Shalimar Paints, the third largest protective coating supplier in the country, is looking at possibilities of setting up a greenfield project down South to gear up its capacity.
Sandeep Sarda, chief executive officer & executive director, said: “We will either set up a greenfield plant in the southern part of the country or acquire a company based in that region.”
The company has already identified three paint companies as possible targets for acquisition. A final decision from the board is expected within the next six months.
Sarda was talking to reporters on the sidelines of the company’s 105th annual general meeting in Kolkata Thursday.
Shalimar Paints is looking at increasing its production capacity by at least 25% from the present 43,000 tonne annually. It has three plants located at Sikandrabad, Nasik and Howrah.
The company is talking to global technology leaders for tieups. It is also planning to introduce water-based eco-friendly paints and new generation wood finish and timber treatments.
The paints industry in India is around Rs 11,000 crore, with 70% belonging to the decorative segment. The industrial segment accounts for Rs 3,400 crore. Shalimar paints has a 4% market share in both the segments.
The company recorded sales of Rs 290 crore for 2006-07, an increase of 17% over Rs 248 crore in 2005-06.
Shalimar’s borrowing costs have increased owing to increased utilisation of working capital limits and hardening of interest rates–both on rupee borrowings as well as on foreign currency loans.
This has pushed the interest costs from Rs 2.92 crore to Rs 5.34 crore in 2006-07. However, Shalimar has improved its operating margins with profit increasing by 64% from Rs 5 crore in 2005-06 to Rs 8.12 crore in 2006-07.