs Replacement of Heat tracing in 3 Medium Tank Yard storage tanks: Total saving/annum = 0.90 lacs Air Pre-heaterson Thermopack:Total Saving/annum = 19.11 lacs

Total

Small Group Activities: Adjustable Timers in 4 Ball Mill of Liquid Paint processing: Total saving/annum = 0.46 lacs Energy Savers Units in Room Air Conditioner: Total saving/annum = 0.43 lacs Adjustable Timers in Twin Shaft Dispenser of Liquid Paint Processing & Stiff Section: Total Saving/annum = 0.69 lacs RH Filtration Pump Upgradation: Total saving/annum = 0.20 lacs QRC Replacement in Liquid Paint Processing: Total Saving/annum = 0.41 lacs Solar Photovoltaic Street Light installed as non conventional Energy Source: Total Saving/annum = 0.00650 lacs Installation of Energy Efficient Tube lights in CentralUPS room & Canteen: Total savings/annum = 0.24 lacs

At Asian Paints, Research and Development (R&D) plays an important role in developing new products and innovations, and reducing costs by value re- engineering of formulations. In India, the company's 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. Right from the company's inception, all its decorative products for the Indian market and also in the overseas market have been developed in-house. In the last few years, companys R&D efforts have been focused on developing new exterior finishes, economy emulsions and distempers. Asian Paints' R&D team has successfully managed to develop High-end exterior finished and wood finishes in-house, which was earlier imported into the country. These products are currently marketed under Asian Paints Elastomeric Hi-Stretch Exterior paint and Asian Paints PU wood finish respectively. Company is also in the development of the water based wood polish which is a new product as all the

R & D / INNO VAT I O N ST RAT E G I ES

other wood polish are solvent based, and they have odour which causes irritation. So, company is in the process of developing a polish which is odourless and is of same quality as of solvent based polish. The R&D team also provides technological support and develops customized products for the company's international operations spanning across 19 countries. The company is also in the process of setting up new a new R&D centre near Mumbai (India).

Improving schools

infrastructure

O T HER I NIT I AT I VE S
and

healthcare

at

local

Besides water management and age care, the company also invests time and energy in providing infrastructure support to primary schools. In Ankleshwar - Gujarat, the company continues to support the "Shree Gattu Vidyalaya" school which was established along with the Ankleshwar Industrial Development Society in 1983. The school today boasts of around 2,500 students in primary as well as secondary sections and the plant has sustained its commitment of providing infrastructure support to this school, be it through donations of computers, tables and chairs, or through assistance in other maintenance work for the school. In addition, the Ankleshwar plant has also taken up the cause of improving the health and hygiene situation of schools in nearby villages. Understanding that prevention is better than cure, the plant conducts Vaccination and Health camps. Not only students, but teachers are also briefed on hygiene aspects in such camps. In Sriperumbudur (South India) also, the plant is treading on similar lines and has taken up the task of improving facilities in the neighborhood primary schools. It presented the Pondur primary school with desks, tables, a PA system and even school bags for the students.

Tsunami relief: Helping community in need time

of

The massive disaster Tsunami hit the coastal areas of South India and South East Asia on Dec 26, 2004 and left behind a trail of devastation. As a socially responsible company, Asian Paints rose to the occasion and decided to play its rightful role in extending support and relief to the affected. All the employees contributed in cash and kind to the best of their capacity. These contributions were supplemented with a contribution from the company. A total amount of Rs. 4.7 million was generated as relief aid and handed over to the Tsunami victims. Besides India, all the units across the world also contributed to the best of their capacities towards Tsunami relief.

Operating Ratio Operating CostNet Sales Gross Profit Margin Gross ProfitNet Sales Net Profit Margin Profit after TaxNet Sales Return on Net Worth Profit after TaxAverage net Worth

P RO F I T AB I LIT Y

Ratios
Operating Ratio

07FY
14.77

08FY
15.83

Net Profit Ratio Return Worth on Net

9.11 39.82

10.28 44.86

Operating Ratio establishes a relationship between operating costs and net sales. The operating ratio of the company is 14.77 in 2007 and increased to 15.83 in 2008. A rise in operating ratio indicates decline in efficiency. Lower the ratio, the better it is. The Gross Profit Ratio establishes relationship of gross profit to net sales of a company. The company had a ratio of 13.23 in 2007 and it increased to 14.62 in 2008 which indicates that there has been adequate coverage of administrative and marketing expenses. Net Profit Ratio establishes the relationship between net profit and sales. The company had a ratio of 9.11 in 2007 and it decreased to 10.28 in 2008 which means the companys efficiency has increased because higher the net profit ratio better the business.

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. 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 companys objective is to be among the top three players in each market where it is currently

F U T U RE O U TLO O K

operating or plans to operate in the future. Introducing Water based Paints Repositioning of existing Brands in Rural Market Broadening of Distribution Network Adding more choices for shades and effects Enhancing Better Quality Demand will be generated through the new constructions coming in housing and industries

Asian Paints is Indias largest and Asias third largest paint company. It is a vertically integrated paint company with in-house manufacturing facility. Its product portfolio includes wall paints, metal paints, wood finishes, primers and others. The companys market segments include decorative and industrial coating segment. The industrial coating segment consists of automotive coating, powder coating and protective coating. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International, Apco Coatings, and SCIB Chemicals. One notable aspect that I personally like about Asian Paints is that, it has been able to expand globally without taking on too much debt. It is able to support its expansion plan from its internal sources. Post acquisition of SCIB Chemicals (for Rs245mn) and Berger International (for Rs576mn), Asian Paints has emerged as a major decorative paint company in the world with 28 plants spread over 23 countries. However no substantial gains could be expected from the international operations in the medium term. BI has an accumulated loss of US$24mn. Of the balance, most of the international operations are relatively small in size and in the growth phase. Asian Paints domestic operations, particularly exterior paints, have been driving volume growth. To cater to rising volumes, Asian Paints is setting up a new 100,000 tpa plant at Pondicherry. Investments in IT have led to a substantial reduction in working capital cycles. Like it has done in the past, we expect Asian Paints to exceed industry growth rates. QUALITATIVE ANALYSIS: Over the years, Asian Paints has been a very stable and growing corporation. It has kept growing along with the economy in both real estate and industrial paints segment. It is also increasing its reach in global markets. It has had a very favorable dividend strategy in which it consistently shared its profits with shareholders. The dividends have doubled in last 5 years. In addition, historically, it has been a very low debt company, with most of the growth coming from organic sources. I like this aspect of Asian Paints. Along with slowdown in our countries and global economy, I expect Asian Paints to shows reduced earnings. This is expected and extrinsic factor which company does not have any control over. The most recent analyst presentation shows that management acknowledges this challenge and presents a realistic picture. It does not hype its positioning and maintains a firm footing in realities. I believe company is very well position to navigate this downturn (brand

E P I LO G U E

value, distribution network, presence in different markets).

negligible

debt,

excellent

management,

I like Asian Paints as a company, its brands, and managements dividend strategy. I like its market positioning and ability to navigate the current downturn.