Kansai Nerolac Paints Ltd

Scheme details

• NCLT Mumbai sanctioned the Scheme of Amalgamation on 24-09-2026.
• Appointed Date: 01-04-2025; effective on filing with ROC Mumbai.
• Transferor is wholly owned by Transferee; no change in control.
• Entire paid-up equity of Transferor will be cancelled; no Nerolac shares issued.
• Post-scheme, Nerolac's capital structure remains; MOA/AOA to reflect higher authorized capital.
• Rationale: synergy, economies of scale, operational integration, and reduced admin costs.
• Shareholders and creditors not adversely affected; no change in management.
• NoC from stock exchanges not required as merger involves a wholly-owned subsidiary.
• Status: sanction granted; certified copy awaited; effective upon filing with ROC.
• Next steps: file certified copy with ROC; amend MOA/AOA; update stock-exchange notices as needed.
• Employees continue under existing terms; liabilities and assets transfer to Transferee; Transferor dissolved.
• Related party: merger within the group; no external consideration.

Meeting Details

• Board meeting date: 4 November 2026.
• Time and venue not disclosed.

Key Agenda Items

• Consider unaudited standalone and consolidated financial results for quarter and six months ended 30 September 2026.

Other Notes

• Trading window closed 1 Oct 2026 to 6 Nov 2026 for designated persons and relatives.
• General investors not restricted.
• PAN freeze at security level during closure.

Share Issuance under RSU Plan 2022

• Board approved allotment of 75,801 equity shares under RSU Plan 2022.
• Date of issue of shares: 24 September 2026.
• Distinctive numbers of shares: 80,87,78,780 to 80,88,54,580.
• ISIN: INE531A01024.
• Par value: Re 1 per share.
• Total issued shares after this issue: 80,88,54,580.
• Total issued share capital after this issue: Rs 80,88,54,580.
• Shares are fully paid-up.

Filing Status

• Order under CGST Rules 113(1) and 115 reduces penalty to Rs 1,45,58,104.
• Date of order receipt: 25 August 2026.
• Disallowance of ITC for FY2017-18 in Gujarat partly led to relief.
• Company will file an appeal before the GST Appellate Tribunal.
• No material impact on finances or operations reported.

Financial Performance

• Q1 FY27 margins remained stable despite inflation and inventory costs.
• Q1 consolidated pricing was 4–5%.
• Decorative volume growth high-single-digit; industrial volumes double-digit.
• Industrial gross contribution declined about 1.3% due to price pass-through lag.
• Q2: decorative pricing ~3%; industrial ~3–5%.
• Capex outlay INR 600 crore over ~2 years; baseline annual capex INR 150–200 crore.
• Capacity additions: 66,000 KL/year across Sayakha, Bawal, Hosur; resin capacity ~10,000 MT.
• Mid-term margin target 14%+; ROCE target 15%+.
• No backward integration into raw materials planned; sourcing may use Kansai Group.
• Brand awareness >95%; distribution reach 250+ cities.
• AID program in 45+ cities; Pragati covers 65,000 painters.
• New products launched: Excel Everlast 20; Excel Total Floor Coat; Perma NoDamp NXT.
• Campaigns: Out of This World; No Heat campaigns with broad reach.
• Awards won: Golden Peacock Energy Efficiency; ABBY 2026 awards.
• ESG: EcoVadis Bronze; CRISIL ESG Rating top 16/548.

Operating Update

• Decorative strategy is six-pronged, with CRM and distributor management tech.
• Offline retail footprint: 186 NXTGEN Shoppe; 275 Shop-in-Shop; 385 Nerolac Paint+ zones.
• Industrial performance: premiumization, new technologies, dealer expansion; EV focus.
• Automotive tie-up enables water-based, high solids, low bake technologies.
• New segments include boost chemicals and underbody coatings; project pipeline strong.
• Capex 600 crore; capacity expansion and resin capacity improvements.
• Capacity expansion: 66,000 KL/year; resin ~10,000 MT.
• Awards and ESG: manufacturing energy efficiency, ABBY 2026 awards; EcoVadis Bronze.

