Financial Daily
from THE HINDU group of publications

Thursday, April 13, 2000



Catalyst | Next

Colour the world

With a three-pronged strategy well in place to get among the global Top 10 paint companies, Asian Paints is all set to paint the town red.


The touch-up job is finally over. After painting over the small spot left by ICI Plc's aborted takeover bid in 1997, Asian Paints is now ready to paint itself a pot of gold at the end of the rainbow.

As the man sketching the blueprint for Asian Paints, Ashwin (bhai) Dani, Managing Director, has his work cut out. He has to transform Vision 2003 from a static statement into a workable plan. Read the fine print in the company's 1998-99 annual report, w hich states the three-pronged agenda: Be among the world's top 10 decorative paint companies (it's already in the top-15 slot); be a significant player in the Indian industrial coatings business and, finally, make Asian Paints a Rs 3,000-crore entity by 2003. It is expected to book around Rs 1,300 crore this fiscal, ending March 31, 2000.

Dani makes this Leviathan task sound almost approachable: ``We are restructuring our organisation into strategic business units to provide greater focus. The three units are to consolidate our position in the Indian decorative paints business, the indust rial and chemicals business, and the international paint business.'' This exercise has sprung out of the recommendations made by Booz Allen & Hamilton in 1997.

Indeed, action on these recommendations has been swift. Board-level changes were initiated, where Ashwin Choksi was appointed Executive Chairman and Ashwin Dani and Abhay Vakil were appointed as Managing Directors by end-1998. Apart from this, different levels in management cadres have been created to kick-start key ventures.

Overweening ambition? No, say market observers. In fact, few can deny that Asian Paints has become a role model for successful Indian entrepreneurship. And post the changes on the Board, confidence levels seem to be surging at every level. ``We have iden tified three areas that should be fortified to take on the kind of growth we see for ourselves,'' says Nirupam Sahay, Group Brand Manager, Asian Paints.

The areas where external expertise is being sought are internal ERP, brand strategy and supply chain logistics. US-based consultant i2 Technologies has been brought in to streamline the supply-chain initiative. Deepak Aggarwal, Regional Manager, Asian Pa ints (India) Ltd, points out that this exercise will result in efficiencies at all operational levels. From streamlining inventory planning to meeting the order-fill rate, various stages in production and planning will be taken care off. ``In fact, this is the largest project as of now for i2 Technologies in India,'' he adds.

At another level, PricewaterhouseCoopers has been set cracking on the internal ERP initiative. Manish Choksi, Vice-President - Strategic Planning & IT, says: ``We are readying the company's backbone so that an integrated environment is in place to handle B2B and B2C communications. The ERP should be complete by March next year.''

The third issue being intensely debated is the brand. How can it leverage the strength built over the last two decades? Brand managers are faced with a typical dilemma _ Should they push the generic Asian Paints brand or pump in investment on individual brands such as RoyalE, Opal or Touch Wood?

Look at it this way, says Sahay. With an overall marketshare of 45 per cent in a Rs 2,500-crore organised paint market, Asian Paints is one company where people actually ask for the paint by brand. A creditable achievement, as consumers are not known to be very brand-conscious in this low-involvement segment and, more often than not, rely on what the painter buys for them within the budget allocated. They are more specific about the colour than its source.

With that in mind, the company has taken on Bangalore-based Momentum to evolve a distinct brand architecture. Who better than an objective outsider to tell them how to bite the bullet and give strong recommendations on how Asian Paints should deal with 1 3 brands with over 1,100 shades, targetting different niches.

In all, the company is setting aside Rs 45 crore towards advertising and marketing expenditure for this year, and this includes the Rs 1 crore that goes to Momentum.

It's not difficult to see why the market is not taking this as just another tall claim. For one, this is no sleeping giant. It has joint ventures in Australia, Oman, Mauritius, Fiji, Tonga, Nepal, Sri Lanka, Vanuatu and Solomon Islands. To give it the ne cessary edge, it has forged a 50 per cent equity partnership with world leaders PPG Industries Inc, and the new entity is called Asian PPG Industries Ltd.

