Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Satish C. Shah who wrote (3734)	2/15/1999 12:59:00 PM
From: Mohan Marette	Respond to of 12475

Company of the week -Asian Painst Ltd (Source- Quantum Research-India) Hi Satish: I don't know whether you have any interest in Indian companies and/or their stocks but here is good take on Asian Paints Ltd form Quantum Research. Thanks for the link to the Presidential biography. ================================= Asian Paints Limited Company web site: asianpaints.com Company News: asianpaints.com Current stock price as of 02/12/99 ASIAN PAINT (Last traded on: 12/02/99, % change over previous close:-2.08%) Exg. Code Open (Rs) High (Rs) Low (Rs) Close (Rs) Vol. (nos) Value (Rs) B 820 252.0 259.9 248.0 249.2 19,139.0 4,816,580.0 N 62 254.0 258.0 249.0 252.5 14,291.0 3,592,596.0 Highlights Asian Paints is India's largest manufacturer of paints. It is the market leader in decorative paints (34% market share) which constitute 70% of the paints market in India. Asian Paints is a focused company with paints contributing to 85% of total sales, while phthalic anhydride (PAN), a paints intermediate accounts for about 10%. In paints over 90% of sales are from the decorative segment. Despite the decorative segment becoming more competitive, Asian Paints commands a decent market share. Asian Paints is promoted by the Dani, Vakil and Choksey families. The company was in the news in FY98 following a near-take over by ICI, a competitor, when promotor Atul Choksey sold his stake. It is the only paint manufacturer in India which has integrated backwards into the manufacture of pthalic anhydride (PAN) and pentaerythritol, which together constitute about 35% of the total raw material costs for paints. Asian Paints is the only paint company in India, which boasts of a product presence in almost every segment of the decorative paints market. Its main brands are ‘Gattu', ‘Tractor', Apcolite' and Royale' – each of which is a market leader in its segment of decorative paints. Asian Paints has a strong manufacturing presence in almost all parts of the country, except for the north. With its four plants strategically located in different parts of the country, Asian Paints has lower freight costs which allow it to sell at reduced prices without sacrificing margins. Plant locations Bhandup, Maharashtra Ankleshwar, Gujarat Patancheru, Andhra Pradesh Kasna, Uttar Pradesh Marketing Asian Paints has the largest distribution network amongst all paint companies. Its distribution network of 52 sales offices and 14,000 distributors is nearly 2X that of its nearest competitor. The company's strong brand equity and extensive distribution network have enabled it to consistently increase market share by 1% per annum since the past 15 years. As the only paint company with an organised rural network, Asian Paints has a distinct advantage – product visibility. Asian Paint's success is owed largely to its considerable market-savviness, it be it advertising campaigns, dealer relationships, point of sale publicity or product demonstrations. It apparently has understood the Indian paint bazaar earlier than any other competitor. It was the first to introduce small pack sizes for a wide variety of paints. Asian Paints has been a constant innovator. By adapting new strategies to differentiate products, Asian Paints has created market segments where none existed before. It was also amongst the first to introduce IT systems in its operations to improve inventory levels and delivery schedules. Asian Paints made a delayed entry into the highly lucrative and faster-growing industrial paints market. It comes second with a share of 16% of the total industrial paints market. It has tied up with PPG Industries, USA for the automotive paints. The automotive paints business had been hived into a joint venture company. The JV company now commands second place behind market leader Goodlass Nerolac with 21% share of the automotive paints segment. Future plans Asian Paints is spending some Rs 1 bn in FY99 and Rs 150-200 bn in FY2000. The investments in JVs will be limited to Rs 50 m annually in the initial years. The company is financing these through cash accruals and Rs 400 m privately placed debentures. Currently Asian Paints is expanding paints facilities at Ankleshwar, Patancheru and Kasna. It is also reconstructing the paint house at Bhandup. These projects will take its total capacity to 180,000 tpa at a cost of Rs 2.3 bn. While the Bhandup plant will cost Rs 300 m (completed by Jan-99), about Rs 660 m has been spent on the Ankleshwar plant (15,000 tpa of paints and 10,800 of synthetic resins). An investment of Rs 480 m has been made in the Patancheru plant (2,600 tpa), and the Kasna plant (2,300 tpa) has absorbed another Rs 480 m. Asian Paints has postponed its 5th plant at Mahad (50,000 tpa; cost: Rs 950 m) as the existing capacity is sufficient to meet demand. From a marketing aspect, Asian Paints has planned to increase number of 'Colour World' outlets throughout India. These outlets will serve as one-stop colour shops which will provide consumers with a wide variety of shades and other related products. The company has earmarked Rs 300 m for starting 500 of such outlets in the current year (almost Rs 0.5-0.6 m per outlet).