Asian Paints Buys Pacific Paints Of Australia

Asian Paints, India's largest paints company, has acquired an Australian company -- Pacific Paints -- for Australian $375,000 (approximately Rs 90 lakh).

The acquisition is through its has been made through its Australian subsidiary Asian Paints (Queensland).

Ashwin Dani, vice chairman and managing director of Asian Paints, said, "Through this acquisition, we will have an entry into the large Brisbane market, where Pacific Paints had popular brands in the trade and retail market."

Pacific Paints is a family-owned company which manufactures two lakh litres of paints annually. This acquisition is in line with the company's plans to expand its presence in the overseas markets. "We will continue to focus our entry into the emerging markets like Middle East, Saarc and African countries," Dani said.

 

This is the second overseas acquisition by Asian Paints in the last year, the first being a company in Sri Lanka. In recent months, the company has also set up manufacturing units in Mauritius and Middle East, and is also looking at acquisitions in Bangladesh.

Before embarking on the international expansion, Asian Paints had already set up seven overseas subsidiaries till last year.

The paint major has targeted a turnover of $50 million by the year 2003 from its international operations.

The acquiree company, Asian Paints (Queensland), has however reported a loss for the last fiscal. It posted a turnover of Rs 5.66 crore for 1999 against Rs 4.94 crore for the previous year.

The operating loss after income tax was Rs 30.72 lakh against the operating loss after income tax of Rs 38.40 lakh.

When inquired about the how the company was planning to fund the acquisition, company officials declined to comment. It is expected that Asian Paints may have to infuse fresh capital in the company, analysts said.

In order to meet the working capital requirements and to retire costly debts, the company contributed to the share capital of the joint venture company on preferential allotment basis to the extent of Rs 2.99 crore.

The total equity holding by Asian Paints in the joint venture is 58.30 per cent (Rs 3.79 crore) In the domestic market, Asian Paints has kicked off a fresh strategy which includes product launches, enhanced presence in the rural market and improving market share in areas where it does not have a major presence.

The entire organisation has been spilt into three business units --decoratives, industrial and international. Asian Paints, with a capacity of 1.62 lakh tonnes per annum, has a 30 per cent share of the paints market, followed closely by Goodlass Nerolac.