Q&A Highlights

• Decorative growth in line with market; premium mix prioritized.
• Margins: industrial pass-through lag; margins to be maintained.
• Capex 600 crore over ~2 years; annual capex not materially impacted.
• Backward integration not planned; sourcing within Kansai Group.
• ROCE target 15%+; mid-term margin 14%+.
• Q2 pricing: deco +3%; industrial +3–5%; Q1 4–5%.
• Dealer productivity up with premium mix; no fixed timeline.
• Industrial utilization high; expansion to meet demand over two years.

Guidance and Outlook

• FY27 margins to be maintained; premiumization focus.
• Mid-term margin target 14%+; ROCE 15%+.
• Capex INR 600 crore over ~2 years; baseline annual capex 150–200 crore.
• Pricing trajectory: deco +3%; industrial +3–5% in Q2.
• Backward integration not planned; sourcing within Kansai Group as needed.

Risks and Watchpoints

• Competitive intensity remains high; pricing discipline crucial.
• Inflation and currency fluctuations; pass-through lag risk.
• Macro headwinds including monsoon and geopolitical factors.
• Execution risk around capex and capacity commissioning.

Filing Status

• Transcript-based filing; substantive content present.

Meeting Details

• Date and time: 3 August 2026 at 17:00 India Time.
• Type and mode: group call conducted virtually.
• Event/organiser: Q1 FY27 Earnings Conference Call hosted by ICICI Securities Limited.
• Recording: conference call was recorded; transcript available.

Participants

• Managing Director - Kansai Nerolac Paints Limited participated.
• Chief Financial Officer participated.
• Director - Corporate Planning, IT and Materials participated.

Purpose

• Purpose: discuss Q1 FY27 financial results.
• Format: investor conference call with Q&A session.

Additional Notes

• Transcript of the conference call is enclosed; no URLs provided.

Meeting Details

• Date and time: 3 August 2026 at 17:00 India Time.
• Type and mode: group conference call hosted virtually by company management.
• Event/organiser: Q1 FY 2026-27 Financial Results Conference Call.
• Key participants: company management representatives (roles not specified).
• Purpose: discuss Q1 FY 2026-27 financial results.
• Recordings: audio recording available on the company website; transcript and exchanges to be uploaded.

Business overview

• Core business: decorative, automotive, and industrial coatings.
• R&D and Japan technology ties underpin water-based, low-VOC solutions.
• Retail expansion includes 180+ NXTGEN SHOPPE, 270+ Shop-in-Shop, 380+ NP+ Zone.

Operational highlights

• Q1 standalone net revenue Rs 22,995m; consolidated Rs 23,736m.
• Standalone PBDIT Rs 3,359m; PBT Rs 3,258m; PAT Rs 2,423m.
• Consolidated PBDIT Rs 3,283.7m; PBT Rs 3,124.6m; PAT Rs 2,284m.

Financial performance

• Standalone net revenue up 10.2% YoY; consolidated up 9.8%.
• Standalone PAT Rs 2,423m; Consolidated PAT Rs 2,284m.
• Standalone PBDIT margin 14.6%; Consolidated 13.8%.

Outlook & risk

• Outlook: sustained infrastructure demand; automotive buoyant from new launches and festive inventory.
• Risks: geopolitics, commodity prices, rupee depreciation impacting imports.
• Mitigation: ongoing market monitoring amid geo-political disturbances.

Capacity expansion details

• Sayakha Plant: Auto Paints/ARF/Thinner capacity up 1,750 KL/month.
• Bawal Plant: Auto Paints/Thinner capacity up 1,625 KL/month.
• Hosur Plant: Auto Paints/Thinner capacity up 900 KL/month.
• Sayakha Plant: Powder Coating capacity up 1,215 MT/month.
• Sayakha Plant: Industrial Resins capacity up 815 MT/month.
• Investments: Sayakha Rs 204 Cr; Bawal Rs 143 Cr; Hosur Rs 65 Cr.
• Financing: internal cash accruals for all expansions.
• Completion target: by end FY 2028-29.