Company History

Kansai Nerolac Paints Limited (NSE:KANSAINER) is one of India’s leading players in the Paint industry, catering to the evolving need for newer Coating solutions of customers. A future-focussed Company rooted in innovation, KNPL bespeaks quality and manufacturing excellence that makes it a preferred choice of a growing and ever-evolving customer base.

In 1920, Gahagan Paints and Varnish came into being at Lower Parel in Mumbai. A century later, this paint company continues to be in an enviable position- that of being the second largest paint company in India and one of the most trusted names in the industry.1

So what does it take to go from being a relatively small paint company to being a heavyweight like Kansai Nerolac.

It takes hard work and passion. It takes commitment and courage. It means marching ahead with fearless innovation. It involves taking risks and celebrating when they work. And going back to the drawing board when they do not. It means being keenly attuned to the needs of the customer. And still being invested in the environment. It requires investing in R and D, in technology, in your workforce. More importantly, it requires the unwavering belief in the product and resolute determination.

It is because of all this and more, that Kansai Nerolac is the second largest coating company in India and a market leader in Industrial Coatings.

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Product Portfolio

The company's product proposition is designed to cater to the evolving needs of customers in the key segments of Decorative and Industrial.2

Interior Range

  • Impressions UHD
  • Impressions HD
  • HD Impressions Eco Clean
  • Beauty Gold
  • Beauty Smooth

Exterior Range

  • Excel Top Guard (Basecoat)
  • Excel Top Guard (Topcoat)
  • Excel Total
  • Excel Mica Marble
  • Marble Suraksha Plus

Designer Range

  • Ideaz
  • Glitter
  • Mettalics

Enamel

  • Synthetic
  • Satin

Primers

  • Excel Alkali Prime
  • Exterior Prime
  • Ready Mix (Putty cum Primer)

Wood Finishes

  • Gloria
  • Italian
  • ICRO

Adhesives

  • Nerofix
  • Nerofix Gold

Waterproofing

  1. Waterproof Putty
  2. No Damp
  3. Crack Filler

Soldier Paints

  • Emulsion Range (Interior and Exterior)
  • Brush and Rollers
  • Floorcoat

Automotive

Applications in Industries: Passenger Vehicles, Commercial Vehicles, Tractors, Two Wheelers, Three Wheelers, Wheels and Auto Ancillaries.

Key Products:

  • Cathodic Electro Deposition (CED) and Acrylic Cathodic Electro Deposition (ACED) Primers
  • 3 Coat – 1 Bake System
  • Medium Solid, Thermal Sprayed Aluminium (TSA) Polyester
  • Monocoat Metallics
  • High Mar Resistant Clear Coats
  • Super Durable Monocoats
  • Heat Resistant Paints
  • Auto Interior Coatings

Polyurethane (PU) Coatings for Metal and Plastics

Performance Coatings Liquid (General Industrial + High Performance Coating)

Applications in Industries: Petroleum, Metal Industries, Chemicals and Fertiliser, Infrastructure, Cement Industry, Railways, Pipes Pre-Coated Steel, Bridges, Drums and Barrels, Cylinders, Electricals, Helmet, Pre-engineered Bulidings, Construction Equipments.

Key Products:

  • Polyurethane (PU) Primer and Top Coats
  • Chlorinated Rubber Coatings
  • Epoxy Coatings
  • Alkyds – Primers and Top Coats
  • Zinc Rich Coatings
  • Heat Resistant Coating
  • Floor Coatings
  • Pipe Coatings
  • Coil Coatings
  • Polysiloxane, C5, IPNet

Powder Coatings

Applications in Industries: Refrigerators, Washing Machines, Air Conditioner, Light Fixtures, Electrical, Auto Components, Pipes, Rebar Steel, Architectural.

Key Products:

  • Epoxy Polyester Powder, Epoxy Powder, Pure Polyester Polyurethane
  • Heat Resistance Powder
  • Rebar Coatings, Pipe Coating Powders
  • Super Durable Powders, Bonded Metallic Powders

Auto Refinish

Applications in Industries: After Market Repainting and Touch-up for Passenger Vehicles, Commercial Vehicles, Two Wheelers, Three Wheelers, Bus Body, Auto Parts and Furniture.

Key Products:

  • Polyurethane Paints - Retan PG Eco, Cardea, Nerokan, Acric EZ, Perfect Match
  • Nitrocellulose (NC) and NC Acrylic - NAP
  • Alkyd Based - Nova Plus
  • Putty - NC, Polyester, Body Fillers

Business Overview

Established in 1920, Kansai Nerolac Paints Limited (“KNPL”) is a subsidiary of Kansai Paint Co.Ltd., Japan (“KPJ”).

Apart from its primary operations in India, KNPL operates in Nepal, Sri Lanka and Bangladesh through acquisitions and joint ventures.

KNPL caters to customers through products and services in Decorative and Industrial. In Industrial, while the traditional thrust has been on Automotive, KNPL now also has a sizeable presence in Performance Coatings and Powder Coatings. Recent years have also seen the Company moving forcefully into Auto Refinish.

While steadfastly strengthening its position in these traditional markets, it continues to venture into new customer need areas, such as Wood Coating, Adhesives, Construction Chemicals in Decorative and Floor Coatings, Transportation Coatings, Coil Coatings, Rebar Coatings and Super Durable Powders in the Industrial. These forays have helped KNPL expand its portfolio of products and offerings to the market.

