💰 Financial Performance

Revenue Growth by Segment

The company reported an overall revenue growth of 12% in FY25, reaching INR 599.06 Cr. In Q1 FY24, the Industrial segment grew by 28% while the Decorative segment grew by 7% YoY.

Profitability Margins

Gross margins stood at 27% in FY25, a decline from 28% in FY24 due to higher input costs. Net profit margin was -13.37% in FY25 compared to -13.79% in FY24, reflecting sustained losses.

EBITDA Margin

EBITDA margin was -7.81% (Negative INR 46.81 Cr) in FY25, compared to -8.59% (Negative INR 45.97 Cr) in FY24. The company targets a positive EBITDA of 5% to 7% in the medium term.

Capital Expenditure

The company is investing in new R&D facilities, plant upgrades, and warehousing, though specific total INR Cr figures for the full year are not disclosed. Q1 FY24 saw INR 0.59 Cr spent on supply chain turnaround.

Credit Rating & Borrowing

Ratings were downgraded in June 2025 to 'CARE BB+; Negative' from 'CARE BBB-; Negative'. Finance costs increased by 35.4% to INR 17.55 Cr in FY25 from INR 12.96 Cr in FY24.

⚙️ Operational Drivers

Raw Materials

Raw materials are primarily crude oil derivatives and pigments; specific names like titanium dioxide or solvents are implied by 'crude prices' which dictate the volatility of 73% of total material costs.

Import Sources

Global markets for crude-linked derivatives; the company notes dependency on imported raw materials which subjects them to geopolitical and exchange rate risks.

Capacity Expansion

Current capacity not specified in MT; however, the company is expanding its reach by adding 2,000 new dealers over five quarters and increasing its warehouse and sales depot count to improve market penetration.

Raw Material Costs

Raw material costs (COGS) represented approximately 73% of net sales in FY25. Gross margins compressed by 100 basis points (from 28% to 27%) due to higher input costs.

Manufacturing Efficiency

Inventory turnover ratio improved slightly to 3.48 times in FY25 from 3.37 times in FY24, indicating marginal improvement in stock management despite higher closing inventory.

Logistics & Distribution

Distribution reach improved by adding 646 new dealers in Q1 FY24 alone. Dealer-contributed sales account for approximately 14% to 15% of total revenue.

📈 Strategic Growth

Expected Growth Rate

20-25%

Growth Strategy

The company aims to cross INR 1,000 Cr revenue in 3-4 years by increasing marketing spend from <2% to >5% of topline, expanding the dealer network (2,000+ added), and focusing on high-growth water-based emulsions and industrial B2B verticals.

Products & Services

Decorative paints (emulsions, water-based products), Industrial coatings, and integrated application services for industrial projects.

Brand Portfolio

Shalimar Paints.

New Products/Services

Healthy shift toward water-based products and specific emulsion portfolios which contributed to the 12% revenue growth in FY25.

Market Expansion

Aggressive expansion in the Industrial segment through an integrated supply-and-apply model and increasing dealer reach in the Decorative segment.

Market Share & Ranking

The company acknowledges a low market share but is growing faster than the industry average (14% vs industry in Q1 FY24) to acquire more share.

Strategic Alliances

Promoter support from Hella Infra Market Private Limited (Hella), Virtuous Tradecorp, and JSL Limited, involving significant equity infusions.

🌍 External Factors

Industry Trends

The industry is shifting toward water-based emulsions and integrated service models. While the decorative market is dealer-heavy, the industrial segment is moving toward B2B direct supply and application support.

Competitive Landscape

Faces intense competition from large organized players with superior pricing power and 40%+ gross margins.

Competitive Moat

Brand legacy (established 1902) and a growing dealer network of 2,000+ new additions provide a moderate moat, though it is currently challenged by weak profitability and high competitive intensity.

Macro Economic Sensitivity

Highly sensitive to crude oil price volatility and inflationary trends which compress operating margins.

Consumer Behavior

Growing preference for water-based and emulsion products over traditional solvent-based paints.

Geopolitical Risks

Global uncertainties impact the supply chain for imported raw materials, leading to production delays or cost escalations.

⚖️ Regulatory & Governance

Industry Regulations

Subject to pollution norms and manufacturing standards typical for chemical/paint industries; specific impact costs not disclosed.

Taxation Policy Impact

Not disclosed; the company reported a loss before tax of INR 80.11 Cr with no tax expense for FY25.

Legal Contingencies

Hella Infra Market Limited (promoter) pledged 80,50,747 equity shares in favor of Catalyst Trusteeship Limited in late 2025 as per SEBI Takeover Regulations.

⚠️ Risk Analysis

Key Uncertainties

Inability to turnaround operations to profitability (PBILDT margin below 2% is a negative rating factor). Promoter Hella's deteriorating credit profile poses a liquidity risk.

Third Party Dependencies

High dependency on promoter fund infusions for debt servicing and liquidity; absence of timely support is a key negative factor.

Technology Obsolescence Risk

Risk of falling behind in R&D compared to larger competitors; currently mitigating through new R&D investments and product mix shifts.

Credit & Counterparty Risk

Worsening credit cycles in the manufacturing sector impacted the Industrial segment in H2 FY25, leading to fluctuating consumption and dispatch delays.