Shalimar Paints Lives On Old Glory

Birth Of Shalimar Paints

Birth Of Shalimar Paints
Birth Of Shalimar Paints | Source
Shalimar  Paints - share price movement
Shalimar Paints - share price movement | Source

Shalimar Paints - Latest Financial Results

(in Cr.)
Dec-11
Sep-11
FY10-11
Revenue
125.43
110.51
405.83
Net Profit
3.79
2.36
11.67
EPS
10.01
6.23
30.82
Cash EPS
--
--
--
OPM %
7.75
6.6
7
NPM %
3.02
2.14
2.88
Shalimar Paints - Latest Financial Results

Move To Cede Controlling Stake In The Company?


Good Q3 Results

Shalimar Paints has produced good Q3 results for the quarter ended 31.12.11 compared to the previous quarter. Revenue has increased from Rs.110 crore to Rs.125 crore. Revenue for the whole year 2010-11 was at Rs.405 crore. Net profit increased from Rs.2.36 crore to Rs.3.79 crore. Net profit for the whole year was at Rs.11.67 crore. Operating profit margin increased from 6.60% to 7.75% and net profit margin increased from 2.14% to 3.02%. The shares of Shalimar Paints are traded in the Indian stock markets at Rs.483.45 (BSE 05.04.12). The highest and the lowest prices recorded by the shares of the company in the last one year are Rs.988 and Rs.270 respectively. The face value of the company’s shares is Rs.10. Shalimar Paints is operating in furniture, furnishing and paints sector. The company enjoys a good brand image.

Move To Cede Controlling Stake In The Company?

Shalimar Paints is a Kolkata-based company. Last year the company’s share price underwent wild fluctuations in the Indian stock markets because of the rumours that the management had ceded a portion of the equity stake to an overseas buyer. Management of Shalimar Paints denied any concrete proposals. It appeared as though the management was actually negotiating with prospective buyers for ceding a portion of their stake in the company but could not arrive at a concrete agreement to that effect. Otherwise the management would have denied the rumours outright saying that they did not have any intention to cede any control of any portion of their stakes in the company. Shalimar Paints has a small capital base of Rs.3.79 crore. But the company has free reserves amounting to Rs.50 crore, giving a high book value to the company.

Berger Paints Denies Rumours

On May 6th, the share price was ruling at Rs.290. It started moving up and climbed upto Rs.988. It was rumoured that Berger Paints wanted to acquire a controlling stake in Shalimar Paints. But Berger Paints Chairman K S Dingra denied the rumours and stated that he had no intention of acquiring Shalimar Paints. Promoters control around 62% of the equity of Shalimar Paints. The company has two production plants in Howrah in West Bengal and in Nashik in Maharashtra. Shalimar Paints has been promoted by the Jindal Group and Jhujjhunwala Group.

Three Ownership Changes

Paint industry is experiencing problems now. Raw materials like crude oil-based derivatives, vegetable oils and titanium dioxide are seeing increase in their price upto 10-12 per cent in the last one year. Raw materials form 60% of the cost of a paint company. Even though demand for paints is at a healthy level, the price increase in raw materials has affected the margins of the paint companies. The famous Howrah bridge has been coated by Shalimar Paints. But the company Shalimar Paints itself has witnessed three ownership changes in its chequered history. For the fourth time, the company may witness change in management.

Eleven Course Menus With Drinks And Dessert For Lunch

Till the sixties, Shalimar Paints was managed and operated like a British company. The Managing Director and other executives were British people. It appeared as though the company believed that Britain was still ruling India. Only after 2000 did the corporate office of the company shifted from Kolkata to Mumbai. This happened after the management changed. O P Jindal group acquired the company then. Old time executives recall that the lunch in the company in those days was an eleven course one with liberal dessert and drinks. Shalimar Paints is also India’s oldest paint company. Shalimar Paints celebrated its centenary year in 2002 under the new management.

