In pink of health

Mumbai, April 30: Goodlass Nerolac Paints Ltd today announced a bonus issue in the ratio of 2:3. The announcement came amid a 45 per cent growth in net profit to Rs 58 crore for the year ended March 31, 2004.

This has put Goodlass Nerolac in the company of technology companies like MphasiS BFL, Infosys Technologies and Wipro who issued bonus shares recently. Others like Wockhardt and Sun Pharma have also given additional shares to their shareholders.

The board of the paints major also stepped up the dividend for 2003-04 to 125 per cent from 90 per cent in the previous fiscal.

These announcements followed a turnover of Rs 925 crore, marking a record growth of around 17 per cent over the previous year.

According to managing director H. M. Bharuka, the topline growth in 2003-04 was the highest in the industry, largely driven by the growth in the automobile sector and complemented by the superior performance of the architectural segment.

“In 2003-04, our focus has been more on the profit mix and we have been able to absorb the inflation in raw material prices through reduction in overheads and operating efficiencies,” he added.

The company expressed that the outlook for the industry looks positive with an expected 9 per cent CAGR for the next five years. Bharuka said Goodlass Nerolac will capitalise on the boom in the housing sector on account of low interest rates and tax benefits.

The company will also gain from the growth in the automotive sector through better brand management and an increasing operating efficiency to target better growth rate than the industry CAGR.

The company has been concentrating on a focused branding and distribution strategy and increasing investments in research and development. It has also carried out capacity expansions at its Jainpur plant and set up a new greenfield plant at Bawal, Haryana, with an outlay of over Rs 100 crore, which was funded through internal accruals.

Goodlass Nerolac, a subsidiary of Kansai Paints of Japan, has traditionally been strong in the industrial paints segment that includes the automotive and white goods sectors.

However, it has concentrated on the decorative segment, which has seen its share rising to around 15 per cent. It has also repositioned some of its brands.