Colour-Chem's official spokesperson in India said that the revamped structure, while allowing the individual businesses to focus on the customer's needs more effectively, also broadens the decision-making process.

The five new divisions are fine chemicals, pigments and additives, process & performance products (PPP), cellulose ethers & polymerisates (CEP) and surfactants. The company is already in talks with a few companies to enter the Indian surfactants market. "Those functions that are not integrated into the divisions form service units," the spokesperson added.

The business revamp comes even as Colour-Chem and Clariant India, (both subsidiaries of Swissmultinational Clariant International), recently swapped thier indenting businesses. While Colour-Chem transferred its masterbatches business to Clariant, the latter handed over the pigments and additives business to Colour-Chem.

Meanwhile, Colour-Chem has also embarked on a cost-reduction effort which includes the closure of its hydrogen/nitrogen plants; relocation of the chilled water plant even as the company improved efficiencies by reducing steam consumption by 10 per cent; improved drying efficiency of chambers etc. Key austerity measures undertaken include an increase in credit terms by seven days on purchase of raw materials, fuel oils etc, reduced travelling allowances and a pruning of repairs and maintenance costs.

Company officials said that the current financial year will see eroded value, given that most of the separation costs and one-time investments required for effecting some of these cost reduction projects have been borne in this fiscal.

No Colour-Chem, Clariant merger inmedium-term

An Indian merger of Colour-Chem and Clariant is unlikely to materialise in the medium term, given the conflict of interest posed by the textile dyes business and the complexities therein. Colour-Chem had earlier transferred its textile dyes business to DyStar India, a 100 per cent subsidiary of DyStar GmbH which, in turn, is a 50:50 joint venture of German giants Hoechst AG and Bayer AG.

Colour-Chem officials say that while the lock-in for the original toll manufacturing agreement with DyStar ends in August 1999, the agreement itself is valid for five years which ends in August 2002. Further, the non-compete clause in the area of textile dyes would be valid for three years after the conclusion of the agreement.

Besides, the Swiss parent is still reviewing its response to the Sebi directive necessitating an open offer to transfer erstwhile parent Hoechst AG's majority stake to Clariant International in Colour-Chem India.