Mumbai: Asian Paints Ltd, India’s top paints maker, expects to exit operations in China and Thailand by the end of February, after it sold stakes in two loss making units in Hong Kong and Malaysia, a senior official said.
“The company has divested its units in Hong Kong and Malaysia, the divestment of units in Thailand and China are currently in progress,” P M Murty, managing director and chief executive, told a conference call.
He said the company hopes to complete the divestment by next month.
The firm, which gets more than half of its international revenues from the Middle East, has seen good volume growth in that region, though it is cautious in its outlook for sales from Dubai, officials said during the call.
Asian Paints did not specify the percentage of sales it gets from its Dubai operations.
Dubai had raised fears of a second bout of global financial turmoil in late 2009 by asking for a six-month repayment freeze on debt issued by Dubai World and its unit Nakheel.
The firm is expecting a “minor gain” in its financial results as a result of the stake sale in its China and Thai operations, officials said in the call.
Asian Paints’s consolidated Oct-Dec net profit soared to Rs1,980 crore from about Rs59 crore rupees a year ago.
Murthy said the company does not expect to sustain profit margins at current levels.
“These are margins which are at an all time high and is not sustainable at these levels...but I am not going to make any predictions as to where that margin is going to be,” Murty said.
“As the market matures and as new competition gets established in this country, competitive pressures will probably intensify. That’s why we think these margins, which are at a very high level today, will probably not be sustained”.
India’s top four players account for 60% of the paint market-valued at Rs1,500 crore.
The firm also said it was on track to set up a plant at Rohtak in Haryana by April this year and has spent about 2.5 billion rupees in the first three quarters of FY10 on the plant, which will have an initial capacity of 150,000 kilo litres.
It has acquired land near Pune in Maharashtra for a decorative paints plant and construction is expected to commence during the course of this year, Murty said.
Asian Paints has not yet finalised a capex plan for 2010/11.
At 3:08 p.m., its shares were up 0.75% at Rs1,780.20 in a weak Mumbai market.