Business Selling Project, Santosh Kumar, Pg20101256

8/3/2019 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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Business Selling Project, Santosh Kumar, Pg20101256

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