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Paint industry

Paints
y The paint industry volume in India has been growing at 15% per annum for quite
some years now. As far as the future growth prospects are concerned, the industry is expected to grow at 12-13% annually over the next five years. FY11 was a challenging year for the industry as a whole due to subdued demand across key sectors and rising inflation.

y The unorganised sector controls around 35% of the paint market, with the

organised sector accounting for the balance. In the unorganised segment, there are about 2,000 units having small and medium sized paints manufacturing plants. Top organised players include Asian Paints, Kansai Nerolac, Berger Paints and ICI.

y Demand for paints comes from two broad categories:


Decoratives: Major segments in decoratives include exterior wall paints, interior wall paints, wood finishes and enamel and ancillary products such as primers, putties etc. Decorative paints account for over 72% of the overall paint market in India. Asian Paints is the market leader in this segment. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (September-December) is significant, as compared to other periods. This segment is price sensitive and is a higher margin business as compared to industrial segment. Industrial: Three main segments of the industrial sector include automotive coatings, powder coatings and protective coatings. Kansai Nerolac is the market leader in this segment. User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment.

y The paints sector is raw material intensive, with over 300 raw materials (30%

petro-based derivatives) involved in the manufacturing process. Since most of the raw materials are petroleum based, the industry benefits from softening crude prices. Key Points Supply Supply exceeds demand in both the decorative as well as the industrial paints segments. Industry is fragmented. Demand Demand for decorative paints depends on the housing sector and good monsoons. Industrial paint demand is linked to user industries like auto, engineering and consumer durables.

Barriers to entry Brand, distribution network, working capital efficiency and technology play a crucial role. Bargaining power of suppliers Price increase constrained with the presence of the unorganised sector for the decorative segment. Sophisticated buyers of industrial paints also limit the bargaining power of suppliers. It is

therefore that margins are better in the decorative segment. Bargaining power of customers Competition High due to availability of wide choice.

In both categories, companies in the organised sector focus on brand building. Higher pricing through product differentiation is also followed as a competitive strategy. TOP

Financial Year '11 y FY11 was a mixed bag for the paint companies. While all the 3 players viz. Asian Paints, Kansai Nerolac and Berger Paints reported strong growth in sales, operating margins came under severe pressure due to raw material price inflation. Top-line growth was boosted by strong demand from the decorative paints segment. Nonetheless, the demand environment in the industrial segment continues to remain challenging due to rising interest rates.

y Performance on the margins front was a big disappointment. Rising prices of

crude oil and titanium dioxide increased the overall expenditure thereby impacting profitability growth. However, companies are undertaking a gradual and calibrated price increase to shield margins. Nonetheless, as a complete pass on of raw material price increase is not possible in the industrial segment, the blended margins continue to suffer.

y All the key players are in an expansion phase. Asian Paints' plant in Khandala,

Maharashtra is under construction and is expected to be commissioned by 4QFY13. Kansai Nerolac's capacity expansion plans at Jainpur and Hosur culminated during the year. Berger Paints has also undertaken capacity expansion for its plants located in Andhra Pradesh and Goa. Further, it is also contemplating to set up a manufacturing facility in Pune, Maharashtra. TOP

Prospects y The market for paints in India is expected to grow at 1.5 times to 2 times GDP in the next five years. With GDP growth expected to be over 7% levels, the top three players are likely to clock above industry growth rates, especially given the fact that protection that was available to unorganised players has come down significantly.

y Decorative paints segment is expected to witness higher growth going forward.

The fiscal incentives given by the government to the housing sector have benefited the housing sector immensely. This will benefit key players in the long term.

y Although the demand for industrial paints is lukewarm it is expected to increase

going forward. This is on account of increasing investments in infrastructure. Domestic and global auto majors have long term plans for the Indian market, which augur well for automotive paint manufacturers like Kansai Nerolac and Asian-PPG. Increased industrial paint demand, especially powder coatings and high performance coatings will also propel topline growth of paint majors in the

