Saturday, November 17, 2007

Shalimar Paints Plans to make a foray into real estate

Shalimar Paints is planning to acquire a paint company in the South and expects to close the deal by January.

The company, which is keen on expanding its presence in the decorative as well as the industrial paints segment, is also pursuing global deals, especially in the sub-prime crisis hit U.S. market and the European market.

C. S. Sarda, Managing Director, however, declined to divulge any details on the acquisition plans saying that on the overseas buyout front, the company had been approached by some companies in Europe and the U.S. “India is a growing market where companies want a presence. In the case of the U.S., he said several paint companies’ bottomlines have been hit in the downswing that followed in the housing sector following the sub-prime crisis. These companies were keen to be acquired, he said. On talks of private equities showing interest in Shalimar Paints, Mr. Sarda said that there was nothing on the table right now.

He said Shalimar’s plans for a brownfield project in Hosur in Karnataka had failed to materialise and efforts were now on to chalk out alternative plans.

Shalimar Paints has a number three position in the industrial paints market after Berger and Asian paints with a presence in the decorative paints market too. This, it is trying to expand by marking an entry into the real estate sector in a sort of forward integration move.

In this context, Mr. Sarda said this was a natural growth path for the paints company and it had identified some cities where it could take up real estate projects. While Delhi National Capital Region has been chosen with an eye on the 2010 Commonwealth games, the real estate markets in cities like Chennai also look attractive to the company. Projects planned include residential and commercial. These are proposed to be done through joint ventures.

The company plans to alter its object clause of memorandum to enable this activity.

The proposal entails acquisition and purchase of lands and properties and setting up of infrastructure projects and associated systems. Shareholders’ approval for these activities will be sought through a postal ballot.


No comments: