The Telegraph
Since 1st March, 1999
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ICI ready with cash for buyouts

New Delhi, April 5: ICI India has lined up a war chest of Rs 1,000 crore to acquire domestic paints and chemicals companies this fiscal.

“We are looking at opportunities within India. At present, we are talking to a couple of companies but nothing has been finalised yet. After we identify the target company we will appoint a merchant banker to undertake the due diligence exercise,” Rajiv Jain, managing director of ICI Paints, told The Telegraph.

The bulk of ICI India’s Rs 990-crore war chest comes from the Rs 600 crore cash surplus on its books.

Last November, the company raked in Rs 390 crore when it sold its entire stake in wholly owned subsidiary Quest International India to Switzerland’s Givaudan Group.

In June 2006, the company sold Uniqema, which manufactures chemicals for textiles, personal care and crop protection, to Croda International as part of its global sales.

ICI Paints has plants in Hyderabad, Mumbai and Mohali. The company produces 60 million litres of paints per day and is increasing the capacity to 100 million litres through debottlenecking.

The country’s approximately Rs 6,000-crore paints market is expected to grow by 12-13 per cent this fiscal. ICI has an overall market share of 13-14 per cent and a 26 per cent share in the premium segment.

According to Jain, the company will continue to focus on its core business of decorative paints and conventional refinish segments of the paints industry.

“In the paints category, we are looking at the decorative segment. Exteriors continue to be the fastest growing area in this segment,” Jain said.

The sales of paints in the third quarter ended December 2006 fetched Rs 192 crore, a growth of 12 per cent over the corresponding quarter of 2005-06.

Similarly, the chemicals business, which includes speciality chemicals and adhesives, grew 15 per cent in the third quarter over the corresponding previous period, recording sales of Rs 32 crore.

The company reported gross sales of Rs 252.8 crore for the third quarter ended December 2006 compared with Rs 290.91 crore in the corresponding previous quarter. Net of excise duty, the company’s sales stood at Rs 224.23 crore against Rs 257.16 crore in the corresponding previous period.

Operating profit during the reporting quarter, however, grew 6.09 per cent to Rs 42.67 crore over the September-December period in 2005. But following an increased tax liability of Rs 64.65 crore (Rs 14.85 crore), the company suffered a loss of Rs 28.31 crore.

However, ICI India reported an extraordinary income of Rs 253.61 crore, which raised its net profit to Rs 225.3 crore from Rs 8.27 crore in the corresponding quarter a year ago.

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