President - International, Asian Paints Limited
Executive Chairman, Berger International Limited
afternoon friends. As I always say whenever I get invited to
one of these sessions, that it is very glamorous I think to
build a multi national business. I also think that it is equally
stressful because what makes you successful in one market does
not make you successful in some other market, and if you have
that humility to learn as you go to new markets then you will
probably succeed. Other point is that every one wants to build
a global business but it is a journey, and we embarked on this
journey a long time back, but in a fairly serious manner only
in the last few years. The job is not over for us. I think you
can raise capital- internationally- most corporates do in the
Indian context today. You can buy material from all over the
world. Some of us are beginning to sell material services and
products, around the world. Some of us also source a lot of
other things as we grow our business, but if we can do this
all together at one time I think it is an art. I think organizations
go through this journey only over a period of time, and may
be we are at level 2 or level 3 or third step of this journey,
and I think it will be at least 5 years before we know whether
we have finally arrived.
We are among the top 10 decorative paint companies in the world
today…fairly large in this part of the world. We have
paint manufacturing facilities in 22 countries. Our results
are not announced yet but, for last year, sales across 600 million
US super markets, capitalization of 1.3 billion, which is a
reflection of quality of management and profitability.
These are the brands we have acquired over a period of time.
Berger is an acquisition we made about 3 and ½ years
ago, and because of that we have manufacturing in a fairly big
way in South East Asia, Middle East, and the Caribbean. Apco
and Topmans is what we have in the South Pacific. Asian Paints
is what we have in India and other parts of South Asia. In Egypt
about 3 and ½ years ago, we bought a local brand which
I believe that as you become, or as you aspire to become a global
player, and most of the people are usually national champions,
it does not matter who you are…in some part of the world
is where you usually start, whether it is 40, 50, or 60, some
corporates 100 years ago or as back as 5 years ago. I think
it is an orientation you have to develop over a period of time.
The word I like to use is not multi national but meta-national,
by which I mean it is beyond borders. Somewhere geographies
are restrictive but what you are after are corporate customers.
The questions that run in your mind, and as I was discussing
with some one at lunch today, which I have not put here, is
when Indian economy is growing at 10% then why do you want to
be or go outside India?...a question people have begun asking
once again. I think it is a question we need to continuously
ask because what is it that you bring from your successes from
abroad to India, and what is it that you are taking abroad.
I think we need to be fairly accurate in these things, and this
is something we need to recalibrate every year. Are you willing
to take long term calls on some of the markets? Are you willing
to go to markets abroad and expect returns in the short term,
much lower than what you have in India? In India, the return
on capital employed is 40% and outside of India, if we do 10-15%
we are quite happy. Are you willing to adopt a challenger mind
set because as Dharen started out saying you can be leader in
a market, can take it for granted, but when you go to somebody
else’s market then what do you do as a challenger? What
is the difference you are going to make in that market place?
How do you portray your capabilities? Is it service? Is it price?
Is it technology? Is it a combination of these things? And what
it is all about in this seminar is how do you build brands?
How is it being done?
I will spend the next few minutes talking about the Asian Paints
experience. We have identified, I think identification of markets
you saw in the presentation of earlier speakers, is something
that is very critical. You have got to identify markets to which
you are best suited to serve. We have identified fast growing
emerging markets because retail is fragmented the influence
of contractors is fairly large. That is why our vision also
states that we want to be the leading decorative paints company
across emerging markets. We have taken the route of acquisitions
because when you make acquisitions in emerging markets you get
brands, you get access to the distribution network, you have
ready made manufacturing facilities, and most of the time we
spend evaluating people more than accounting or legal reasons.
You buy the right company then you get great set of people on
the ground on day one. Also it gives you size. Otherwise as
a challenger trying to establish your identity, most of these
markets are not very easy.
I will spend the next few minutes on the human resource challenge
and what it is to build values in these markets, whether it
is with consumers or other stake holders? Today at Asian Paints
we have more than 1500 people of more than 20 nationalities
working with us. How do you respect cultural sensitivities?
How do you put systems and procedures in place that take into
consideration these aspects? Communication. How do you integrate?
