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Oem blue emulsion paint8/31/2023 ![]() ![]() The PU factory was inaugurated in November 2019 in Sonepat (Haryana) and was under trial phase followed by disruption due to COVID. To build a stronger brand recall, it will become important for the company to scale this segment to a few hundred crores. On the side of the paint, Sirca deals only in premium emulsion paints that may not contribute significantly now. Along with the Sirca brand, the company will also add Durante and San Marco to its portfolio in the latter part of FY22. ![]() The formulation for the economical PU will be provided by Sirca Italy and sold under the brand “Unico” by Sirca. ![]() SPIL deals in coatings (wood, metal and glass), paints and adhesives. Most of the business, >90%, comes from imported PU & allied products, while paints account for a small proportion – ~5 cr in sales last FY. As part of its IPO, the company had raised ~78 cr out of which 33-35cr was used to set up a facility to manufacture economical PU, thinners, NC, and melamine. Although it is still early days to make a judgment, the fact that in 15 years, the management has been able to scale the PU business and compete against the biggies in the industry it will be interesting to see how the plan unfolds. The rationale behind the tie-ups is to offer a complete basket of products to leverage the distribution network while also making it enticing for dealers as it creates a more robust brand recall as a paints company. The San Marco high end decorative paints business will be marketed through influencer’s. For the adhesives business the company will first start with industrial adhesives and market it through existing OEM clientele and in phase two introduce retail products (White glue). Both of these should start contributing from 3Q/4QFY22. The margins on both the imported and economical PU shall more or less be the same.Īdditionally, in 2020, SPIL tied up with Durante & Vivan Spa (part of same group as Sirca Italy) for distribution of adhesive product range and San Marco for distribution of texture paints in India. There is no royalty payment on Italian PU as the co imports finished product from Sirca Italy itself while the Thinners, NC and Melamine are not part of the contract. The co had to make a one time payment of EUR6,00,000 and a royalty of 0.15 EUR for every litre of economical PU sold. In 2018, SPIL signed a 15 year contract with Sirca Italy for distribution rights in India, Bangladesh, Sri Lanka and Nepal. The use of NC and Melamine is gradually coming down and will slowly phase out from usage as they are hazardous, while adoption of PU will pick up and accelerate further as now there are water-based products. At the same time, the rest is split equally between economical PU (~3100cr) and other products – melamine, NC (Nitrocellulose), thinners and stains (cumulatively ~3100cr). As per the company, the wood coatings market is ~7000cr, out of which ~700cr is the Italian PU market (which currently forms more than 90% of its sales). The company’s product categories include wood coating, paints and adhesives. Although the company seems to be a Paints company by the name, their business majorly comprises Wood Coatings, a subset of the paint industry. SPIL was initially incorporated in 2006 and was primarily involved in the marketing and distribution of wood coatings (from Sirca Italy) and allied products (Thinner, Abrasives and Buffing Cream from Korea and domestic market). While taking a look at the paint industry and a few discussions with fellow investors, I came across Sirca Paints India Ltd (SPIL). While we know that the paint industry has a strong resemblance to the FMCG industry in terms of industry structure and valuations, there is scope for disruption in the FMCG industry while the technology changes slowly and is generally guided for the paint industry by environmental standards. ![]()
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