1. Sales ForecastingSales Forecasting

2. What is Sales Forecasting?What is Sales Forecasting?
“Prediction based on past sales performance and an analysis of
expected market conditions.”
• The true value in making a forecast is that it forces us to
look at the future objectively.

3. Importance of Sales ForecastingImportance of Sales Forecasting
Evaluation of past and current sales levels and
annual growth
Compare your company to industry benchmarks
Establish policies to monitor prices and operating
costs
Make a company aware of minor problems before
they become major problems

4. Importance of Sales ForecastingImportance of Sales Forecasting
Companies that implement accurate sales forecasting processes
realize important benefits such as:
• Optimised cash flow
• Knowing when and how much to buy
• In-depth knowledge of customers and the products they order
• The ability to plan for production and capacity
• The ability to identify the pattern or trend of sales
• Determine the value of a business above the value of its
current assets
• Ability to determine the expected return on investment

5. Internal factors affecting SalesInternal factors affecting Sales
ForecastForecast
New
Product
lines
Production
Capacity
changes
Change in
Distribution
method
Price
Changes
Working
Capital
shortages
Inventory
Changes
Sales
Motivation
Plans
Credit
Policy
Changes
Labor
Problems
Internal
Factors

6. External factors affecting SalesExternal factors affecting Sales
ForecastForecast
Productivity
changes
Weather
Population
changes
Consumer
earnings
Styles or
fashions
Political
events
Direct and
indirect
competition
State
of the
economy
Seasonality
of the
business
External
Factors

7. NeedNeed
Every company needs to generate forecasts of their short to
medium term sales. Being able to forecast demand more
accurately has major commercial advantages, whether the
forecast is used:
 To plan purchasing, production and inventory
 As the basis of marketing or sales planning
 Or for financial planning and reporting or budgeting

8. Types of forecastingTypes of forecasting
Time-Series Forecasting A common forecasting
task is to predict sales for the next 12 months based
on sales of the past 36 months.
Time-series techniques are quantitative-that is, they
use values recorded at regular time intervals (sales
history) to predicts future values

9. Correlation or Regression TechniquesCorrelation or Regression Techniques
Another common forecasting task is to predict the
increase in sales given some marketing action such
as a sales promotion or advertising campaign. In
this case, correlation or regression techniques are
used to compare how a change in one variable (e.g.
advertising effort) causes a change in another
variable (e.g. sales volume).

10. Qualitative TechniquesQualitative Techniques
Changes in sales volume may result from the actions
of the company or from other factors such as actions
by competitors and economic conditions.
Time-series techniques cannot foresee and regression
techniques cannot account for changes in demand
patterns and other relationships that affect sales
volume. Instead qualitative techniques (also called
subjective and judgmental techniques) call on the
expertise of people inside and outside the company to
adjust the forecast to account for these factors.
The three categories include many different sales
forecasting

11. Indian paint industryIndian paint industry
 The paint market in the country is estimated at around Rs
8,200 crore
 Around 35% of this market is with the unorganized players
 Asian Paints is the largest player in controlling around 30%
of the overall paint market.
 Asian Paints is India's largest paint company and the
operates in 21 countries and has 29 paint manufacturing
facilities in the world servicing consumers in over 65
countries.
 Besides Asian Paints, the group operates around the world
through its subsidiaries Berger International Limited, Apco
Coatings, SCIB Paints and Taubmans
 The demand for paints is relatively price-elastic but is linked
to the industrial and economical growth.

12. In most developed countries, the ratio of decorative
paints vis-ã -vis industrial paints is around 50:50.
All the industry majors have a vast dealership
network and are required to maintain high
inventory levels
Most of the paint leaders have technical tie-ups
with global paint leaders.

13. In India the organised sector controls 70 percent of
the total market with the remaining 30 percent
being in the hands of nearly 2000 small-scale units
In India the industrial paint segment accounts for
30 percent of the paint market while the decorative
paint segment accounts for 70 per cent of paints
sold in India

14. Asian PaintsAsian Paints

15. A few definitions…A few definitions…
Enamel – Paints for metals & also wood
Distempers – Economy interior wall paint
Interior Emulsion – Acrylic interior wall paint
Exterior Emulsion – Acrylic exterior wall paint
Wood Fin – Premium wood coating with natural
look
Undercoats – primers for adhesion, Putty for
leveling surfaces
Ancillaries – other paint requirements eg stainer,
thinner, etc.

16. Asian Paints Category PortfolioAsian Paints Category Portfolio

17. Category ProfileCategory Profile
APL is identified with the common man right from
the time the little boy Gattu was made famous by
RK Laxman.
Even now Enamels & distempers contribute upto
50%
Emulsions a recent addition adding another 20%

18. YOY overall growthYOY overall growth
Value in Rs. Crs.

19. Competition Scenario
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Asian Paints* Kansai Nerolac ICI India Berger Paints
FY07 FY08E

20. ObservationsObservations
APL growth – YOY in double digits for the past 5
yrs.
Growth % higher than competitors in the last 3
years
Changing consumer tastes led to new products &
focus on premium products.

