In the past two years, Asian Paints has been trying to reposition itself from being a paints company to a home décor major. The company made two successive acquisitions, first in Sleek, a kitchen solutions provider followed by bathroom products company, Ess Ess. However, the contribution of both these businesses continues to be miniscule to the overall operations of the paint major as it views these investments as part of a long term strategy.

``It is more a trial and error long haul strategy which could take more than decade for Asian Paints as it will be competing against the unorganised sector in these categories. It is now becoming a one stop shop for all home décor needs since there is going to be domestic demand from more nuclear families buying homes,’’ observes Manish Poddar, Analyst at Motilal Oswal.

Recently, Asian Paints announced that it shall be launching a comprehensive sanitary ware range by the end of this month under the brand name ‘Ess Ess by Asian Paints’. It reiterated that it would be launching it with a view to create complete bathroom solutions over time. This is also a step towards the company’s vision to move from being a paints company to being a provider of complete decor solution to help customers create their dream homes.

During the third quarter, domestic demand ensured volume growth at 15 per cent due to the festive season despite the adverse impact of heavy rainfall in south India and slowdown in rural markets. Asian Paints posted net profit growth at 25 per cent at Rs 463.28 crore while sales increased by 13.9 per cent at Rs 4102.95 crore.

However the acquisition of companies like Sleek International did lead to an impairment loss of Rs 52.5 crore during the third quarter which was disclosed as part of exceptional items.

``It is an experiment that Asian Paints is doing and the acquired businesses is not generating any significant cash flow with less than 2 per cent contribution from both Sleek and EssEss to the company’s revenues,’’ said Sachin Bobade, Senior Analyst, HDFC Securities.

The process of transformation for the company started in 2012, when it came out with its new logo and brand positioning with the message : `To be the fore runner of inspiring décor and to actively empower customers to create their dream homes.’ During this time it also started its home solutions service to provide painting service to the consumers with a toll free number.

While the company did not officially comment on its strategy, its management did declare that it has decided to look at opportunities in the home décor space which can leverage its retail network and consumer connect. Most of the dealers selling paints are hardware dealers who also sell electrical, kitchen components and bath fittings and the thought was to provide bouquet of services to consumers who are thinking of redoing their homes.

So far it has made two successive acquisitions to supplement its paint business. In Aug 2013, Asian Paints acquired 51 per cent stake in kitchen solutions provider company, Sleek International.

Sleek is an organised player in the modern kitchen space with a pan India presence. It is engaged in the business of manufacturing, selling and distributing kitchens, kitchen components which include wire baskets, cabinets, appliances and accessories with a retail network of more than 30 showrooms including shop-in-shops and a network in excess of 250 dealers.

In June 2014, Asian Paints acquired the front end sales business including brands, network and sales Infrastructure of ESS ESS Bathroom Products Pvt Ltd.

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