Shalimar Paints Ltd Management Discussions

Industry Structure & Developments

The Indian Paint and Coatings Sector saw a muted growth in FY 2023-24 following robust growth in two consecutive years of FY 2021 -22 & FY 2022-23. During the year under review, demand for paint & coating goods remained flat. Going forward in next 5 years, Paints Industry is expected to grow from Rs. 70,000 Crore to Rs. 1 Lakh Crore industry, driven by Indias expected GDP growth rate of 6-7% in medium term, which naturally creates a supportive environment for the industry growth.

Indian Paint industry consists mainly of Decorative Paints, Protective Coatings, Wood Coatings, Automotive Paints, Ancillaries, Waterproofing etc. with decorative market being the largest part accounting for over 70% of the market. Paint industry in India is largely dominated by organized players accounting for 80% of the market with mainly 4 large players and significant number of medium level players while the unorganized players accounting for the rest 20%. Slowly but steadily large players are increasing their market share and dominance in the market with unorganized players limited to niche markets. We also see a fair chance of consolidation in the paint industry going forward.

The industry is divided into two categories - decorative and industrial. The Indian paint sector has grown extensively over the years wherein decorative segment has grown at 11.4% CAGR and industrial paint segment has grown at 7.9% CAGR over the last 12 years. Demand of Decorative Paints that hold 70% of the market is significant during the festive season that arises from household painting and other display purposes. Along with this, the popularity of quality paints and increasing income in tier-1 and tier-2 cities is adding in the growth of the premium market of decorative paint industry. The Indian paints industry by value and volume is expected to grow at a CAGR of around 10% in next few years.

The key growth drivers for paint industry in India, inter alia, includes rising urbanization, improved products, shortening of repainting cycle, decreasing propensity to save, affordable housing, growing middle-class with higher disposable incomes, nuclear family structure, growing demand from smaller towns & rural areas, increasing consumer involvement in the painting process, growing adoption of new styles/ designs/ textures and triggers like government focus on housing & infrastructure development.

The prices of key raw materials cooled off significantly in the last financial year. Further, the cost of solvent and water based raw materials decreased sharply due to decline in prices of crude oil and titanium dioxide. As a result, the profitability of all the players has increased significantly in FY 2023-24. The year 2024-25, however, sees a reversal of price as the crude oil price is rising leading to price intervention in terms of price rise in a staggered manner.

About Shalimar Paints

Established in 1902, it can be said that the history of Shalimar Paints is closely linked to the development of Paints industry in India. Shalimar Paints legacy is interwoven with the very fabric of this nation, as the Company has long played a pivotal role in safeguarding the nations most iconic structures - from the majestic Howrah Bridge to the venerable Rashtrapati Bhavan, from the intricate systems of nuclear power installations to the sprawling networks of railways, power plants, and refineries. Most recently, Shalimar Paints had the distinct honor of protecting the worlds highest rail bridge over the Chenab River, demonstrating the resilience of our coatings in environmental conditions ranging from -20?C to +45?C.

The Company is engaged in manufacturing and marketing of decorative paints and industrial coatings. The Decorative business covers both Interior and Exterior paints where it has a number of flagship brands. The Company also has tinting systems under the brand "Color Space" where it offers more than 12,000 shades across all product lines to its customers.

The Company has increased its distribution reach from 38 sales depots in FY 22-23 to around 48 in FY 23-24 and will be further expanding the same in the current FY. On the back of such promising growth numbers complemented by a significant production boost, the brand is well on its way to pick up the growth trajectory soon. Apart from India, Shalimar also catered to consumers from Nepal, UAE, Bhutan and Seychelles.

The Company currently has three manufacturing facilities, one each at Chennai, Nashik and Sikandrabad (Uttar Pradesh). Howrah units operations remains suspended after fire broke out in 2014

Performance

The year 2023-24 began on a strong note, with Shalimar Paints achieving significant milestones. For the first time in a decade, we surpassed the Rs. 600 crore mark in revenue on gross basis, registering a net sales growth of 10% and gaining market share in both the decorative and industrial sectors, a testament to our strategic focus on refining internal and external facing functions and processes to meet customer demands with exceptional efficiency and timeliness.

The Company is primarily engaged in industrial and decorative segments with decorative segment contributing almost 63% of the revenue. Within decorative segment, water based paints contribute about 61 % of the sales which has shown a good growth over last one year. Your Company is taking steps to increase water based proportion to about 70% in next one year, which should help in improving margins & financials of the Company.

The Company has undertaken automation and infrastructure development across all three plants. These investments have been mainly towards reducing wastages, improving throughput and quality. These enhancements will bring greater accuracy to our product packing processes and significantly improve cycle times, thereby boosting overall efficiency. These strategic investments, along with our comprehensive quality improvement plan, underscore our commitment to maintaining our competitive edge and delivering superior value to our stakeholders.

To minimize the impact of cost escalation, the Company has taken number of steps. The Company has started to source raw materials based on reverse auction principle. In addition, Company has also started direct import of certain raw materials. In addition, R&D is working on change in formulation to reduce costs. The Company is also trying to control its fixed costs as well as interest costs so that benefit of increased revenue can be reflected in bottom line.

