The Telegraph
Since 1st March, 1999
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Recast coat on Asian Paints
- Divestitures loom on floundering foreign units after review

Mumbai, July 13: Asian Paints, which sealed several international buyouts last year, has begun to feel the challenges that come with being a global player. The company is now in the midst of addressing these tasks, and the outcome could mean divesting some overseas units that do not generate shareholder value.

The plan is part of its product portfolio and manufacturing facility review, but a larger initiative is to create a unified organisational framework, nurture global managers and plan every aspect of its international strategy once it is through with the transition.

In November last year, the company successfully completed the acquisition of 50.1 per cent stake in Berger International. It then purchased 60 per cent of the shares in Egypt’s SCIB Chemical SAE, the fifth largest paint company in that country. International operations are now expected to contribute more than 20 per cent to the company’s revenues in the current year.

Along with its subsidiaries, Asian Paints has 28 paint manufacturing facilities in 23 countries across the globe.

While the acquisitions made the company one of the top 10 global majors in the decorative paints business, they also threw up challenges in marketing and selling products under different brand-names. Three different identities — Asian Paints, Berger and SCIB — have to be harmonised for sharper market focus.

An indication of what a fresh look at its brand strategy for the international markets will lead to has come from Asian Paints chairman Ashwin C. Choksi in a recent letter sent to the shareholders of the company.

While the company until recently sold its products under the Asian Paints and APCO Coatings brands, Choksi said “this had to change” because Berger has a strong brand presence in the Caribbean Islands and West Asia, while SCIB is one of the top five players in Egypt.

Apart from the organisational issues, human resources has been identified by the company as a daunting proposition. According to Choksi, while the company has over 1,300 employees abroad, those working at Asian Paints and overseas units have to learn from each other’s work cultures and their best practices.

A slew of initiatives to strengthen manufacturing processes, optimise supply-chain and improve sales through consistent marketing and pricing strategies are now proposed to be adopted for some units of Berger International which are have been loosing money.

The company expects the turnaround at Berger, which has a good market-share in protective, industrial and marine coatings, to be completed in two years.

Among the overseas operations of Asian Paints that have shown mixed performances, units in Sri Lanka continue to be in the red, as do those in Mauritius.

On the other hand, the Oman subsidiary is nearing break-even.

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