EXPLORING GOLDEN EMPIRE A CASE

STUDY ON BERGER PAINTS PAKISTAN

LIMITED

By ENDEAVORS
Nazish Pervaiz (mbt-sp12-053)
Humna Ijaz (mbt-sp12-025)
Nawaz Tabassum (mbt-sp12-043)
Abdul Qadir(mbt-sp12-053)

SCENARIO BUILDING - BERGER PAINTS PAKISTAN LIMITED

Where will you see yourself in the next 5 years in the

growing but intensely competitive paint industry of
Pakistan?

It was a question asked by one of the columnist of business

recorder when she was conducting an interview with the CEO of
the Berger paints Pakistan Ltd for her column with the name of
business today published in the famous business recorder
newspaper every week. It was a question that put CEO of paint
organization in thinking where his company Berger paints stands
today. The answer was rooted deeply in the taking glance of the
Berger Empire. Fragmented deeply inside the company will give
the answer that was related to the future. As one of the industry
analyst once said Berger is going to hit the status of being trusted
worldwide by expanding globally with its innovative technology
and best ever customer oriented services.
Berger paints always tried to capture trust of its wider consumer
base as easily examined by the statement of the one of the senior
official of the Pakistan Paint industry association as the era of
fastest ever construction in the country company like Berger will
find its place in the best paint and associated products provider
list of the governments infrastructure departments. Lets try to
answer question that is closely related to the future outlook of the
Berger Paints Pakistan limited. lets start with the origin of the
Berger

HISTORY

Berger was established two centuries ago and now it has grown to become one of
the worlds largest paints manufacturer. In Pakistan, history of Berger is as old as
history of Pakistan. Berger started its operations in Pakistan in 1950 and was the
first organized Paint Company to offer premium products through import from the
United Kingdom.
Berger paints Pakistan ltd became a public limited company in 1974, when 49.38%
of its shares were acquired by Pakistani investors, while the remaining 50.62%
were held by U.K. parent company, Jenson & Nicholson Limited. In 1991 Slot
rapid Limited, a U.K. based company with diversified business interests, acquiring
control of Berger Paints Pakistan Limited by gaining 50.62% shares of the
company.as the parent company wants to hold the control of the company its
operations its management in order to keep its products image based on the
superior quality and best in its category.

Berger established its first local manufacturing facility in Karachi in 1955. In 2006,
Berger established state of the art manufacturing facility in Lahore. This plant has
provided Berger an edge over its competition through enhanced production. State
of the art manufacturing facility built by company was the milestone for the
company and with the help of this manufacturing facility Berger was putting its
steps towards leading the entire industry.

HISTORY

Consistent quality has always been Bergers trait. This has been
the driving force in making it the leading brand name backed by
premium quality across Pakistan. Berger has the most
comprehensive product range for various paint market segments
at different price points

Berger have tried to provide its target market an abundant choices

and they were good in that by offering paints and associated
products. Paint associated products were those that was used
either before and after of the painting coats

Berger is also operating Resin manufacturing facility at its

Lahore factory. The resin plant has high production capacity and
has enabled Berger to meet its entire resin needs for the
manufacturing of a wide range of quality paints. Berger was the
first paint company in Pakistan to set up its own resin production
facility.

FOUNDING PRINCIPLES OF BERGER

Berger paints started its operations when they even dont know the
dimensions of the Pakistani market and they are just tried their struggle on
the basis of some core founding principles . they have build their vision and
mission based on those fundamentals
VISION;
We will become the leading paints and associated products manufacturing
and marketing company ensuring the best returns to our stakeholders and
superior customer satisfaction
MISSION STATEMENT
We want to deliver best quality paint and associated products manufactured
by using innovative ideas and advanced technological arrangements to
ensure superior customer satisfaction and value while vigorously promoting
and safeguarding interests of all stakeholders

