business selling project, santosh kumar, pg20101256
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IILM Institute of Higher
Education
MTS PROJECT REPORT
ON
Submitted in Partial Fulfillment towards the
completion of the course:
Master of Business Administration (M.B.A)
Academic Year: 2010-2012
SUBMITTED TO:
ROHINI VAISHNAVI
SUBMITTED BY:
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SANTOSH KUMAR
PGP20101256
INTRODUCTION ABOUT COMPANY
Kansai Nerolac Paints Ltd. (KNPL), a subsidiary of Kansai Paint, Japan was
established in the year 1920. It is the second largest coating company in
India and the market leader in Industrial Coatings. Having completed 90
years of existence, KNPL has established itself as a well known brand with a
strong recall proposition. KNPL has a pan-India presence and serves its
customers through its 74 sales locations and 5 factories. The manufacturing
operations extend across India and are located in Bawal in Haryana, Lote in
Maharashtra, Jainpur in UP, Chennai and Hosur in Tamil Nadu. The proximity
of the plants to the customers base has offered logistic advantage and
enabled high service levels. Kansai Nerolac has been a cherished name in
millions of households across the length and breadth of India. The company
manufactures a diversified range of products for every surface. It is the
second largest coating company in India and the market leader in
automotive and powder coating. Nerolac paints as it is known popularly are
an established brand in decorative paints.
Origin & Evolution of Nerolac
It is the second largest coating company in India and market leader in
Industrial Coatings. Its Industrial Coatings it has a wide range of products in
the Automotive, Powder, General Industrial and High performance Coatings
space. Nerolac paints, as it is popularly known, are an established brand in
decorative paints.
Kansai Nerolac Paints Ltd is a subsidiary of Japan based Kansai Paint
Company Limited, which is one of the top ten coating companies in the
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world. The technological edge of Kansai helps us constantly innovate and
come up with products that meet consumer need gaps. Kansai Nerolac has
always believed that the key to its business is:
Technology
Research & Development
Innovations
Quality
COMPANY HISTORY
In Year 1920, they began as Gahagan Paints and Varnish Co. Ltd. in Mumbai.
The journey is marked by moving from strength to strength in every sphere
of business be it product introductions through innovation, value
engineering and superior technology.
1920:They started their journey as Gahagan Paints and Varnish Co. Ltd at
Lower Parel in Mumbai.
1957: Goodlass Wall Pvt. Ltd grew popular as Goodlass Nerolac Paints (Pvt)Ltd. Also, it went public in the same year and established itself as Goodlass
Nerolac Paints Ltd.
1976: Goodlass Nerolac Paints Ltd. became a part of the Tata Forbes Group
on acquisition of a part of the foreign shareholdings by Forbes Gokak.
1983: Goodlass Nerolac Paints Ltd. Strengthened itself by entering in
technical collaboration agreements with Kansai Paint Co. Ltd, Japan and
Nihon Tokushu Toryo Co. Ltd, Japan.
1999: Kansai Paint Co. Ltd, Japan took over the entire stake of Tata Forbes
group and thus GNP became wholly owned subsidiary of Kansai Paint
Company Ltd.
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2006: On the 11th of July, Goodlass Paints Ltd. name has been changed to
Kansai Nerolac Paints Ltd.
VISION VALUES AND CULTURE
They have been at the forefront of paint manufacturing over eight decades
pioneering a wide spectrum of quality products that change the face of
economy and lifestyles of people at large.
Innovation
Entrepreneurial
Responsive
Simplicity
Team Orientation
KEY DRIVERS OF BUSINESS
COLOR RESEARCH & DEVELOPMENT
Kansai Nerolac has a well equipped Color R&D centre at Lower Parel, Mumbai
which is backed by Kansai Paint Co., Japan to service ever expanding need of
OEM industry for newer shades & finishes. The Color Development Cell of
Kansai Nerolac organizes Color Presentations at customers locations to give
wide choice of color introductions and follows it through a rigorous activity
from development to standardization.
There is a regular activity to liaise with automotive customers Styling &
Marketing departments to continuously work for introduction of new shades
for new models and refresh existing models as per need of the market. Color
Development Cell also collects data on Indian and global Color Trends.
