The Hindu Business Line : Asian Paints aims to boost global biz

ASIAN Paints (India) Ltd, which has an established presence in the decorative segment of the domestic paints market, is looking at a similar growth for its overseas business on the back of the growing demand for paints in some of the developing countries.

Robust demand in the backdrop of low per capita consumption is expected to propel growth for the overseas business, a senior company official said.

The overseas operations' contribution has been inching up on the revenue charts of the consolidated accounts of Asian Paints. At the end-of-June quarter, it stands at 19.2 per cent as compared to 18.4 per cent for the year-ago quarter.

"We have three clusters of countries and we are working on different strategies. We expect the growth focus markets to grow at 20 per cent,'' said Mr Jalaj Dani, Chairman, Berger International, a subsidiary of Asian Paints (India) Ltd. Berger International reported a sales growth of 10.3 per cent for the June quarter and SCIB Chemicals SAE Egypt reported 44.2 per cent increase in revenues. Both these entities have also reported profits as compared to losses in the year-ago quarters.

However, growth of the overseas business would go alongside the increase in Asian Paints' domestic business. Therefore, its contribution to the overall topline of Asian Paints' consolidated operations would edge up nominally.

The countries in which Asian Paints has a presence have been segregated as growth drivers, market leaders and niche markets. Growth drivers include Bangladesh, Egypt, Malaysia, Sri Lanka, Thailand and the UAE; market leaders include Bahrain, Barbados, Fiji, Jamaica, Nepal, Samoa Islands, Tonga, Trinidad and Tobago, Vanuatu and Solomon Islands; and niche markets include Australia, Mauritius, Oman, China, Myanmar and Singapore.

Although per capita consumption of paints in these countries is not as low as in India (0.7-0.8 kg), it is considerably lower than the world average. "Our strategy is to upgrade the customers to premium products. We would like to offer Colour World to increase choice for these customers too," Mr Dani said.

Asian Paints' Colour World, is a customer service that offers around 1200 shades to choose from. Having set up Colour World for its domestic market, the company will be able to leverage on its strengths to expand this concept in some of the overseas markets. "We have selected some of the emerging markets to embark on the Colour World project," Mr Dani said. According to him, demand for decorative paints is akin to that in India in most of the emerging markets. The distribution model is also similar to India, he said. "We have put a marketing action plan in these countries to capture demand," he said.

While rising raw material prices have raised concerns for the paint industry, Asian Paints believes its global as well as regional sourcing contracts help negate some of the input cost hikes.