The venture, it anticipates, will strengthen its marketshare in automotive paints in the domestic market. Meanwhile, the company is looking at spreading its reach further in other developing markets.

Evaluating its potential on home turf, V. Chandramouli, Asian Paints' Marketing Manager, feels the company is well entrenched as a leader in the decorative paint segment. ``It is the industrial and automotive paints segment which we need to concentrate o n. We want to go to the top slot in this by 2003 and gain an overall marketshare of 60 per cent from the current 45 per cent,'' he says.

To this end, it has already struck strategic pacts with auto majors whereby players such as General Motors, Hyundai and Daewoo use Asian Paints for their cars (and this is where its PPG venture has scored). These alliances mean much as competitor Goodlas s Nerolac has the Maruti contract which, being the market leader, contributes almost 90 per cent revenue to its coffers.

Meanwhile, in the industrial segment, Asian Paints has made considerable progress with its pacts with Indian Oil and Concorde. All their outlets across the country use its brand.

It is certainly not resting on its laurels in the decorative paints category, although it is the market leader here, taking that as reason rather to strive harder. The Colour World initiative it kicked off in 1998 is gaining momentum. This exclusive reta il chain is designed to reach consumers in a direct `dil se' style. The whole idea is to make our brand top-of-mind and involve consumers. ``We are looking at 1,750 outlets by 2001 at least,'' says Chandramouli. And with Rs 60 crore already pumped into t he venture, he means business.

The logic for this retail platform again points to its strong brands. ``People ask for Tractor distemper (its almost generic now). Apart from this, Apex emulsions, Royale interior emulsion, Apcolite and Touch Wood are all brands which enjoy high recall,' ' says Sahay.

Simultaneously, the company has set up a helpline service for people to call in for assistance on things such as the kind of paint to use or a paint that falls within their budget. It has a Web site, and is working to make it more interactive.

The agenda, then, is clear: First, streamline operations with the help of various consultants and specialists; second, with the proliferation of Colour World outlets, dealer promotions and campaigns, further tighten the grip on home turf. And last, but d efinitely not least, tackle the industrial and automotive paint segments. Recent tie-ups with Gautier Furniture and Continental Furnishings are a right move towards the institutional segment. All of this is supported by a capacity build-up at its four pl ants and 15,000 dealers countrywide and overseas.

At the end of the day, if Asian Paints is able to hold its colours aloft with the best in the business, all the frenzied activity would have paid off.


In 1942, four young men Champaklal Choksey, Chimanlal Choksi, Suryakant Dani and Arvind Vakil got together to manufacture paint at a garage on Foras Road, Bombay. They picked a name for their company at random from the pages of a telephone directory and called it Asian Oil & Paint Company.

By 1945, the company had notched a turnover of Rs 3.5 lakh, way beyond its wildest dreams! And the colour of success has only deepened since. Gattu, the impish mascot, was born in 1954, conceived by none other than R.K. Laxman.

Few mascots perhaps personify their corporate entities as well as Gattu does Asian Paints. Gattu's demeanour reflects perfectly the smart-on-its-feet personality of Asian Paints.

Laxman's comments on Gattu have been faithfully recorded: ``Representatives of an agency asked me if I would create a symbol for a paint company. They were not clear but said the trademark should be attractive, adaptable... but after a period of despair, the hazy picture of a boy took shape _ Gattu. I worked on the details... gave him a shock of black hair eternally dangling over his right eye. I made him clutch a rather over-worked bristling paintbrush in one hand...''

More than four decades have gone by but Gattu has managed to breeze through time effortlessly, much like his company. For example, in the 1940s, paint was sold only in bulk, and that primarily in the urban markets. Asian Paints realised that many small c onsumers were being ignored in this. It introduced small pack sizes, allowing individuals to buy just the amount they needed. The company tapped the rural market before it was fashionable to do so, and has the Utsav brand strongly entrenched in that s egment. Gattu-like, it's brandishing its brush everywhere.

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