CORPORATE VALUES & PROPAGATED INNOVATION
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For the Industrial Coatings, KNPL has a series of products in the Automotive,
Powder and Liquids domain. A series of innovative product launches and
service capabilities like Just in Time (JIT) have been some of the key enablers
for sustaining the leadership. For the Decorative business, the organization is
known for its innovative products and services and has many firsts to its
credit like launch of low Volatile Organic Compound (VOC), low odour and
lead free (no added lead) paints. The organization, through the course of the
last decade had benchmarked itself against the practices of several
organizations and devised the Mission for all the business segments. A series
of initiatives with long term strategic implications on the organization had
been undertaken in all the functions.
KNPL has always propagated innovation, use of technology and value
engineering. It has continuously demonstrated leadership traits and
challenged the way business is done in the Decorative as well as Industrial
segments.
QUALITY
It is the philosophy ofKansai Nerolac Paints Ltd., and its associates to
achieve complete customer satisfaction by providing products and services
that consistently meet or exceed the customer needs and expectations,
pursuant to agreed specifications, delivery schedules and competitive prices.
It is the philosophy of the company to systematically operate its
manufacturing facilities by inculcating commitment to total quality
management at all levels and on a continuous basis with a view to achieving
First Time Right results in manufacture, services and other operations.
Being major Industrial paint manufacturer & supplier to OEM customers KNPL
has also implemented QMS as specified by ISO/TS 16949 standard .Their
industrial paint manufacturing locations are certified for ISO/TS 16949 -2009.
The Japanese 5-S and TPM (total productive maintenance) concepts have
been implemented in organization.
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STRATEGIC PARTNERSHIPS:
Kansai Nerolac has tie-up with the global players for product range offered to
automotive and industrial customers. Kansai Nerolac has entered into
collaboration with the following players for specific product range:
Company Product Category
Kansai Paint Co., Japan ED Primers, Automotive & Industrial Coatings,
Auto Refinishing System
Nihon Parkerizing Co.,
Japan
Pre-Treatment Chemicals ( JV- NIPA CHEMICALS LTD,
Chennai)
Oshima Kogyo, Japan Heat Resisting Paints
THE PRODUCT
1. Automotive Paints
In Automotive Coatings, Kansai Paints is one of the top five manufacturers in
the world and is having a dominant market share in Asia Pacific in
Automotive Coatings. In Japan, it is the largest Automotive Paint Company.
Automotive paints segment has undergone a metamorphosis in past 3
decades in India. The paint technology for automobiles has undergone a
complete transformation. Kansai Nerolac is proud to be associated with this
path breaking change when it forged a technical collaboration with Kansai
Paint Co. Japan by introducing contemporary paint technology for Maruti.
Kansai Nerolac been in forefront to introduce new technologies in automotive
sector in India from time to time be it Cathodic Electrocoats, TSA/Polyesterbased top coats, Mar Resistant Clear Coats, 3 Wet Coatings technology,
Acrylic CED etc. Through its various strategic collaborations, Kansai Nerolac
offers a total painting system to auto makers in India with a range of
products, starting from Pretreatment Chemicals, Electro Deposition Primers,
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Intermediate Coats/primer Surfacers, Solid & Metallic Top Coats, Clear Coats
& Touch-up Paints. The products are approved by most Global Auto Majors.
Kansai Nerolac has strong reputation for innovation, Superior Technology,
Value Engineering, Quality and Service. More than 85 Technical Service Team
members are located at customer sites to support application processes,
controlling the process parameters and jointly participate in improvement
and optimization plans with customers. Kansai Nerolac is the largest supplier
of CED Coatings in India- catering over 75% of requirements in India.
RANGE OF PRODUCTS FOR AUTOMOTIVE PAINTS
Kansai Nerolac offers a very comprehensive product range, technical support& service to cater to the specific needs of Auto OEMs & Components
Suppliers keeping in mind the latest global trends.
PRETREATMENT (PT) CHEMICALS: All automotive metallic surfaces
need to be cleaned before the painting process. Kansai Nerolac along with
its collaborator Nihon Parkerizing Co., Japan offers Pretreatment
Chemicals for cleaning various substrates and prepares these surfaces for
improved Paint bonding & corrosion resistance. Pre treatment chemicals
play a significant role in corrosion management along with E-coat and
subsequent Primers. Zinc Phosphate Conversion Coating is widely used
process in Automotive Industry.
