Asian Paints is an IT Company!

1 Dec 2021  Read 3891 Views

Wait! Before you click off, no, I’m not crazy. Asian PAINTS is indeed an IT company. And as bizarre as that sounds, Asian Paints’ secret to its 60+ years-long success is, foraying into the IT sector. Lemme elaborate with a scene.

We’ve all had our houses painted at some point in time. As an avid grayscale enjoyer, I find just exploring the colour catalogue to be plenty entertaining. But those with artistic inclinations find the colour selection process joyous and something of an entertaining endeavour. The creative ones are probably already stirring up a colour combination storm in their minds...

But what if I told you, every colour combination you’ve thought of, are thinking of and will ever think of, is partially known by an algorithm sitting in a computer. Now imagine what a paint company could do with this information that only grows as time passes.

Well, this near mythological and niche algorithm does exist, and Asian Paints has it, using it regularly to stay in the pink of health. The algorithm has been in its possession since 1970.


Asian Paints has been a leader in the pigment industry from long before 1970 though. What are the secrets to its palette of success that no competitor ever tries to come after its crown? Let’s find out.(IT abhi nahi, IT ke liye... ruko zara, sabar karo😋)

The Mixing Bucket

When it comes to the paints and pigments industry, the companies are not price makers. With similar production techniques, unchanged chemical compositions and no major disruption, the competitors are too similar to warrant the strength to set distinct prices for their products.

Currently, the paint industry is being led by three major players, namely, Asian Paints, Kansai Nerolac Paints and Akzo Nobel India. Here’s a look at their financial standing:

 

Notice the massive difference between Asian Paints and its peers? In any particular numerical, Asian Paints is more than 5 times bigger than the next in line.

Just in case the vast rift between Asian Paints and the rest seems hard to believe in, Jaake dekh Ticker main, Company hai ya Bhagwan!

Back to the blush baron, Asian Paints enjoys such a dominant position because, in an industry that has somewhat peaked in terms of future developments, Asian Paints is choosing to change. Change not the industry but itself in such a radical fashion that no other player could achieve a similar feat.

Asian Paints: A hipster of the paint industry

As mentioned before, the paints and pigment industry is saturated(eh? eh? saturated… colour… get it?) in terms of development that can take place inside the industry. So what does Asian Paints do? It innovates from an angle outside the industry. And voila! the title starts to make some sense.

Asian Paints be like, “Being a paint company in the paint industry is too mainstream, I’ma do something hatke.”

These are the “hatke” changes Asian Paints made to shift from “plain jane paint”:

Giving customers the reigns: Originally, the paint industry had been commodity centred, i.e., customers would buy the very few options available for residential colouring. The paint was usually picked by the contractor or builder and had no input from the end-user.

Did you know: The name Gattu was chosen from a “Give me a name” contest. Incidentally, two separate people submitted the winning entry and, as a result, received halves of the decided ₹ 500 prize money.

“Gattu”, the mischievous boy with a paint can and brush took this archaic dynamic and turned it on its head. The appearance of the endearing character made by legendary Indian cartoonist R.K. Laxman let the company take the dull industrial product and metamorphose it into an attractive customer product.

ADditional Help: While Gattu brought Asian Paint under the spotlight of approachability, the population of India still only painted their houses once every 10 years. With the purpose of said renovation would being purely maintenance based, residences would be stuck on the same colours for too long.

The process of painting one’s house was made an emotional process than a purely mechanical one by the strong ad campaign by Asian Paints. These ads made painting one’s home a festive affair, whether it would be widespread phenomena like Diwali or Pongal or a personal celebration like childbirth or marriage.

Painting wasn’t just pigments and colours anymore, it was the reflection of the homeowner’s personality.

These advertisements also opened the eyes of customers to a broader selection of colours, creating accelerated demands as more colour combinations were made possible now.

But these were the changes that made “decorative coating” a customer-centric process. Competitors still exist, and are similar to our subject today. So what gives? Why is Asian Paints still at its mountainous lead? What has it done?

Well, I saved the best part of this journey for the last bit. Now we look at Asian Paints’ IT integration and how deeply intertwined technology is with the company.

