Asian Paints Ltd has acquired a 76 per cent stake in Sri Lanka's second largest paint company, Delmege Forsyth & Co (Paints), for a consideration of around Rs 3.6 crore. The acquisition, made through subsidiary Asian Paints International Ltd, is the the company's first-ever overseas acquisition.

The Rs 16 crore Delmege Forsyth has a 12 per cent share of Sri Lanka's Rs 130 crore paints market. British multinational ICI is the market leader in that country.

The acquisition is Asian Paints' first step in the direction of expansion of its international operations after the announcement of its Vision 2003 plan, according to an official release. The company's other overseas ventures are created from the ground up.

The company has embarked on an ambitious plan to emerge as one of the top ten decorative coatings companies in the world by 2003, and achieve a turnover of Rs 2,700 crore, the release says. Currently, Asian Paints ranks among the top 15 decorative coatings companies in the world.

According to Ashwin Dani, vice-chairman and managing director, Asian Paints, the company will expand further in emerging markets and has targeted a turnover of $50 million through international operations. "We are not interested in entering developed markets, and we will look at companies in emerging markets in Africa, South-Eeast Asia and neighbouring countries."

Mr Dani says, "The acquisition in Sri Lanka will further strengthen our presence in the sub-continent." The company is already market leader in India and Nepal. The company is the largest producer of paint in the country with 42 per cent market share, the release states.

Acquisition by Asian Paints will enable Delmege Forsyth to move up the value chain, "and its strong brands and talented professionals will in turn benefit us," Mr Dani says.

Asian Paints has five joint venture units in the South Pacific region - in Fiji, Tonga, Solomon Islands, Vanuatu, and Australia. Its other two joint ventures in Oman and Mauritius are expected to become operational by the year-end. The company sells its products in 22 markets in the Asia-Pacific region, the Middle East and Africa.

Asian Paints operates in the decorative and industrial paints business. However, decorative coatings are its dominant business, accounting for 88 per cent of total sales, a company official says. The company makes a wide range of paints, from acrylic emulsions to synthetic enamels, from automotive paints to industrial paints.

The company has been the market leader in India since 1967, and today it is double the size of any other paint company in India. Enabled by vertical integration, it has also diversified into specialty products such as pentaerythritol, synthetic lattices and phthalic anhydride.

The company has four manufacturing facilities in India, and is currently engaged in an ambitious expansion plan, which will almost double its capacity by the year 2000.

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