To match the demands of its expanding product portfolio, KNPL has been aggressively augmenting its capacity over the past few years. While during FY 2018-19, it started commercial production at Sayakha, Gujarat, during the year under review, it commenced production at its new state-of-the-art manufacturing facility at Goindwal, Punjab. Work is currently in progress to set up another high-end manufacturing unit, equipped with modern production technologies, at Visakhapatnam in Andhra Pradesh.

To steer its strong focus on innovation for catering to new customer needs and markets, KNPL is also continuously enhancing its Research and Development Capabilities. During FY 2018-19, the Company operationalised its newly established world-class R&D facility at Vashi, Navi Mumbai, thus further scaling its innovation edge. Its new plants and R&D facilities will help the Company strengthen its capability to innovate and serve its customers better.

With IT a key strategic driver for KNPL, it has, since 2013, been making rapid progress on driving an organisation-wide digitalisation agenda to boost customer responsiveness, efficiency, speed and productivity.

Industry Progress

The Indian Paint Industry has grown historically at double digits and is poised to grow at a healthy rate in the medium to long run. There is a strong correlation between the Indian paint industry and the GDP of the country historically. The industry growth is expected to be subdued for FY 2019-20 and to be negatively impacted in FY 2020-21 due to the effect of the lockdown imposed due to COVID-19.

Opportunities and Threats

Opportunities

Policies

  • Reduction in corporate tax

Per Capita Consumption

  • Paint consumption per kg in India is low as compared to developing countries

Infrastructure Thrust

  • The government is expected to continue its push toward infrastructure growth which will provide great impetus to the economy

Rural Thrust

  • Budget focussed on increased spending towards agriculture
  • Increase in income of rural consumer

Environment

  • Increase in legislation brings more consciousness in saving cost, energy saving and quality paint product
  • Reduction in energy consumption at customer production lines through product and process innovations
  • Growing use of renewable energy

New Market sectors

  • Forays into new opportunity areas with huge potential for growth such as Construction Chemicals, Adhesives, Coil Coatings

Specialty Niches

  • Speciality products in the form of speciality coatings represents an opportunity for the company to leverage its technical strength

Threats

Pandemic

  • Disruptive effect of COVID-19 pandemic on the economy is negatively impacting demand
  • Looming threat of global recession

Geopolitical

  • Emerging geopolitical trade restrictions
  • New Competition
  • New competitors are entering the market

Unpredictable Monsoon

  • Extended monsoon in India since past couple of years

Financial

  • The exchange rate between Indian Rupee and US Dollar has fluctuated widely

Cyber-Security

  • Data loss/Thefts
  • Domain-based threats
  • Hacktivism

Financial Highlights

Gross Sales and other operating income for the year aggregated to ₹ 5487.43 Crores as compared to ₹ 5682.28 Crores for the previous year. Net Sales and other operating income reflects a degrowth of 4.5% over the previous year.

Depreciation for the year is at ₹ 119.88 Crores as against ₹ 90.47 Crores in the previous year which is higher compared to the previous year due to capitalisation of Sayakha and Punjab projects. Other Income was lower at ₹ 26.86 Crores as compared to ₹ 61.88 Crores for the previous year. Reduction is due to utilisation of surplus funds for new projects. The Company had taken various initiatives to reduce material cost and operational costs. These initiatives helped the Company in the current year to keep the operational costs under control. Profit Before Depreciation, Interest and Tax (PBDIT) for the year is higher at ₹ 781.62 Crores compared to ₹ 742.00 Crores last year reflecting a growth of 5.3%. Profit Before Tax (PBT) for the year is ₹ 683.60 Crores as compared to ₹ 713.41 Crores in the previous year which is a degrowth of 4.2% over previous year.

The Company spent ₹ 16.91 Crores towards Corporate Social Responsibility compared to ₹ 13.45 Crores in the previous year

Kansai Nerolac Consolidated December 2020 Net Sales at Rs 1,592.55 crore, up 19.57% Y-o-Y 3

February 01, 2021; Reported Consolidated quarterly numbers for Kansai Nerolac Paints are:

  • Net Sales at Rs 1,592.55 crore in December 2020 up 19.57% from Rs. 1,331.94 crore in December 2019.
  • Quarterly Net Profit at Rs. 203.79 crore in December 2020 up 74.18% from Rs. 117.00 crore in December 2019.
  • EBITDA stands at Rs. 318.75 crore in December 2020 up 53.05% from Rs. 208.26 crore in December 2019.
  • Kansai Nerolac EPS has increased to Rs. 3.78 in December 2020 from Rs. 2.17 in December 2019.

References

  1. ^ https://www.nerolac.com/about-us.html
  2. ^ https://www.nerolac.com/sites/default/files/uploads/Financial-Results/2019-2020/kansai-nerolac-paints-limited-annual-report-2020.pdf
  3. ^ https://www.moneycontrol.com/news/business/earnings/kansai-nerolac-consolidated-december-2020-net-sales-at-rs-1592-55-crore-up-19-57-y-o-y-6427631.html
Tags: IN:KANSAINER
Created by Asif Farooqui on 2020/08/17 08:43
     
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