Howrah Bridge is painted with Shalimar Paints

Howrah Bridge is painted with Shalimar Paints
Howrah Bridge is painted with Shalimar Paints | Source

Shalimar Paints - Share Price Movement

 
 
 
Weekly H/L
494.9
408
Monthly H/L
494.9
392.2
52 Weeks H/L
988
270
 
( 7 Jun 11 )
( 4 May 11 )
Delivery / Var+ELM %
49.09
30.98
Shalimar Paints - Share Price Movement

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Shalimar Paints Lives On Old Glory


World’s First Movie Theatre In Los Angeles

The year 1902 was a historic year. The world’s first movie theatre was opened in Los Angeles in USA. In India, Shalimar Paints, the first Indian paint company, was born. It was noted for its ethical business practices and corporate code of conduct. If you study the corporate history of Shalimar Paints, you will understand the history of paint industry not only in India but in the entire South East Asia.

Birth Of Shalimar Paints

A.N. Wright and A.N. Turner, two British persons set up Shalimar Paints in Howrah. It was the first ever paint company in the whole of South East Asia. It is also a noteworthy fact that in the initial days of the British rule in India, Calcutta (now Kolkata) was their capital and not Delhi. The company changed its ownership in 1928 when another British company Pinchin Johnson & Associates acquired it. After independence of India was granted by Britain in 1947, Shalimar Paints continued to be run on the same style as it was in British India. It became a public limited company in 1961. In 1964, the ownership of Shalimar Paints changed again with Red Hand Composition, its owner being acquired in USA by International Paints. The company faced FERA problems in 1973 as the majority of its equity was owned by foreign nationals. In 1989, Shalimar Paints was acquired jointly by O P Jindal Group and the Jhunjhunwalas. For a change, Shalimar Paints acquired the American Paints unit near Delhi in 2003. In 2008, Shalimar Paints tied up for a technical collaboration with KCI of South Korea for pre-coated metal coatings.

Technology For Industrial Paints

In those days under the British rule, Shalimar Paints acquired the technology for industrial paints and operated successfully in areas like marine paints, aviation coatings and painting of thermal power plants. In those days, the brand Shalimar Paints was a well known brand throughout India. In fact V V Giri, the former President of India painted the Rashtrapati Bhavan (Presidential Palace) only with Shalimar Paints. The palaces in Bhutan and Nepal are coated with Shalimar Paints. The aluminium pillars of Howrah Bridge are painted with Shalimar Paints even today.

Maiden Venture Into South India

Till 1989, Shalimar Paints was run as a British and American company. Indian promoters assumed charge only in 1989 with the arrival of O P Jindal and Jhunjhunwala. By this time, Shalimar Paints had lost its market leadership and was pushed back to the fifth position by companies like Asian Paints, Kansai Nerolac, Berger Paints and Akzo Nobel. After spending ninety years inside West Bengal, Shalimar Paints moved out of the state for the first time in 1992 and set up a plant in Nashik in Maharashtra. Shalimar Paints has a capacity of 57000 tonnes per annum of paints. Shalimar Paints is adding its capacity by setting up a new plant in Chennai with a capacity of 18000 tonnes per annum. This will be its maiden venture into South India.

A Company Cannot Live On Old Glory Alone

Shalimar Paints is living on old glory and old brand image. Senior citizens reminisce the old days and recall fondly how they painted their house with Shalimar Paints which was the best paint in those days. But the younger generation has no such nostalgia. They neither know corporate history nor do they care to know it. Asian Paints is the market leader today with a turnover of over Rs.6000 crore. Shalimar Paints miserably lags behind with a turnover of just Rs.400 crore.

Do Not Invest

Investors are advised not to buy the company’s shares at this high price merely based on its old glories. If an acquisition war starts, the share price may shoot up further but it is not advisable to buy the shares on such speculations without considering the fundamentals.

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