Gattu, the impish boy known to two generations of Indians as the symbol of Asian Paints, has taken his dripping paint can and brush overseas. Asian Paints’ purchase last month of Sri Lanka’s second largest paint company, spending 360 million rupees ($8 million), is likely to be the first of many for the 45-year-old maker of Royale paints. The acquisition of Delmege Forsyth & Co ended two years of inertia caused by a split within Asian Paints’ four founding families. With that chapter closed, India’s biggest paints maker can now focus on challenging Sherwin-Williams Co, whose ‘Dutch Boy’ brand is the world market leader.

“We want to be among the top-five decorative paints makers in the world—a multinational,” said Ashwin Dani, one of Asia Paints’ founders. Dani is scouting for opportunities in the Middle East, Africa and other emerging markets with an ethnic Indian population more familiar with its brands and where demand for paints is growing at between 8% and 10% a year.

Asian Paints may also buy smaller Indian rivals, he said. The domestic paint market is expected to grow at between 10-11% this year, above the three-year average of 7%, as people in rural areas build more houses. The company needs acquisitions to boost sales and expand market share in India’s 45 billion rupees paint market. It wants to increase its share to 60% from 41% in the next few years. “We can add another 10% to our market share by producing more and launching new products,” Dani said. “But we need to acquire (companies) to get past the 60% mark.”

Asian Paints has looked at local rivals Jenson & Nicholson and Shalimar Paints, only to balk at the asking price. “They are available but we are not interested for the kind of terms they are demanding,” Dani said. The company may instead acquire smaller paint companies whose brands are popular in Indian provinces. “We are interested in buying brands, not capacities,” he said. Asian Paints stock has risen 41% this year, nearly matching the 52% rise in Mumbai’s benchmark 30-stock index.

The rally coincided with the end to a two-year standoff between three of the founders—the Dani, Choksi and Vakil families—and co-founder Atul Choksey, the former public face of the company.

Choksey’s 9.1% stake almost ended up in the hands of Britain’s Imperial Chemical Industries Plc, the company’s only foreign rival in India. That was after two US mutual fund companies—Morgan Stanley and Capital International—backed out when they learnt that the shares they bought belonged to Choksey, then the company’s managing director. Choksey eventually sold half of his stake to the Unit Trust of India, the country’s biggest mutual fund manager, in May 1998 for 280 rupees a share. The rest was bought by the founders early this month for 414.70 rupees a share, or 745 million rupees.

The company established a network of computer-controlled kiosks allowing consumers to create their own paint colors. Growth in the Indian paint market as the economy expands are likely to ensure Gattu goes far.

—Bloomberg