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Gurugram-based Kamdhenu Ltd is in talks to bring in an equity partner as it eyes an infusion ₹200 crore in its about to be demerged paints business. The fund infusion is likely by March-end, will be used for capex and expansion purposes, the company CMD, Satish Kumar Agarwal, said. The company’s paint business caters to the decorative segment only.
Apart from ramping up existing capacity at Rajasthan — that caters to markets like Uttar Pradesh, Rajasthan, Bihar, Odisha, Gujarat and West Bengal — the company would look to put up a new plant catering to south and central Indian markets, that include Karnataka, Andhra Pradesh, Chattisgarh, Maharastra, Tamil Nadu and Telangana. The new plant is expected to be on-stream in FY24.
Looking for partners
“Depending on valuation of paints business we get, post demerger, we are in talks to off load some stake and bring in an equity partner who will infuse around ₹200 crore. Funds will go towards capex, shoring-up dealer network and setting up tinting machines. We also believe the demerger of paints unit will help unlock value in the category,” he told BusinessLine.
“The equity partner should be on board, ideally by the end of this fiscal,” Agarwal added.
Mirror image demerger of steel and paint businesses into Kamdhenu Ltd (for steel) and Kamdhenu Ventures (for paints) will see the group issue shares in 1:1 ratio. Kamdhenu Ltd — the largest manufacturer and seller of branded TMT bars in the retail business — reported a turnover of ₹841 crore in FY22, of which the steel business contributed 71.3 per cent.
40 per cent growth
According to Agarwal, the company is targeting a 40 per cent year-on-year growth or a turnover of ₹350 crore-odd in the paints business in FY23.
The business contributed 28.7 per cent of FY22 revenues; and sales stood at ₹241 crore, up 19 per cent. In FY22 the water-based products contributed 79 per cent, powder based were 11 per cent, and solvent-based at 10 per cent of revenues for the vertical.
“A ₹100 crore increase in turnover can ensure a 40 per cent growth in the segment. And in another three to five odd years, paints can be a ₹1000 - ₹1350 crore business,” he said.
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