Infra market is set to acquire a 24% stake in Shalimar Paints

Infra market is set to acquire a 24% stake in Shalimar Paints

Shalimar Paints announced that Infra.Market’s parent company, Hella Infra Market, has offered to invest 270 crores in Shalimar through a combination of equity and debt subject to shareholder approval and necessary regulatory approvals.

Hella Infra Market Private Limited (parent company of Infra.Market) has announced an investment in Rs. 260 crores through a combination of equity and debt of Shalimar Paints Limited (SPL), subject to shareholder approval and necessary regulatory approvals. If the business agreement happens the Infra.Market will acquire a 24% stake in Shalimar Paints through a series of investments and acquisitions.

The proposed Rs 270 crores investment in the legacy paint brand will come from a combination of equity and debt. Founded in 1902, Shalimar Paints manufactures decorative paints, industrial coatings, and related products.

SPL is a pioneer and professionally managed company in the Indian paint industry with over 120 years of brand history. The company falls in the sector of producing and selling decorative paints, industrial coatings, and related products. SPL has a national presence with strategically located manufacturing facilities and distribution networks. The most significant promoter of SPL is the O. P. Jindal group.

 Dr. Rajeev Uberoi, Chairman of SPL, said, “Shalimar Paints was recognized as one of the top brands in the paint industry in its formative years. We are at the inflection point of exponential growth at Shalimar and partnering with Infra.Market will enable us to pursue both organic and inorganic growth opportunities within our existing and even newer product categories. We are happy to partner with Infra.Market to fuel our next phase of growth.”

The Infra.Market solution allows building solutions companies to expand the unicorn’s ability to create horizontal buildings and compete with significant paint manufacturers such as Asian Paints, Berger Paints, Kansai Nerolac, JSW Paints, and Indigo Paints in the material market. In September 2021, Tiger Global backed acquired Hyderabad-based Equiphunt for $10 million after acquiring a 100% stake in RDC Concrete, India’s largest cement-free ready-mixed concrete company, for approximately Rs 730 million.

This partnership could help old paint brands get back into the game. In fiscal year 21, the company had an operating profit of Rs 325.56 crore and a loss of Rs 49.35 crore. Furthermore, the significant fiscal year figures were Rs 343.85 crore and Rs 37.73 crore, respectively.

 Founded in 2016 by Aaditya Sharda and Souvik Sengupta, Infra.Market is valued at $2.5 billion and is the largest B2B online buying platform in India. The company has proliferated, increasing sales from Rs 350 crore in FY 20 to Rs 1,242 crore in FY 21. Private labels make up about 60% of the revenues of profitable unicorns, which have their own brands of concrete, aggregates, wall solutions, construction chemicals, plumbing, and sanitary tiles.

Infrastructure Market sales volume for the fiscal year 2020 was Rs 1,273 crore, and net profit was Rs 35.9 crore. The company that owns the online marketplace is registered with the company registry as Hella Infra Market Pvt Ltd. From fiscal year 201920 to fiscal year 202021, the company’s revenue increased 3.5 times.

 Infra.Market’s investment in Shalimar paints comes at a time when the paint industry continues to perform well despite COVID-19. The sector has rebounded sharply since June 2020, continuing its recovery, according to Haitong International’s latest equity research report.

The report added that “indoor homes” became a central theme for FY21, increasing home improvement categories and policy support to the real estate sector, which has significantly increased demand for residential properties, accelerating paint and varnish recovery in the sector as compared to other discretionary categories.

 The outlook for the paint and varnish industry over the next few quarters looks promising. In the report, Haitong said, “The Indian coatings industry has excellent growth potential. The favorable housing demographics, the reduction in repainting cycles, the transition from disorganized to organized, steady pace of urbanization and nucleation, and the study also points out that India’s organized paint and varnish industry has a robust competitive moat in the form of strong barriers to entry for new players, strict competition and no disruption to online trading.

Leave a Reply