TACTICAL GROUND ON WHICH BERGER PLAYED SO FAR

Berger paints Pakistan started working in the time when there were few
companies of paint manufacturing . firstly Berger decided to target only
those who are need of paint just for the case of decorating their houses,
offices, buildings. in their decorative paint market they tried to focus for the
individual consumers as well as companies, institutions who were in need of
paint just for making their properties more attractive.
After that Berger started their operations in the industrial sectors. Berger
started to provide paints to the different industries like housing industry,
automotive industry, construction industry, and printing industry. with the
passage of time Berger also started to provide paint to the government. Like
armed forces, aviation, ports and shipping, educational institutions and
health institutions.
Berger broadly have segmented its markets broadly on two benefits that will
sought all of clients of the Berger. first was any person and organization
who are in need of paints and varnishes either for decorative purpose and
second one was who need paint products for the protective purpose.
Berger have positioned itself in the market as the premium brand they have
made their image in the mind of the consumer as the trusted brand in the
paint industry. in all its advertising Berger have focused a premium lifestyle
of its consumers. in all its ads Berger have shown their spirit for the luxury
lifestyle. Berger started its ad campaign as jeenay kay rang. this promotional
campaign was providing consumer with the touch of luxury and stylish
lifestyle with the lot of colors.

TACTICAL GROUND ON WHICH BERGER PLAYED SO FAR

Berger first started to manufacture only paint but after that they were very
much interested to in other complementary paint products. they started
manufacturing adhesives, protective varnishes, powder protective coatings
and oil based name with the name of enamel paints.
after building its headquarter in Lahore company further established its
state of art manufacturing facility in Raiwind Lahore. Berger started its
operations in almost all big cities of Pakistan. Berger have developed its
network through exclusive dealerships in the cities like Lahore, Karachi,
Gujranwala, Rahim , Yar khan, Multan, Peshawar, Faisalabad and
Hyderabad .
Berger than decided to export its paint in the neighboring countries. in 2007
Berger started to export its paint products to Afghanistan. Berger wants
itself to be global specially by reaching neighboring country markets.
Berger business divisions are working day and night to incorporate
corporate level tactic it means that in order to expand and survive on the
basis of growth Berger is trying to incorporate element of uniqueness in all
its business divisions which further insert that unique elements in their
products. so products of Berger will provide ultimately unique performance
in the market to all of its client.

BOARD OF DIRECTORS- WHO IS ON THE BOARD

Total seven members in the board categorized as

3-independent directors
Mr. Hamid Masood Sohail
Mr. Shahzad M. Hussain
Mr. Zafar Osmain
3-non executives directors
Mr. Maqbool H.H. Rahimtoola
Mr. Muhammad Naseem
Mr. Ilyas Sharif
1- executive director
Dr.Mahmood Ahmad

BOD PROFILE

DR. MAHMOOD AHMED,MBBS from Army Medical College.

Business Management courses form Pakistan like CEO courses form
PIM.Served in the Pakistan Army Medical Corps. Leading the paint
business under the brand name of Berger Paints in Pakistan.
MR. H. MASOOD SOHAIL, B.Sc. (Hons.) University Karachi,BSE
and MSE (Mechanical) Degree from the University of Michigan, USA.
Director and Chairman Audit Committee of the Board of Saif Energy
Ltd, Islamabad, Director and Chairman Audit Committee of the Board
of Berger Paints Pakistan Ltd
MR. MUHAMMAD NASEEM,A fellow member of ICAEW-Institute
of Chartered Accountants of England and Wales, Masters of Commerce
from University of Punjab. Leading the paint business under the brand
name of Berger Paints in Pakistan
MR. SHAHZAD M. HUSAIN, Masters in Law, International
Relations. Worked for Citibank for 20 years and Supervised
Corporate/Wholesale Banking. He has previously served on the board
of Citicorp Investment Bank Ltd, Central Depository Co. Ltd, PICIC
and PIA worked with law firm in England.
MR. ZAFAR AZIZ OSMANI, Partner at People Perfect Advisory
Chief Operating Officer at Karachi Electric Supply CO Head of Human
Resources at Habib Bank Limited. Worked with management consulting
firm in the Middle East .

