Asian Paints to restructure international operations

Our Corproate Bureau
22 May 2004

Asian Paints' international operations, which account for 30 per cent of its sales are spread across 22 countries including South Asia, China, Australia, the Caribbean and the Middle East. The company gained entry into 11 of these regions through the acquisition of Singapore-based Berger International.

The company's global operations have now turned profitable with the potential to accelerate growth further, according a leading securities research firm. The turnaround in international operations will further leverage the overall profitability of the company. Strong domestic sales growth and accelerating profitability of foreign operations will make the company show earnings growth of 25 per cent over FY04-06E.

Asian Paints is the market leader in India's decorative paints industry, accounting for 46 per cent of the total revenues of the top six players in the organised segment. The company caters to the industrial paints segment through its subsidiary APICL and Asian Paints PPG, a joint venture with US-based PPG Industries.

Also, the company is poised to capitalise on domestic market growth, the leading foreign analyst firm said. It is expected that increasing urbanisation, higher disposable incomes, cheaper housing loans and a shift from semi-permanent to permanent housing structures will be driver for growth in the paint business.

Although it is expected that the bulk of the demand for paints will come from the housing sector the industrial paints segment is also growing. Asian Paints enjoys competitive advantages that should help it outpace the market — strong brands, a wide range of offerings across all product categories, and the most extensive distribution network in the paints industry. The company has strong brands across various segments of a category.

In the wall finishes category, it has brands from the premium (Royale) to the lower end (Tractor). Through innovative advertising and products, the company has created new segments for growth. Until recently, most exterior paints in India were cement paints.