21. Seasonality – ’07-08Seasonality – ’07-08
In litres

22. Seasonality ‘08-09Seasonality ‘08-09
In litres

24. SeasonalitySeasonality
Painting has been a seasonal activity across
country
Main seasons -, pre Diwali, Durga Pooja, Pongal,
Ramzan, Ganesh Chaturthi,etc.
70 – 75 % business done during this period.
Trends changing , especially urban & metros
Bombay figures show not a vast difference in sales
during this period.

25. Year on Year sales (category)Year on Year sales (category)
0
500
1000
1500
2000
2500
2003 - 04 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09
Ancillaries Enamel Ext Emulsions Ext Undercoat
Int Undercoats Int Wall Fin Wud Fin

26. Overall category performanceOverall category performance
0
200
400
600
800
1000
1200
1400
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
Prem Emulsion Distempers Luxury Emulsion Economy Dist Eco Emulsion Solvent

27. ObservationsObservations
Distempers (Tractor brand ), Enamels (Apcolite &
Gattu), Premium Emulsion, Cash cows for the Co.
Royale & Faux finishes (Play), Melamyne are Stars
Emulsions & Wood finish growing continuously at
15% higher than company growth.
Hence focus clearly on Emulsions.

28. Forecasting - ProcessForecasting - Process
Annual Retail audit conducted at dealer & Territory
level
All products accounted for.
Audit gives the dealers actual potential &
approximated turnover
Competitor turnover is also recorded.

29. A town level profiling is done to identify town
potential
Parameters for profiling – development activities,
construction, consumer profile, market share, etc.
Profiling helps identify actual potential of town &
dealers located in it.
Post profiling estimate turnover for the next year
approximated.

30. Forecasting at decision levelForecasting at decision level
Regional level forecasting involving the Depot
managers, RM & DM.
GM Involved in discussions.
Co level focus products identified
Discussions based on regional level CAGR for past
5 yrs
This data gives the trend of sales at a product
category level.

31. Overall Category growth
Grouping 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Gr%
Ancillaries 97 101 116 127 144 110 -23%
Enamel 919 1014 1078 1090 1125 1000 -11%
Ext Emulsions 289 288 337 429 437 462 6%
Ext Undercoat 16 37 43 65 88 94 7%
Int Undercoats 564 646 717 743 755 686 -9%
Int Wall Fin 1425 1695 1914 2054 2212 2513 14%
Wud Fin 159 174 174 192 184 217 18%
Wud Fin
Undercoat 0 0 0 0 0 0 86%
Grand Total 3468 3955 4379 4700 4945 5083 3%

32. Interior wall finishes
Main Group 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Gr%
1st Qlty Dist 285 348 404 442 480 535 11%
2nd Qlty Dist 499 546 593 592 638 690 8%
3rd Qlty Dist 34 53 76 104 95 119 25%
Economy 52 73 102 117 154 230 49%
Economy Dist 34 31 30 28 28 20 -30%
Faux Fin 0 0 2 3 10 46 370%
Luxury 59 73 82 104 119 160 35%
Premium 203 244 273 285 322 356 11%
Solvent 257 326 343 342 344 360 5%
Grand Total 1424 1694 1903 2016 2191 2516 15%

33. Product growths analyzed
Competitor performance analyzed in these focus
products.
Market trends, changing consumer trends analyzed

34. PlansPlans
Plans for the year chalked out on the analysis of
these diverse data.
Budgets for the Region – Depot based on these
forecasts.
Production forwarded these forecasts for demand
planning

35. Forecasting - ManufacturingForecasting - Manufacturing
Forecasting activity carried out also by production
“ i3” software – highly sophisticated, simplifying the
activity
5 yrs data considered & a forecast created by the
software
Also movement of SKU’s at depots, regions
considered in this activity

36. Deliberations between production & sales
Trends may give a different forecast against plans
forwarded by sales
A midpoint reached & production planning for the
year is loaded onto the system.
Sales has an option of minor modifications in
production for each month.
This activity reduces the chances of dead stock.

37. Planning the forecast deliveryPlanning the forecast delivery
Once the forecasts are finalised,
Activities are planned to deliver the figures.
Eg: for 2009/10- 1st
half of the year will be slow.
This period will focus at influencer & consumer
activities.
Shop meets for low end painters
Contractor meets & training programmes for
influencers
In-shop selling activities (all show casing &
educating on new & focus products use &
properties)

38. Budgets at Depot & Territory levelBudgets at Depot & Territory level
Post forecasting & Budgets @ regional & depot level
– Territory level budgets finalised.
For finalisation of budgets the potential of dealers
& towns profiled is considered.

39. THANK YOU