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Jhunjhunwalas to become major shareholder -- Jindals to sell part Shalimar stake to partner

Ambarish Mukherjee

NEW DELHI, July 27

THE Rs 4,500-crore O.P. Jindal group has decided to sell a part of its stake in domestic paint major Shalimar Paints to their foreign partners, the Hong Kong-based Girish Jhunjhunwala Group of Companies. This will make the Jhunjhunwalas the major shareho lder in the Rs 140-crore domestic paint major.

Currently, Shalimar Paints is jointly controlled by the Jhunjhunwala group and the O.P. Jindal group. But there was a lack of involvement on the part of both the promoters in the day-to-day management of the company.

It has been decided that Jindal Strips, one of the O.P. Jindal group companies controlled by Mr Ratan Jindal, will sell a 11.24 per cent stake out of its 38.67 per cent share held by it to Hind Strategic Investments Ltd (Mauritius) of the Jhunjhunwala gr oup at a negotiated price of Rs 36 per share.

Shalimar Paints is currently being quoted around Rs 29. The 52-week high/low is Rs 73 and Rs 22 respectively.

The O.P. Jindal group and the Jhunjhunwala group together hold around a 60 per cent stake in Shalimar Paints. The Jindals hold 38.67 per cent while the Jhunjhunwalas hold 19.94 per cent on repatriable basis and another 0.41 per cent on non-repatriable ba sis through their Mauritius-based outfit.

After the deal is through, the NRI/OCB equity on repatriable basis in the company will go up to 31.18 per cent while the Indian partner's share will come down to 27.43 per cent. This will make the Hong Kong-based partners the single largest stake-holder in the company after which it is expected that the NRI partner will become more active in the management of the company.

Shalimar Paints has posted a net loss of Rs 1.16 crore for the year ended June 2000 on a turnover of around Rs 135 crore though for the year ended June 1999, the company made a net profit of Rs 1.79 crore. For the year ended June 2001, the company is exp ected to return to the black and results are expected by next week.

The company has two plants with a combined capacity of 30,204 tonnes annually, a strong network of more than 5,000 dealers across the country and is a market leader in a number of segments in the paint industry.