medium term.
Berger Paints India Limited (BPIL) is one of India's foremost paint companies, currently ranked as second largest on the basis of consolidated sales turnover in Indian paint industry. Established in 17th December, 1923, the company then known as Hadfiled's (India) Limited; was a small paint company based in Kolkata having its only manufacturing facility at Howrah, West Bengal to produce ready mixed stiff paints, varnishes and distempers. Post independence, towards the end of 1947, British Paints (Holdings) Limited, U.K acquired Hadfield's (India) Limited and thus British Paints (India) Limited was incorporated. From a production capacity of 150 tonnes and sales turnover of around Rs. 25 lakhs in 1947, the company has come a long way to become at one point of time; a part of the worldwide BERGER group in 1983 and thereby acquiring its present name Berger Paints India Limited to having subsequently gone through further ups & downs as well as ownership changes to gain its present status wherein the majority stake is with Delhi based Dhingra brothers and business revenue more than Rs 2400 crs. Today Berger Paints India Limited, having solely used and developed the name and trademark BERGER and all its variants in India, is a household name in paint. With Head Office in Kolkata the company manufactures and markets a range of decorative & industrial paint products under various product brands and has it operations spread throughout the length & breath of the country; with seven manufacturing facilities in India and more than 85 depots, several regional & area offices, besides four facilities overseas. It has a workforce of over 2500 employees and a countrywide distribution network of 15000 plus dealers. Berger Paints has clearly demonstrated its commitment to Indian consumers for over 88 years, by offering its varied range of high performing quality products backed by highest level of customer service. Company's high ethical standards in business dealings and its on-going efforts in community welfare make Berger Paints India Limited a responsible corporate citizen. While the company's decorative and Industrial paints continue to gain an increasing market share, Berger as an organization has managed to achieve sustainable competitive advantage through innovations in all spear of business, desire to excel and by creating a winning culture & abiding faith in its values & philosophy among all its stakeholders. With Berger Paints you can now see your imagination of colour unfurl in front of your eyes and watch your home come alive, telling a thousand tales. Transform you home with the POWER OF IMAGINATION.

Vision
To endure an environmentally safe and secure future with a commitment from the company and all its employee to practice and implement methods that help reduce the harmful effects on our environment.

A TOUCH OF GREEN IN OUR LIVES


We are committed to taking stringent measures to consistenlty reduce the harmful effects on our environment. A few of them are as follows:

Reducing waste and conserving natural resources in manufacturing facilities.

Mission
To conserve natural resouraces and ensure that protection of the environment remains our top priority. To take up the challenge and develop more advanced products which consistently help reduce the harmful effects on our environment and conserve natural resources. We not only take the responsibility for environmental protection but also make our employees aware and committed to the cause We respect the needs and social implications of all communities and cultuares where our business operates.

Launching green and envergy efficient products.

Installing energy efficient systems at all new plant facilities.

Using renewable and sustainable raw materials in our formulations.

Our products are manufactuared keeping in mind stringent VOC limits along with other environmental guidelines as per ithe industry.Our products are compliant to all global and industrial green certifications

SHADES OF GREEN IN ALL OUR COLOURS


ECO PRO BREATHE EASY - Our first low VOC Paint By reducing the VOC content in our paint considerably, we're offering a products that's not just low on emission but odourless as well. It's our flagship product that leads the way to our Green Horizon. Mentioned below are a few of its propertise: ECO SAFE We ensure that all our other household decorative products are environment friendly and compliant to global environmental standards as well.

Low VOC

No added Lead, Mercury of Chromium

Negliglible aromatic content

Minimal aromatic content

Highest standard of indoor air quality

Acceptable levels of VOC

Global accreditation

Chemical components restriction

Zero health hazard

Maximum performance

Quality Policy
We at Berger Paints are committed to provide full satisfaction to our customers with respect to Quality, Reliability and Delivery and attain Quality Leadership for all products that are offered by us. We shall achieve this goal by:

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Establishing a Quality Management System conforming to International Standards. Institutionalizing a culture of "Getting it Right, First Time." Upgrading our Technology continuously to meet expectations of customers. Planned and structured Training and Development Programmes for all employees. Creating an environment which encourages team effort and where each individual's contribution is recognised and valued.

Green initiatives undertaken by Berger


Berger has pioneered a range of Green Products which include: Water-based Wall Coatings which conform to the Indian Green Building Council (IGBC) limits of permissible Volatile Organic Content (VOC).

Breathe Easy, an emulsion with very Low VOC (8.4 gm/ltr). The product, certified by the Singapore Green Labeling Scheme (SGLS), is particularly suitable for hotels and hospitals. It is completely odourless and leaves no lingering smell usually associated with freshly painted rooms. This means, rooms painted can be used within a couple of hours post painting as no airing-out time is required. Free of allergens and without carcinogens, it is one of the most eco-friendly wall coatings.

Becker Acroma range of Water Borne Wood Coatings are innovative wood coatings from Berger, with very low VOC. The flexibility of the paint film makes it suitable for exterior applications. Berger water borne wood coatings are environment friendly and have low VOC which makes the entire procedure hygienic and environment friendly. Quite unlike typical wood finishes like Melamine and PU that contain isocyanide which is poisonous and makes the hardener non-eco friendly. Its effect on children and infants can be fatal.

