Exclusive: Infra.Market set to buy 24 percent in Shalimar Paints

Move to invest Rs270 crore pits the construction solutions company against paints biggies such as Asian Paints, Kansai Nerolac and Berger

By Rajiv Singh Forbes India Staff

Published: Jan 18, 2022 05:40:35 PM IST

Updated: Jan 18, 2022 05:39:51 PM IST

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Aaditya Sharda, Co-founder, Infra.Market

Image: Neha Mithbawkar

Continuing with its string of investments and acquisitions, Infra.Market is set to pick up a 24 percent stake in Shalimar Paints, according to sources close to the development. The proposed investment of Rs270 crore in the legacy paints brand will be through a combination of equity and debentures. Founded in 1902, Shalimar Paints has been in the business of decorative paints, industrial coatings and allied product categories.

Infra.Market’s move will not only pit the construction solutions company against paint biggies such as Asian Paints, Berger Paints, Kansai Nerolac, JSW Paints and Indigo Paints, but it will also enable the unicorn to deepen its play in creating a horizontal construction material-managed marketplace. In September 2021, The Tiger Global-backed company bought 100 percent in RDC Concrete—the largest non-cement ready mix concrete company in India—for about Rs730 crore, and went on to buy Hyderabad-based Equiphunt in a $10 million deal.

For the legacy paints brand, the partnership might help it get back in the game. In FY21, the company clocked an operating revenue of Rs325.56 crore and a loss of Rs49.35 crore. The corresponding numbers for the previous fiscal stood at Rs343.85 crore and Rs37.73 crore, respectively.

Started in 2016 by Aaditya Sharda and Souvik Sengupta, Infra.Market is valued at $2.5 billion and is the largest B2B online infra procurement platform in India. The company has been growing at a brisk pace, taking its revenue from Rs350 crore in FY20 to Rs1,242 crore in FY21. Private labels make up around 60 percent of the revenue of the profitable unicorn, which has its own branded concrete, aggregates, walling solutions, construction chemicals, bath fittings, and sanitary tiles brand. The company is now clocking a revenue run rate of Rs6,000 crore for the next fiscal.

Infra.Market’s investment in Shalimar Paints comes at a time when the paints industry continues with its robust performance despite Covid. The sector rebounded strongly reporting sequential recovery since June 2020, according to a latest equity research report by Haitong International. As in-home became the central theme for FY21, home improvement categories picked up and policy support for the real estate sector resulted in strong pick-up in residential real estate demand aiding in faster recovery for the paint sector versus other discretionary categories, the report added.

The prospects for the paints industry look promising over the next few quarters. “The Indian paint industry has a long runway for growth,” underlines the Haitong report. The tailwinds include favourable demographic-led housing growth, shortening of repainting cycle, shift from unorganised to organised, steady pace of urbanisation and nuclearisation, and strong premiumisation play in the segment. The organised paints industry in India, the study further points out, enjoys strong competitive moats in the form of strong entry barriers for new players, disciplined competition, and no disruption from online retail.