Asian Paints' valuation on the bourses got a brush up today even as the market awaits the company's results slated for 28 May 2003.

Early afternoon, the scrip of the paints major struck up gains of 8.6% to Rs 369.70. It had even reached Rs 399 earlier. Close to 63,000 Asian Paints shares changed hands on BSE by 12:20 IST.

The scrip seems to be moving firmly now after a bout of volatility over the last few sessions. Between 13 and 15 May 2003, the scrip of the paints major rose 1.6% to Rs 340.45 from Rs 335.10. Prior to that, between 2 and 13 May 2003, it had plunged 7% from Rs 360. Still further back (between 24 April and 2 May 2003), the scrip had climbed 11.8% to Rs 360 from Rs 322.

The market seems eagerly awaiting 28 May 2003 when the company will not only announce results but also decide on a bonus issue and a dividend.

Credit rating agency Crisil had earlier reaffirmed its rating of  AAA  of the company's Rs 36.75-crore non-convertible debenture issue and P1+ rating for its commercial paper programme. Crisil expects the paints industry to witness a compounded annual growth rate of 8.5% for 2002-2007 and a 15-20% increase in capacity in the next three years.

Asian Paints (APL) is India's largest manufacturer of paints. With a 44% marketshare in the domestic paints market. The company has now set its eyes on overseas markets. APL ranks among the top 15 decorative coatings companies in the world.

Recently, APL successfully managed to turn around its Singapore-based subsidiary, Berger International, within two months of acquiring management control of the company.

For the year ended 31 December 2002, Berger International posted an operational profit of Singapore dollars (S$) 4.1 million or Rs 11.1 crore compared to a loss of S$2.6 million (Rs 9.86 crore). The company also managed to inch back into the black by making a net profit of S$0.6 million (Rs 1.61 crore) from a net loss of S$9.4 million (Rs 25.50 crore). Berger International has also substantially brought down its net losses after minority interests to S$ 1.1 million (Rs 2.88 crore) from S$ 11.1 million (Rs 29.78 crore) in 2001.

For Berger, moving out of the red entailed improvements in supply-chain management, introduction of new technologies and strict control of overhead costs.

Berger International recently bought Sultan Bin Sulayem's 40% stake in the Dubai-based Berger Emirates. Berger International already holds 60% in Berger Emirates. The cost of acquisition was not known. Asian Paints (International) has funded the acquisition.

APL acquired a controlling stake in Berger International in November 2002. The company had control of Berger International for only two months in the previous financial year. Only in this financial year (2003-04), the full impact of its two acquisitions, i.e., Berger International and SCIB Chemical, Egypt, would be seen. Through its operating subsidiaries and associate companies, Berger International is engaged in the manufacture and distribution of paints and has manufacturing plants in Singapore, Malaysia, Thailand, Myanmar, China, Malta, Bahrain, the UAE, Jamaica, Trinidad and Barbados.

Earlier, APL had announced that it was transforming itself into a global major in the decorative paints business, with particular focus on emerging markets, following its acquisition of controlling stake in Berger International of Singapore and SCIB Chemical SAE of Egypt. The total investment made by the company in both these acquisitions amounted to around US$ 16.80 million.

Meanwhile, going forward, APL's efforts would be to turn around the operations of individual units by adopting best practices across emerging markets. The focus would continue to be on emerging markets, as these are the fastest growing paint markets in the world with low per capita paint consumption.

While the Europe and Mediterranean region registered a negative sales growth of 13%, the Middle East, Caribbean and east Asia have posted a growth of between 3% and 5%.

The Union Budget for 2003-04 has been quite favourable to the company, as peak customs duties were reduced from 30% to 25%. APL is likely to benefit from this, as 40-50% of the company's raw materials are imported.

For the quarter ended 31 December 2002, APL recorded a rise in net profit by 27% to Rs 43.66 crore (Rs 34.34 crore) on a 10.33% increase in net sales to Rs 413.36 crore (Rs 374.67 crore).

As on 31 March 2003, the promoters held 42.6% equity stake in APL, while the public, local and foreign institutions held 19.92%, 15.26% and 21.25% respectively.

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