WeatherCoat Heat Insulating Paint contains heat reflective additives. These additives help reflect thermal rays and keep the building cool resulting in energy saved and reduced heating and cooling bills. In addition, the paint acts like an insulator for the wall providing long lasting protection against UV degradation and atmospheric pollution.

WeatherCoat All Guard is the only Organo-Silicone based water repellent emulsion in Indian Market. It is known for its superior water repellence, exquisite finish and enhanced durability for exteriors.

Innovative Designer Textures for Exquisite Exteriors are low VOC textures. The eco friendly textures are designed to take care of minor wall undulations and add to the aesthetics of the room. The designer textures include Marble finishes, Metallic finishes, Spatula finish, Rustic finish, Dholpur Stone finish, Bubble finishes, Spray finishes, Roller finishes besides others.

Illusions is a unique product in its lifestyle portfolio which is designed to inspire its customers to paint their imagination. The ultimate in stylish and modern living, the interior wall paints enliven spaces with their fascinating patterns created with internationally designed tools and techniques. Illusions includes designer wall finishes from Imagine, Metallica and Marble.

WeatherCoat exterior emulsion paint made of unique pigments and additives, can withstand extreme weather conditions. Further more, it has a unique feature called one way barrier which enables the wall to breathe out moisture. It also comes with the highest sheen from among its compatriots with Heat Resisting technology that keeps your house upto 5 degrees cooler.

Segment Overview
Berger has a strong presence both in General Industrial and Automotive segments. Industries covered in General Industrial segment are :

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Construction & Agricultural Equipment Electrical Industry Consumer Durable Industry Furniture & Office Equipment Industry Cycle Iindustry Barrel & Container Industry Cylinder Industry While industries covered in Automotive segment are : Passenger Car, including utility vehicles & multi purpose vehicles Commercial Vehicles Medium & Heavy Commercial Vehicles Light Commercial Vehicles 3 Wheelers 2 Wheelers - scooters, motorcycles and mopeds Auto Ancillaries

Main Customers
Automotive Cars & MUVs - Tata Motors, Force Motors, Mahindra & Mahindra, Hindustan Motors LCVs, MCVs, HCVs - Tata Motors, Ashok Leyland, Force Motors 3 Wheelers - Piaggio India, Mahindra & Mahindra, Force Motors, TVS, Atul Auto 2 Wheelers - Hero Honda, Honda Scooter, TVS Motors, Yamaha Motors, Royal & field Auto Ancillaries - Kalyani Suprabha, Indoshell, Caparo. General Industrial Construction & Agricultural Equipment - Mahindra & Mahindra Tractors, Force Motors, Telcon Construction, L&T, Sewing Statter Electrical Industry Crompton, Orient, GEC, Havelles, Bajaj, Greaves Cotton, Johnson Lifts, Khaitan Furniture & Office Equipment Industry - Godrej Cycle Industry Hero Cycles, Atlas Cycles, TI Cycles Barrel & Container Industry - Dimple Barrels, Pearson Drums & Barrels, Balmer Lawrie, Yashraj Containers, Bharat Barrels Lemmerz, Spicer, Synergy Castings, Surin Auto, Rasandik Engg., Krishna Maruti, Wheels India,

Technology

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Collaboration with Dupont USA for CED Coatings for Auto Industry Joint venture with Nippon Bee Chemicals, Japan, for Plastic Coatings

Product Range

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Pretreatment Chemical AED CED Water base primers

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Polyester Topcoats Polyester Metallic/Pearl Basecoats Thermosetting Acrylic Basecoat Thermosetting Acrylic Clearcoat Alkyd-Amino Topcoats Poly-urethane Paints Quick drying Paints Polyester Surfacer Epoxy Surfacer Alkyd Amino HLPS Heat Resisting Paints

Powder Coatings
Segment Overview
White goods, furnitures, luminaries, hospital items, garden tools, power solutions (generators), invertors, batteries, control panel manufacturers, Aluminium extrusions used in real estate etc.

Main Customers
LG, Whirlpool, Godrej, Carrier, IFB, Amtrex Hitachi, Microtek, Balaji Powertronics, Voltas, Videocon, Philips, Crompton, Usha, Wipro, etc. along with 30 distributors through dealer network.

Technology
We have designed and positioned our product in the Indian continent as a quality supplier of international standards with the help of Teodur NV Holland on the formulation side and Tigerwerk Austria on the formulation, equipment line and layout as well.

Product Range
We have successfully designed, launched and selling 4 big brands under the names of Ultracoat for the general market, Qualicoat for the OEM tailormade endues, Permacoat for the outdoor durability and G Coat for the bazaa

Interior wall coatings: emulsions( SILK> BREATHE EASY), designer finishses(illusions, mettalica), Distempers Exterior wall coatings: Emulsions, primer Metal and wood paints: Enamels,

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