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Global paints and coatings major Akzo Nobel has defended its decision to merge various businesses in India with its listed entity, saying “it is the right thing to do” for “creating value“.
“It is a matter of scale...It (merging) will help in creating value for investors. The shareholders will benefit from it. It is the right thing to do,” the Akzo Nobel Chief Executive Officer, Mr Ton Buchner, told PTI.
He was responding to a query on how the company viewed reservations expressed by some shareholders about the company’s plans to merge different businesses in India.
The company’s listed arm Akzo Nobel India Ltd had proposed to merge Akzo Nobel Coatings India Pvt Ltd, Akzo Nobel Car Refinishes India Pvt Ltd and Akzo Nobel Chemicals (India) Ltd with itself.
Mr Buchner, who had recently taken over as the CEO of the 15.7 billion euro paints, coatings and chemicals giant, said merging of the various businesses in India will help in bringing synergies and propel business under a single umbrella.
Asked if the consolidation will lead to job losses in India, he said: “It is too early to talk about redundancies of job.”
Expressing satisfaction over the process of integration, he said: “It is going on as per planned. We are happy with it.”
Asked by when the company expected to complete the consolidation, he said it is difficult to put a timeline as the process involved regulatory approvals.
In February, 22.28 million shareholders of Akzo Nobel India Ltd, accounting for 76.85 per cent of total shareholders who took part in a voting, had approved the merger scheme thus giving the company a shot in the arm as it targets to become a one billion euro entity in India by 2015.
In India, the company has presence in decorative paints, performance coatings and speciality chemicals. In the fiscal 2010—11, its sales stood at Rs 1,096.82 crore with a net profit of Rs 176.6 crore.
During the nine months period ended December 2011, the company’s net sales grew 22.83 per cent to Rs 1,016.1 crore as against Rs 827.2 crore in the year—ago period. Net profit for the period was at Rs 123.5 crore.
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