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Electro deposition (ED) Technology: In E-Coat the metal substrate is
immersed in an aqueous bath solution & coated with a charged organic
primer under the influence of electric field. In CED, their product range
consists of lead free Polybutadine Based Anodic Electro-deposition Primer
(AED); Epoxy Resin Based Cathodic Electro-deposition Primer (CED) &
Acrylic Resin Based Cathodic Electro-deposition Primer (ACED). The
product ACED won an Innovation award for being first in the world for
usage of a single coat application system for coating of Motorcycle
frames.
INTERMEDIATE COATS / PRIMER SURFACERS:The Primer Surfacer is
the second functional layer and it acts as an intermediate coat between
E-coat and the topcoats. It also provides excellent stone chip protection
and protection against UV rays to the E-coat film. The Intermediate Coats
are available in White, Light Grey, Dark Grey, Red, Blue and other specific
colors as required by OE manufacturers. Water borne Dipping Primers are
also developed with an eye on safer environment.
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TOP COATS:Top Coats provide Color, aesthetics and weather protection
to the coating system in Automotives. Kansai Nerolac manufactures a
large variety of Top Coats based on various resin backbones designed as
per specific technical specifications of customers. Containing an
extensive range of colored pigments and effect pigments, it plays a
significant role in establishing the visual image. A general distinction can
be drawn between a solid-color and a metallic paint finish in this
segment. Various types of Metallic & Mica finishes are available.
CLEAR COATS:The Clear coat is the top layer in a Paint System which
provides resistance to sunlight and weather and also to Chemicals and
biological materials such as bird droppings. It helps provide a scratchresistant final coat to the coating system. Kansai Nerolac offers Clear
Coats of various functionalities such as scratch resistance, acid & alkali
resistance, UV resistance, mar resistance etc.
TOUCH UP PAINTS & AUTO REFINISHING PRODUCTS: Kansai Nerolac
manufactures various types of Touch Paints which are used to undertake
small touch ups if the paint film is damaged. Kansai Nerolac offers acomplete range of Auto Refinish product range to service requirements of
Body Shops for repair coatings.
HEAT RESISTANT PAINTS: Kansai Nerolac manufactures specialty paints
such as heat resistant paints, both for interior & exterior surfaces of
motorcycle mufflers. These are made to withstand high temperature
conditions up to 600 degree C.
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UNDERBODY PAINTS & PVC SEALANTS: Kansai Nerolac manufactures
Bitumen & PVC type Underbody Compounds for application on underbody
surfaces of automotive bodies to impart anti chipping & sound deadening
properties.
RAPGARD TRANSIT PROTECTION FILMS: Kansai Nerolac supplies
Rapgard Transit Protection Films which are used for protection of
automotive vehicles during transit from dust, chemicals, bird droppings
and damages to the paint film. Films are available for protection of metal
& plastics surfaces.
2.GENERAL INDRUSTRIAL COATING
Kansai Nerolac Paints develops and supplies cost effective paint systems
used on the finishing lines of major electrical components, cycle, and
material handling equipments, bus bodies, containers and furniture
industries. Besides this they also provide systems conforming to I.S. &
Defense specifications.
They pride themselves in the quality and consistency of their coatings and
have helped companies, who serve diverse markets. They believe in the
power of innovation, and are committed to the exploration of new techniques
that help us exceed the needs and expectations of their customers. Their
product spectrum offers a comprehensive coating system starting from P.T.
Chemicals, Primers, Top Coats & Lacquers, Coil Coats, Heat Resistant Paints,
Metal decoration coating, etc. and they can create custom coating ifapplication requires so.
With a comprehensive range of products meant for industrial application
they have specialized in providing:
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Barrel Coating, Gas Cylinder Coatings, Fan Coatings, Helmet Coatings,
Glass Coatings, Audio video cabinet Coatings, Mirror backing Coatings,
Security equipment Coatings, Agricultural equipment Coatings etc.
KEY CUSTOMERS IN AUTOMOBILE SECTOR
Kansai Nerolac is market Leader in Automotive Industry in India. Some of
their main customers are: Maruti Suzuki, Toyota Kirloskar, Honda Siel,
General Motors, Tata Motors, Mahindra & Mahindra, Renault, Fiat, Hindustan
Motors (Mitsubishi), Renault Nissan, Hero Honda, Yamaha, TVS Motors, Bajaj
Auto, Honda Motorcycle & Scooters, Suzuki Motorcycle , Volvo India, Ashok
Leyland, TAFE, Eicher Motors, TACO, Motherson Auto, Visteon, Wheels India
etc. The list is long & growing.