TOLD YOU I AM NOT CRAZY!

The paint company that entered the space race

So far, we’ve seen how Asian Paints changed the paint and pigment industry from a commodity-led industry to a consumer-centred industry. This change, however, created greater opportunities for the industry altogether. Asian Paints wouldn’t solely benefit from these changes.

To understand how getting close to the customers was just setting the stage and what exactly was the actual play, let’s go on a tangent about the paint manufacturing supply chain.

Traditionally paint manufacturers would sell their paints to wholesalers or distributors, who would then sell to the retailers to bring paint to the end-user.

This system, while effective, would cost manufacturers about 15-20% of their margin to pay the middlemen.

What Asian Paints decided to do, which at the moment seemed like madness, was to axe these middlemen.

In an industry where the prices wouldn’t change because the companies couldn’t change them, Asian Paints created profits by changing its cost. Now instead of the 15-20% of its margin going to the distributors of the supply chain, Asian Paints saved its cost to wholesalers and, as a result, increased its profit.

Asian Paints now earned 97% of its MRP, and the remaining 3% went to the retail seller, compared to the competitors who earned only 60-70% of their MRP due to middlemen.

If only the call was that easy to make though, the cost saved by removing the middlemen caused distress among the retailers as they couldn’t keep such high inventories. Wholesalers were the infrastructural aid to store inventory in large capacities.

Asian Paints, continuing its revolutionary idea, decided to alleviate the storage issue by employing a different aid to trade, transport.

The decision was not to make the retailers maintain a significant inventory but to keep restocking them at a high frequency. How high, you ask? Every three hours, during the working day, meaning 4 times a day and 28 times a week!

To put this number in perspective, other brands were restocking once every 2-3 days.

This abrupt, revolutionary decision was made in 1969. Yeah! That long ago.

But how could a paint company possibly anticipate what paint it would need to supply? Would the deliveries be demand-based? But that would cause a delay and could potentially hamper the consumer’s experience with Asian Paints. The deliveries would have to be pre-emptive.

The whims of humans are unknown to even the real ones; how could a legally created artificial one predict them? The answer is simple. It couldn’t. Tech, however, was leagues ahead and the next step.

This is where the prime paint producer brought in a programmable powerhouse in the pigment play.

What a “supercomputer” Meant in 1960-1970...

In the year 1970 Asian Paint, for a grand sum of ₹8 crore, bought a supercomputer, the first to ever exist in India. This was 10 years before ISRO and IIT Powai(the places you’d expect a supercomputer to be) and 22 years before any other company would do the same.

...vs supercomputers now

So a paint company bought a large, fancy computer, big deal! Yep, it was a big deal. Putting aside the sheer pioneering in technology, the supercomputer turned into a goldmine of insight, giving Asian Paints a look into consumer buying habits based on past habits.

This supercomputer didn’t just zero in on the colours that would be demanded, but the can sizes, paint base types as well as the quantity of the colours being bought. Each purchase added to the data pool the computer drew from, bolstering the accuracy of the predictions.

The introduction and usage of trend-based data was not just useful for the distribution process but also had far-reaching effects into the pre-production process of procurement of raw materials and the production process itself. Knowing exactly what was to be sold meant knowing precisely what was to be produced as well.

The finished picture

Asian Paints began as an adventure between four friends in a garage during a pre-independence India. The company sought to bring color to a time that was both technologically and emotionally pale.

Today the company is an innovator that has taken the dull industrial coating “larva” and chrysalised it into the vibrant decorative coating “butterfly” with the help of tech instead of mainstream media and traditional marketing techniques.

Asian Paints is no one-trick pony though. The benefit that it accrued to itself with tech wasn’t the only lead it took. The company has gone through rebrands and diversified its production to make forays into the interior coating and decoration business.

While this article must come to a close, Asian Paints’ journey is far from over and if the upcoming iterations of the company’s plans have any more wild cards, who knows how far this butterfly might spread its wings.

About the Author: Deb Preetendu Samaddar | 18 Post(s)

Deb is a keen learner and eager to learn about the finance world. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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