Asian Paints looks for right global mix

ASIAN Paints’ (APIL) international business has been an under-performer compared with its domestic business, which is in fine form. Over the years, APIL has been attempting to restructure its international operations by exiting unprofitable areas. Berger International was seen as a key acquisition for its international business, but subsequently APIL has been finding it a tough task to turn around its operations.

With a couple of divestments in the bag, APIL now seems closer to this objective. It has disposed of the Myanmar paint business. Berger Paints Manufacturing was the Myanmar operations of Berger, and was incurring losses. The pro forma effect on Berger group’s performance of the move is positive. The profit after tax and minority interest works out to S$0.43 million compared with a loss of S$0.69 million. Earlier, in June 2006, Berger had announced the disposal-of its Philippines-based associate Dutch Boy Philippines.

This will have a positive effect on Asian Paints’ performance. During the half-year ended June 2006, Berger group’s volume of paint sold grew 8%, while sales rose 7%, with the Caribbean and the Middle East being the better performing regions.

East Asia has been doing poorly. Hence, the company has been disposing of subsidiaries in these regions. As its profitability profile improves, the Berger acquisition may finally start making a positive contribution to Asian Paints’ performance.