3.POWER COATING
Powder coating is different from painting. These are a blend of resins, curing
agent and pigments which are melt-mixed and pulverized into finely dividedparticles. There are no liquids or solvents. Therefore, it is the ultimate
coating for environmental friendliness. It is applied to metal products by
electrostatic spray, the coated item is then heated and the powder melts
into smooth, continuous film.
Powder Coatings are gaining in popularity because of their high quality, the
apparent ease of application and the environmental friendliness of the
technology. It has been a commercial reality now for close to thirty years.
PRODUCT RANGE
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Epoxy Powder (6000 Series)
Epoxy powder coatings are used for thick film functional end uses and for
thin film decorative uses. Especially suited for surfaces subjected to high
stress and chemical effects. It can be formulated to produce attractive
coatings of varying gloss and surface texture which still retain the inherent
toughness, flexibility, good adhesion and environment resistance of the
epoxy resin family. Epoxy powders are very practical coatings for pipes,
water and gas valves, steel furniture and white goods.
Epoxy Polyester Powder (6100 Series)
This is a system for economical operation with a high degree of chemical
resistance. It has been developed for applications where the good
appearance qualities of polyesters are required and good UV resistance is
non-essential. The manufacturers of household appliances, automobile parts,
shelving systems, electrical cabinets and steel furniture, use it.
Pure Polyester Powder (6200 Series)
These coatings have good edge coverage and good mechanical properties.
This is best suited for industrial finishing and typical applications such as
aluminum extrusion, which are exposed to exterior environment. This
powder has excellent U.V. resistance
THE TARGET AUDIENCE
Kansai Nerolac is market Leader in Automotive Industry in India. The main
target audience for the Nerolac automotive paint is the leading automobile
company and their partner who manufacture the body parts for automobile.
Small scale industry which has been in process of manufacturing metal parts
for industry like Fan, bolts, major electrical components, cycle, and material
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handling equipments, bus bodies, containers and furniture industries etc.
have the target audience for the Kansai Nerolac industrial paints. The
company has wide a wide prospective customer base and has been
continuously exploring it further.
INDUSTRIAL SEGMENT
Asian Paints,
14%
Goodlass
Nerolac, 43%Berger paints,
14%
ICI, 8%
Jenson and
Nicholson, 8%
Shalimar, 8%Others, 5%
THE MARKETING CHALLENGES
The world is not yet completely out of the economic recession. There have
been alarming signals, and fears of double recession materializing cannot be
ruled out. KNPL has been vigilant and agile and is prepared to meet the
challenges. The strategy has been defined to understand the needs of thecustomers and align the offering vis-a-vis products, product mix, services
levels, quality, delivery along with the innovative use of latest technology in
IT and other areas. This has enabled the organization to cater to the needs of
the consumers in the Decorative and Industrial segments.GDP growth,
infrastructure and consumer spend, favorable demographics, introduction of
GST amongst others are indicators that the future is bright for the paint
industry. The company has outlined a set of initiatives to take advantage of
the future. The year also saw high inflation which put cost pressures on the
Industry and the company. The company has through a series of internal
measures of operational efficiencies tried to minimize the impact. The
Industrial business, passing on the cost impact continues to be a challenge.
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This has had an impact on the bottom line growth for the company. As far as
the market for paints segment for India is concerned, the long term
fundamentals are sound and the industry is expected to grow at about 12-
13% annually over the next five years.
Despite the long term positive growth prospects in the Indian Economy,
there have been signs of tightening interest rates, increasing inflation,
political uncertainties and rising commodity and oil prices. These along with
the instability in the policy making process, cost pressures and market
uncertainties have made the business environment very challenging for the
year and years ahead. While KNPL has taken various measures to meet the
challenges, it maintains a cautious view about the near future both in termsof top-line and bottom-line growth.
The industry size for paints is estimated at Rs. 24,000 crores wherein the
organized sector accounts for 65% while the remaining is with the
unorganized sector comprising of around two thousand small scale paint
units. The decorative paints segment accounts for Rs. 18000 crores while
industrial accounts for Rs. 6000 crores of the totals paint market.