How do you inform people? When acquisitions happen…when
low cost countries like India are buying assets allover the
world, people’s first fear is that they are going to lose
jobs. How do you build that common platform across all the employees?
How do you create that win-win feeling as far as all the stake
holders are concerned? Also it is very necessary to be truthful
in these acquisitions. Are you going to lay-off people? Who
are the people who are going to go? Why? Are you going to build
the organization? Are you going to move jobs? And putting a
performance-focus management system on day one, because, then
at least at the end of the year, you have a basis on which you
can communicate to people about performance and benefits.
Also it is necessary to have a model, an operating model in
place which helps you to transfer knowledge and skills. How
do you take the best practices? How do you cross pollinate,
whether it is technology, whether it is sourcing, how do you
take it from one subsidiary to another? And again in every industry
you have to figure out your own model. Every company has to
figure out their own model depending on what part of the cycle
they are in. How do you bring in that feeling of oneness other
wise there is always us versus them feeling in most acquired
We have over a period of time launched TOP, which is Top Operating
Performance as far as the supply chain and manufacturing is
concerned. ESTRIVE is an ERP solution we use around the world…sitting
in any part of the world you can access information as to what
Now to what we call in Asian Paints as guiding principle which
is the 4 values that we hold most dear…and how do we build
on those and succeed in the market place…and 120 key managers
that we identified as global managers…and how do we bring
them in various platforms over a period of time.
In our business, and this is something we have done lot of good
work with Dharen also, we have learnt that the consumer buys
the product once but the brand gets established 3,5,7 years
hence so the same consumer comes and wants to use the same product
again. When you do acquisitions and if you have bought the right
brands, it really helps. Also the corporate brands are much
more important than the product brands and this is something
we have attempted to build regionally over a period of time
in all these markets.
In Sri Lanka we have bought the third largest player, this was
in 1999, and through a launch of products we discovered that
the brand we bought was not very strong, and this was our first
acquisition within India or outside. We rolled over to the parent’s
name, which was Asian Paints, and today we have a full range
of products and services, and also we were able to take the
efficiencies out of India.
The company we acquired in Egypt, Skip chemicals, we renamed
it Skip Paints. Today, from number 5 position we have already
moved to number 3 position, and we sell more than 100 crore
worth paints in the Egypt market last year.
We have also adopted common brand architecture across subsidiaries.
So at the economy product range, in most of the markets we will
see the brand Decora. In India we have grappled the brands like
Apcolite, Tractor, and Three Mangoes. I think as we globalize
our business we will have to migrate to some of these brands
over a period of time.
Berger, an acquisition we made in Singapore gave us rights to
brands in 70 countries. We now have a fairly strong presence
in the Middle East and South East besides leadership in the
Just to close, we at Asian Paints believe, each market is different
and needs a different strategy. So you cannot take the experience
of Dubai market to Oman or even to Qatar. Organizations have
to align the products and customer offerings in each of the
markets and it is never the same solution every time. For us,
acquisition is a preferred mode of entry and localization of
talent is a fairly big challenge. It is very easy when you acquire
and send people from a country of billion people but you will
have issues over a period of time, and we have spent a lot of
time and money in creating local managers as far as these 120
key positions are concerned. You need to constantly keep your
lines of communication open. And how do you leverage relationships
whether it is an intra or inter group level. Also multi nationals
are about processes…they are about robust processes…managing
very different requirements, but ensuring that you are giving
value to the consumer, because I have seen parts of our organization
also getting carried away with processes and losing out on customer
Speed of integration. Clearly setting benchmarks as in how much
cost you will take out, how much you will grow the market, what
kind of market share you will have, and putting this with clear
milestones from day one…and celebrating some of these
successes as you make progress. Last but not the least we are
in the era of SOx and other compliance issues. Control is a
necessary and sufficient condition. It is necessary and it is
sufficient but in the end it is all about trust because you
are working with human beings. So putting reward mechanism in
place for people to be truthful, to tell you the bad news when
something has gone wrong out there instead of discovering at
the end of the year after an internal audit visit and things
like that. These are some of the experiences for us at Asian
Paints. Thank you.