The Hindu Business Line : Shalimar Paints plans unit in South

SHALIMAR Paints is planning to commence manufacturing operations in the southern region of the country in order to strengthen its position in the region.

"We will take a decision within the next few months on whether to set up our own greenfield facility or acquire an existing unit in the region. For setting up the unit, in case we decide to do so, would require an investment of up to Rs 20 crore. We will be focusing on the southern region this year to increase our market share," said Mr Sandeep Sarda, Chief Operating Officer, Shalimar Paints.

Shalimar Paints currently has facilities in Uttar Pradesh, West Bengal and Maharashtra. The company had acquired the Uttar Pradesh facility in 2003. "The benefit of acquiring an existing unit is that the gestation period is shorter," he said.

Shalimar Paints, which has a presence in the decorative and industrial paints segments, is planning to undertake sizeable expansion at its Uttar Pradesh unit as well this year.

"We are going to start making industrial paints at our facility there by December 2005. The unit is currently producing decorative paints. The expansion would require an investment of about Rs 5 crore," Mr Sarda said.

Meanwhile, in order to boost its bottomline growth, the company is planning to focus on high value products in its portfolio. While the paints industry had seen healthy topline growth in the last fiscal, the industry's margins had suffered due to rising cost of key inputs. Resultantly, most companies including Shalimar had raised product prices by 7-8 per cent in December.

"But the increase in selling price was not to the extent of the increase in cost of inputs. For example, the cost of MTO (a key raw material) increased by about 50 per cent," Mr Sarda said.

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