BERGER EMPIRE-THE INSIDE STORY

Berger is the most trusted name in quality paint The company has built this
proud reputation by not compromising on quality standards
Berger has efficient logistic systems through which it deliver paint products to
dealer of Berger paints who supplies quality paint in all major cities of
Pakistan. To be the leading paint manufacturer Berger has to supply its
products timely in the market which is done through its logistic partners which
is M/S Pak logistics systems. But still Berger is not extensively distributing its
products to rural

Pakistan Berger was the first to start its own resin manufacturing plant to meet
their resin needs. As said by one of the CEO of the Berger paints : We reduced
the time for our month-end account closes by 70% and increase staff efficiency
by up to 25%, enabling us to become more responsive and improve customer
service by 20%

To timely deliver its product to its customers Berger has efficient sales
personnel who efficiently its product to the distributors and to the wide
network of the dealers.

Berger Paints has been a leader in Innovation and Customer Care in the Paint
Industry. Berger always prefer how to give value to its customers its free color
advisory service through which customers get advice on color selection

BERGER EMPIRE-THE INSIDE STORY

ERP systems delivered an integrated system that reduced the

month-end account closing time from seven days to two days,
slashed staff-process time by 25%, and decreased inventory by
11%, ultimately enabling the company to produce paint products
in a timely manner and improve time-to-market. IT head of the
Berger paint said that Previously, our systems were not
integrated, and we had to collect data from different modules and
locations, taking two to three days to compile, verify, and submit
regulatory reports. Now it takes under a minute to generate the
report, and only a few hours to verify data before submitting
Now in organizations people are consider as the key resource of
the organization. Berger uses retina recognition device for
employees attendance to increase the element of punctuality in
them
Across all layers in the organization, Berger is promoting a
culture of acknowledging talent, nurturing potential and
encouraging initiatives. Berger is maintaining an enabling
environment with fairness and equal opportunity and freedom to
perform and excel.

BERGER EMPIRE-THE INSIDE STORY

. Berger is performing its operations transparently, Berger

acquire its material from foreign suppliers. Berger has
distribution rights of CROMAX, formerly known as DuPont
for Pakistans vehicle refinish paint segment. They acquire
material through the competitive market prices by taking
quotations from the market. Company sometimes goes for
the tender which is solicited in the newspaper and then go
for the competitive bidding.

Berger has entered into a number of technical collaboration

arrangements with leading international manufacturers.
These include the largest paint company in Japan, which
enables Berger to develop Automotive, Vehicle Refinishes a
Japanese chemical company, for Bumper Paints; , Malaysia
for Road & Runway Markings and Asian Paints for
Decorative Paints.

COMPETITIVE LANDSCAPE OF BERGER PAINTS PAKISTAN LIMITED

Berger is working in the very intense rivalry. In the Pakistani

paint market Berger is facing competition from the
international players who are interested to invest in the paint
market of Pakistan.

Many players have already entered in the market. Japanese

companies are imposing threat to the company like Berger as
these companies are now looking their avenues in the market
of Pakistan because of the large infrastructure projects.

Multinational paint companies are opening their

manufacturing facilities in the country because the cost of
investment is very much low, labor is very cheap here and
Pakistan regulatory framework is not imposing too much
harsh restrictions to the new entrants.

COMPETITIVE LANDSCAPE OF BERGER PAINTS PAKISTAN LIMITED

Berger paints Pakistan is facing many challenges from its competitors. With the very diverse product
range changing cultural trends like of the population is providing a way for the multinational companies
to take advantage of the facts.

Now people are more sensitive towards price, quality, texture, color range, environment friendliness of
the paints. All the paint manufacturing companies are trying to capture biggest market of the customers by
providing them exactly what they are really want.

Paint manufacturing companies are working on the basis of getting advantage by providing their
consumers with the superior value by fulfilling their needs through utilizing their core competence and
their sustainable competitive advantages

Paint manufacturing companies are now not only portray themselves as purely paint manufacturing
companies but they making their images in the minds of the consumers as the complete solution
providers. They are offering services like the color consultancy, consumer feedback, consumer complaint
hotlines, paint tutorials, online chatting with the paint experts

If we talk about the market share of the Berger so Berger is having market share of 20% of the total paint
market and ICI is holding market share of about 25%. This is clearly shown that the Berger paints
Pakistan limited is currently hold the status of the second biggest player in the Pakistani market and ICI
paints is major dominant player in the industry. So Berger paints Pakistan and ICI is considered as the
major players to holding the markets maximum share. The graphical presentation shows the market share
of the various paint manufacturing companies

