The Rs 2,263-crore global paints major Asian Paints Ltd is putting in place a new business strategy to generate additional revenues by licensing out its brands and technology.
As part of a massive review of its global business, the company is taking a re-look at its operations across all its 29 plants, of which five are in India. It has now decided to exit markets which do not fit in with its strategy.
The new business plan marks a major shift from the existing strategy of growing through acquisitions.
“In an increasingly globalised economy, it is scale of operations and technological excellence that are going to give companies the competitive advantage. It is in this context that we have initiated the review. Wherever we find that the operations are not viable, we will exit,” Jalaj Dani, vice-president (international operations) of Asian Paints told FE. Mr Dani also said the company may not go for any more acquisitions at the moment.
Asian Paints has manufacturing facilities in Bangladesh, Mauritius, the Middle East, Nepal, Fiji, Tonga, Sri Lanka, Singapore, Hong Kong, Ningbo and Jamaica.
Net sales from the company’s international business was Rs 424.45 crore in 2003-04. The international business accounts for 19% of the total sales of the Asian Paints group.
As per the new business strategy, Asian Paints will out-licence the brand name and the paint manufacturing technology. Recently, the company licenced out its brand and technology to PT Abadi, a leading paint company in Indonesia. Asian Paints also licensed its technology to Berger Paints, Pakistan.
The company has already sold its Malta plant, which it had acquired from Berger Paints in 2002, to a local company called Vangeebee Ltd and also licenced out the Asian Paints brand name and technology knowhow to Vangeebee. The company has also decided to shift its focus from China to six other emerging markets: Taiwan, Sri Lanka, Dubai, Egypt, Bangladesh and Malaysia.
Mr Dani said: “China is a very complex market. We want to restrict our product profile in China to only one segment — protective coating — and will focus mainly on Taiwan and other emerging markets.”