Asian Paints temporarily shuts two Egypt plants

Asian Paints has temporarily shut down operations at its two production units in Egypt in the wake of the ongoing political crisis in the country

India's leading paint company, Asian Paints said it has temporarily shut down operations at its two production units in Egypt in the wake of the ongoing political crisis in the country.

"Due to the unprecedented situation and prolonged curfew in Egypt, the company's subsidiary, SCIB Chemicals SAE has temporarily shut operations of its two plants from 29 January 2011," Asian Paints said in a filing to the Bombay Stock Exchange.

The company has taken all necessary steps to protect employees and assets, it added and the decision to restart the plants will be taken once the situation returns to normalcy, it added.

Yesterday, two other leading FMCG companies, Dabur and Marico had also said they have shut down their plants in Egypt temporally, while Emami is keeping an eye on the situation.

According to analysts, the shut down is unlikely to have any major impact on Asian Paints' sales as it is a temporary closure.

"There could be a decline in revenues for one quarter, but that could be recovered by the company later. There will not be any major affect of this shut down on the company's overall performance," Elara Securities India, Research Analyst Anand Shah said.

He said, Egypt contributes significantly to the sales in the Middle East region for Asian Paints. The ME region witnessed a turnover of Rs650 crore, out of the total international revenues of Rs1,215 crore registered by the company in 2009-2010.

Last fiscal, the company's consolidated revenue was Rs5,125 crore.

In 2002, Asian Paints had acquired controlling stake in SCIB Chemicals, one of the top five paint companies in Egypt.

Currently, thousands of protesters have taken to the streets of Cairo and other cities of the country demanding the end of President Hosni Mubarak's 30-year rule.

On Thursday, Asian Paints ended 0.64% down at Rs2,471 on the Bombay Stock Exchange, while the benchmark Sensex gained 1.98% to 18,449.31 points.
 

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