CICO targets Gulf, Southeast Asia for expansion
By Arvind Padmanabhan, Indo-Asian News Service

New Delhi, Jan 23 (IANS) Cico Technologies Limited, manufacturer of speciality chemicals for the construction sector, has planned a major expansion in the Gulf and is also targeting the Southeast Asian market with a trading arm in Singapore.

The company, in which the British government's Commonwealth Development Corp has a 40-percent stake, is setting up a joint venture with Aljabor Trading of Qatar for a manufacturing unit in Doha, said the firm's managing director Amit Gupta.

"The idea is to target not only the growing Middle East market, where there is sizeable construction activity, but also spread our reach to the East African countries," Gupta, a third-generation head of the company, told IANS.

"After a thorough reconstruction, under which we separated the ownership from management in the 75-year-old company, the target is to sell our products in other countries."

He said Cico's target was to step up the turnover from Rs.450 million ($10.3 million) at present to Rs.1.5 billion ($34.3 million) over the next two years.

"We have a presence in Sri Lanka, Nepal, Bangladesh and Maldives. We will be on a look out for consolidation."

Gupta said Aljabor would hold a majority 51-percent equity in the Doha joint venture while Cico will acquire the rest. He said water-based chemicals would be manufactured in Qatar, while resin-based products will be sent from India.

"We will also scout for original equipment manufacture arrangements where our products can sell either under our brand or some others. Then, in places like Sharjah, we will look at trading opportunities."

The company's product range includes water-proofers and sealers, plasticisers, epoxy-based repair compounds, concrete aids, industrial floorings, protective coatings, tile adhesives, moisture insensitive epoxies and sealants.

According to Gupta, Cico was also looking at converting its franchise operations in Sri Lanka - through Cico Gavic Limited - into a joint venture with equity stake. "There is a good potential in Sri Lanka and we have some plans there."

Speaking about the domestic market, Gupta said a PriceWaterHouseCoopers study had estimated the size for construction chemicals at Rs.6 billion ($137.3 million) per annum in the organised sector.

"But what makes the potential for growth rather exciting is the fact that compared to the developed world where 80 percent of concrete contains some chemicals, it is only five percent in India," he said.

"Also, in Britain, for example, there were over 600 companies engaged in this business in early 1990s. Now there are just five-six left. So, along with growth, there is scope for consolidation."

On the foray into Singapore, Gupta said it was mainly to expand the company's product range and to establish a hub for Southeast Asian markets. "We can source polyurethane resins from Taiwan and blend them with our own products."

The Kolkata-educated post-graduate in economics said the company's ultimate aim was to go for a public offer to plan future expansions. "But that will be after 18 months or so. We first want to reach a turnover of Rs.1.5 billion."

Appeared in:

• Business Standard: January 18th 2005
• Mantraonline. Com: January 23, 2005
• Yahoo news: January 23, 2005
• Google news: January 23, 2005
• The Peninsula: January 24, 2005
• Gulf Today: January 24, 2005