Financial Daily from THE HINDU group of publications
Thursday, Nov 13, 2003
Alliances & Joint Ventures
Shalimar Paints in talks with 2 global majors Plans strategic tie-ups in non-decorative coatings
Kolkata , Nov. 12
SHALIMAR Paints Ltd (SPL) - said to be the oldest paints company in the country (Howrah factory set up in 1902) - is in dialogue with two top global paint companies for a strategic tie-up in non-decorative coatings.
Briefing newspersons here today on the company's future plans, Mr Asim Mukherjee, President, said talks were now in an advanced stage and an announcement was likely within the next two months.
Fresh acquisitions within the country, especially in the southern region, where the company does not have a manufacturing facility at the moment, was also not ruled out.
Pointing out that Shalimar was now totally debt-free, Mr S. Sarda, President, Corporate Affairs, said the plan was to make investments ranging between Rs 20 and Rs 50 crore for such acquisitions. The company intends to take its current market share of 5 per cent of the total organised paints market in India (around Rs 4,500 crore) to 8-9 per cent within the next two years.
Mr Sarda said the newly acquired (through an auction sale) factory of American Paints (a part of the Shehrwin Williams group) in Sikandrabad, UP, at a cost of Rs 3 crore, has now become fully operational and was feeding the northern States with a whole range of special products, including the latest in architectural coatings - Superlac Satin Soft Sheen Enamel and Super Lustre Finish.
Mr Mukherjee said as part of the new business plan, the company has re-launched operations in the Rs 125-crore North-East market, by opening a regional office in Guwahati. "The market situation is fluid as the hitherto market leader's share is up for grabs."
He said Shalimar wanted to make a dent in the North-East market and consolidate its present position (12 per cent share) by growing rapidly to achieve a minimum 15 per cent market share in the region in the next two years. The North-East market has the presence of all major players with local manufacturers claiming nearly 35-40 per cent of total sales.
He said the company has already appointed a clearing and forwarding agent for North-East operations and was in the process of appointing more than 100 wholesalers and retailers. The supply initially will be made from the Howrah factory, and if and when the need arises, alternative arrangements such as direct supplies from the new Sikandrabad unit may be considered. Pointing out that today's discerning customer was no longer influenced by price, he said quality and the service levels offered were the critical factors. Stating that the company was constantly adding to its product range, both in the decorative as well as industrial paints segments, Mr Mukherjee said some 20 per cent was through outsourcing, with strict monitoring of quality carried out by company executives at the production outfit's premises. He said the `Superlac Lustre Finish' was a protective as well as a decorative coating for all surfaces including wood, concrete and metal.
Describing the company's new tinting system "Colorscape", which is said to be gaining popularity in northern and southern States, Mr Mukherjee saw a big opportunity for Colorscape in the North-Eastern States.
Shalimar, which now has three manufacturing units (Howrah, Nasik and Sikandrabad), according to Mr Sarda, was expecting at least a 15 per cent growth in turnover during the current fiscal over the Rs 160 crore recorded during 2002-03. It posted a positive growth in the first quarter of this fiscal. The OP Jindal group and the Jhujhnuwalas of Hong Kong jointly hold 62 per cent in SPL (31 per cent each), and out of the remaining 38 per cent, public holding is 20 per cent with the balance 18 per cent held by FIs and other institutions.
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