GRAPHICAL REPRESENTATION OF MARKET SHARE B/W ICI AND BERGER

berger

ICI

RIVALS COMPANIES IN THE PAINT INDUSTRY

RIVALRY AMONG COMPETITORS

RIVALRY IS STRONG AS MANY INCUMBENTS AND
POTENTIAL COMPETITORS EXIST IN THE MARKET AS
1. AKZONOBEL
2. MASTER PAINTS
3. ICI
4. NIPPON
5. BRIGHTO PAINTS
6. KANSAI PAINTS
7. HAPPILAC PAINTS
8. BLACK HORSE PAINT
9. DIAMOND PAINTS
10.ALLIED PAINT PRODUCTS
11.ATLAS PAINTS
12.JOTUN PAINTS

BERGER PAINTS BUSINESS DIVISONS

1- decorative paint division

2- automotive paint division
3- general industrial finishes
4- powder coatings
5- vehicle refinishes
6-road safety
7- construction chemicals
8- printing inks
9- adhesives

BIRDS EYE VIEW OF LUCRATIVE PAINT INDUSTRY OF PAKISTAN

The paint industry in Pakistan operates both in the

organized as well as the unorganized sectors. There
are around 22 paint producing units in organized
sector and two multinational companies also in the
organized sector which includes Akzonobel, ICI,
Master Paints, Nippon, Brighto Paints, Kansai
Paints, Happilac Paints, Black Horse Paint, Diamond
Paints , Allied Paint Products, Atlas Paints , Jotun
Paints .There are great opportunities to grow in paint
industry because of the expansions of building,
manufacturing and construction projects. Pakistans
chemical industry is also boosting up which will
benefit the paint producers which use chemical as a
raw material for paint manufacturing will be
produced or manufactured locally.

CHALLENGES FACED BY BERGER PAINTS

Unorganized paint sector ( Tax evading paint companies) is

affecting badly the paint manufacturers, they are selling paint at
low prices than the higher quality branded paints.
Energy crisis are affecting adversely the manufacturing sector.
Inflation rate is increasing which shows a sign of risk to the
economy ultimately posing risk to the manufacturing
companies.
law and order conditions are also not stable which affects the
business
The main ecological concerns arising from paint manufacturing
are the use of organic solvents and inorganic pigments, and the
disposal of hazardous chemical wastes which is problematic for
the businesses

CURRENT PERFORMANCE INDICATORS OF BERGER PAINTS

market share..........up to 20%( according to business

recorder dec.03/2013)
dividend per share.......................Rs. 1
earning per share................................ Rs 5.36
BOD ...........................7
foreign share......................52.052
local share............................47.94
ROI..10.17%
According to annual report of FY 2014

CURRENT FINANCIAL PERFORMANCE OF BERGER PAINTS- HIGHLIGHTS

Total Net Assets

= 958,150000
Turnover
=4,500,893000
Gross Profit
= 1,089,122000
Operating profit
= 198,607000
Profit after taxation =97,508000
with the passage of time company is going
towards success

DESTINY OF BERGER

Berger is working in the environment where

unorganized paint sector is flourishing very rapidly .
Berger is also taking notice of the fact that Pakistan is
a land of opportunity. Pakistani market is known as
emerging market which provides many investment
opportunities to investors besides poor law and order
situation and threat of terrorism. Berger future
perspective is closely related to the fact that how
company will efficiently avert all of its internal and
external threats. efficiently manages and enhance its
core strengths, how much rapidly grasp the
opportunities from the external environment and try
to avail them. last but not the least will be the factor
that to what extend company will remove all of its
weaknesses.

DESTINY OF BERGER

Berger is premier paint which targets the urban market. future

operations will include focusing for the rural base of the
country in the future the company will try its luck in the rural
paint markets of the country for that Berger will have to scan
its internal external future environment ,company's strength,
its financial resources, its sales force volume, future industry
trends, economic and political condition of the country and in
last cultural trends within the society so that in future the
entire empire of Berger is standing on the for front of
innovative technologies meeting latest consumer demands
. the whole and unified picture of prevailing and future
position the company will enable the CEO to give an answer
of significant questions related to position of company in the
next five years.