Environmental regulation is rapidly gaining momentum. KNPL is prepared to
face with Eco friendly products as well as working on its manufacturing and
procurement processes. The year ahead appears challenging with the
volatility in the market, increased and new competition, fluctuating foreign
exchange, rising interest rates, inflation, rising crude oil prices, and natural
disasters. KNPL is geared to meet the challenges. IT is being used to ensure
that organization risks are well evaluated without losing out on flexibility.
Business managers are empowered with better decision making tools.
Inflationary pressures are being met through new products being offered to
customers to create a compelling value proposition and thus hedge on cost,
price increases and cost reduction. This has gone hand in hand with the
internal cost control measures.
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COMPANY FINANCIAL POSITION
Gross sales for the year aggregated to Rs. 2493 crores reflecting a growth of
26.4% over the previous year. Sales net of excise duty grew by 25.3%. Profit
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for the year was driven by robust growth in decorative and industrial sales.
Overall raw material inflation was very high. Increase in raw material prices
was driven by increase in crude oil prices. Depreciation is higher due to full
impact of the water based plant at Hosur commissioned in the last quarter of
09-10. Current year's depreciation is at Rs. 49.35 crores as compared to Rs.
44.26 crores of the previous years. Interest was lower at Rs. 0.84 crores as
compared to Rs. 1.20 crores of the previous year due to effective cash
management. Other income was higher at Rs. 48.83 crores (09-10 Rs. 20.38
crores) due to profit on sale of investments. During the year companys
investment in nipa chemicals ltd. was sold to Nihon Parkerizing co. Ltd.,
Japan at a profit of Rs. 25.37 crores. Profit before tax (pbt) is higher at Rs.
289.13 crores as compared to Rs. 238.61 crores of the previous year
reflecting a growth of 21.1%. The company has been financially sound and
would be continue to do so.
FUTURE OUTLOOK
Boom in Indian automobile sector has been continuously growing and
it is suppose to grow at a steady pace in recent future which will
provide an opportunity for the company to increase its market share.
Strong industrial growth: There is an average growth of 10% in the
automobile sector which provides 50% of the revenue in the industrial
paints segment
Heavy infrastructure spending: New projects in roads, ports and
industrial segments increases revenues from protective coatings forcivil applications and road-marking paints to all parts of the building
paints sector, whether interior, exterior.
Increase in manufacturing activities: Over 40% of the industrial sector
takes the form of OEM finishes, which is expected to grow steadily as a
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result of increasing demand for consumer goods in India as well as
Indias position now as a leading manufacturing hub for the supply of
goods to the South East Asian and other world markets.
As Indian market has been attracting a lots of foreign players so the
competition is expected to intensify in the recent future. The Multi-
nationals Company in the paint industry has started to shift their focus
to Indian market especially in industrial sector because they have huge
R&D work under their belt and have sophisticated and new technology
to back their business in India. So the companies who have been doing
business right now should try to be alarm from now.
LEARNING AND SUGGESTIONS
The Indian paint industry has been continuously growing and expects to
grow in future. Companies in the paint industry have been competing on the
quality parameter rather on price which has been plus point for the industry.
All the foreign payers are eying on the Indian market so the competition is
expected to intensify in future and Indian player have been doing their
efforts to with stand this.
Nerolac paints have been performing very well in the B2B segment of the
paint industry and with the current policy it will sustain its position. The
company invest huge amount of resources and money towards research and
development and thats why they have been able to offer new and improved
products to their customers and also cost effective. They continually try to
improve their efficiency by reengineering the process, use of new modern
machine so as to stand to competition and change according to their
customer requirement and provide them better services at low cost. The
company also gives emphasis on the relationship between the company and
suppliers, company and customers, company and distributor. It has the
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policy of nurturing the relationship with mutual benefit and having ideology
of working towards aligned goals.
Nerolac paint have been doing their level best in their B2B segment but most
of their clients are big companies like Tata, Maruti, etc. but there are not fully
focusing on the small sector industrial sector which has a wide scope of
growth in the future. Although company has allotted their distributor for
taking their order but the order processing time is high, so this is a drawback
for the company image. So company should try to capitalize the small scale
industry in most efficient manner so that it can out-stand the competition.
REFERENCES
www.nerolac.com
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Annual report of Nerolac.
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