Painting A Pretty Picture

Updated: Jul 25 2004, 06:02am hrs
The paints major, Goodlass Nerolac Paints (GNPL), posted a 17 per cent y-o-y growth in net sales for the quarter to June 2004 to Rs 190 crore ( Rs 162 crore). Net profit has painted a still better picture with 73 per cent growth at Rs 15.5 crore (Rs nine crore). The earnings per share (EPS) has improved to Rs 10.14 from Rs 5.85. The company also approved a dividend of 125 per cent and a bonus issue of 2:3.

Total expenditure has increased 12 per cent to Rs 162.5 crore, while the raw material consumption (net of stock) has grown by 17 per cent to Rs 113.5 crore. But the interest burden is down by 58 per cent to Rs 14 lakh. Operating profit is up by 51 per cent to Rs 4.5 crore.

This comes on the back of a good performance for the year ended March 2004, wherein the company posted net sales of Rs 760.5 crore, while the net profit was Rs 58 crore.

GNPL has a market share of 14 per cent in decorative paints and is a market leader in industrial paints with a share of 45 per cent. It has five manufacturing units that make a range of products like architectural coatings for homes, offices, hospitals and sophisticated industrial coatings.

The company has a distribution network of over 11,000 dealers and has technological tie-ups with a number of foreign companies like EI du Pont and Oshima Kogyo. In 2003, it tied up with the French company Eliokem for production of anti-bacterial speciality paints.

GNPL, which plans to shift its focus on the decorative segment (the largest potential market), signed up Bollywood star Amitabh Bachchan as its brand ambassador in August last year. A look at the companys website also shows some efforts towards B2B channel with a tie-up facility for architects, interior designers, dealers and contractors with Goodlass Nerolac.

The thrust on rural development may also help the company in increasing its sales volumes, going forward, provided the monsoon also cooperates.

The share price of the company has almost doubled to Rs 505 as on July 22, 2004 from Rs 225 level in August, 2003, that incidentally was a 52-week low. Foreign promoters hold 65 per cent stake in the company, while mutual funds account for 10 per cent. Other major stakeholdings include Indian public: 14 per cent, banks/FIs: seven per cent and FIIs: three per cent.

In 1986, GNPL turned into a joint venture of Tata Forbes and Kansai Paints, Japan, with the latter acquiring 36 per cent of its share capital. In 1999, Kansai Paints took over the entire stake of Tata Forbes and thus GNPL became a wholly owned subsidiary of Kansai Paints. Associate companies include Chemguard Coatings, Nipa Chemicals and Polycoat Powders.

Goodlass Nerolac has a geographical presence in almost all parts of India. The company banks on its distribution channel, R&D and strategic alliances as its key strengths for the future.