Research & Development

Our commitment to innovation is exemplified by our significant investments in R&D initiatives. In FY 2023-24, your Company achieved a significant milestone with the completion of its State- of-the-Art R&D facility at Nashik, spanning over 31,000 square feet, a project that began in the previous financial year with the vision of positioning Shalimar Paints among the top five companies in Indias paint industry. Over the past two years, these investments have enabled us to launch 14 new products. Revenue from new products launched in the previous FY was more than 20% of total sales, which depicts our deep understanding of the consumer requirements. This achievement underscores our deep understanding of consumer needs. Our Research and Design team, in close collaboration with our esteemed vendors, ensures that our final products not only meet but exceed customer expectations while minimizing the use of hazardous substances and reducing greenhouse gas emissions.

Our state-of-the-art R&D center in Nashik is dedicated to achieving the highest international standards of product quality through continuous innovation and has enhanced our capabilities to innovate and improve on the basket of products as well as improvement in recipe of existing products. We are focused on developing sustainable, eco-friendly coatings that extend the lifespan of critical assets - from metal pipes to plant machinery, national infrastructure, construction equipment, ships, and buildings - all while prioritizing environmental protection. Our modern IT systems and processes further empower us to deliver swift and impeccable service, fostering a level of customer satisfaction that is second to none.

Outlook

The paint industry like many others in the economy, globally, is likely to witness a period of consistent growth for next 5/6 years. Indian economy though seems to be pegged to grow around 7%. Going forward, India is expected to become the third largest economy in the world by 2027 and that would definitely be on the shoulders of some extraordinary developments in the field of infrastructure and which definitely would bring in good news for the building materials segment and paint in particular.

We at Shalimar Paints are preparing and doing the groundwork for the potentially golden period ahead. Plant capacities are augmented. The facilities will also be modernized and upgraded to meet the increasing demand. The purchase and sales systems are being upgraded and automated to reflect the latest trends. New products are being developed for decorative segments to account for the changing tastes.

The year 2023-24 also saw us foraying into innovation with the launch of Hero brand in the premium segment. Looking into the interests of our consumers we also came up with premium enamels. We are deeply gratified by the warm reception these products have received from both consumers and channel partners, affirming our belief in their enduring value.

Opportunities and Threats

Opportunities:

Paint Industry in India is driven by growth not only in construction activities but also in industrial development. Media exposure and innovative marketing initiatives by the players have also added impetus to increasing awareness about latest trends prevalent in the sector. Due to increased government funding for infrastructure, paint industry is poised for growth.

A further analysis of key drivers and challenges of the market indicate the factors for growth of the market including boom in real estate construction, growth in industrial sector, increase in disposable income and increased government expenditure on infrastructure. Rising urbanization, supported by real estate demand and improving infrastructure, has been boosting paint demand over the past few years.

Easy availability of housing loans has contributed to increase in number of houses which has directly added to increased demand for paints industry. Also, finance is now more easily available for renovation and repair of houses than before. This in turn, helps to shorten repair cycle.

Your Company is poised to grow in the Decorative as well as Industrial segment. The Company is in the process of reinforcing its current production facilities. Many new products are ready for launch in the coming months.

New entry of modern retail and E-comm players in the category like Hippo Stores, Infra.market stores, YouKraft.com, painting service partners like Aap ka Painter, Urban Company and many more have opened up new channels of selling paint products and engage new influencers. New Age interior designers and architects and the emerging demand for hiring these professionals also brings a new opportunity to connect with them and promote our products.

Threats:

The Cost of Raw materials is an important factor as the industry is raw material intensive. However, the rising raw material cost is still the biggest challenge. Also, a large portion of raw materials are imported, leaving the cost factor vulnerable to exchange rate fluctuation.

The entry of new players in the Indian market may increase the competition among the players of the industry. This may lead to price war which may impact the profit margin of the companies. As a result, the increase in volume growth may not equally reflect in the profit growth for the companies.

Another threat to this industry is that the competition does not lie just within the paint industry. Any brand, be it into decoration like wall paper or furniture, in which a consumer is ready to spend money to decorate his home is our competitor.

Risk and Concerns

Paint consumption is positively co-related to GDP growth and therefore a slowdown in GDP would affect the industry directly. Also, paint being a discretionary spend item, there is a likelihood of customers putting their paint requirements on hold for some time, thereby impacting renovation demand.

One of the key challenges for the paint sector is price fluctuation. Since most raw materials used in the production of paint products are petroleum-based, the fluctuation in crude oil prices creates a direct impact on the final paint product that goes to the end consumer.

The vagaries of the monsoon: extended monsoon in some regions and deficit rainfall in others affect demand from the rural sector, as an extended monsoon can reduce the number of dry days before the festive season and deficit rainfall affects income.

The cyclical nature of the decorative paints segment is the biggest loss factor that affects its sales. The demand for this segment is high only during festive seasons when people invest in whitewashing and painting their homes and then go down as they redo it after a long gap of at least 3-5 years.

Import policies also play a key role in deciding the price points as most raw materials are imported from foreign countries. Any change in the tax regime can significantly escalate the painting price.

Another challenge faced by the industry is the new regulation by way of extended producer liability on usage of plastic products. The new regulation mandates that gradually the industry will have to graduate to complete utilisation of plastic waste used as containers/ packing materials to ensure that no waste goes in the environment. This is a big challenge particularly since current technologies are not developed to ensure the same. Shalimar Paints like its peers will have to face this challenge.

Slowdown in infrastructure and construction activities would affect overall demand for paint companies. Delay in the revival of the auto industry would continue to pose a threat to the growth of industrial paints demand. In the post-COVID era, however, the challenges will change drastically.

Information Technology

At Shalimar Paints, Information Technology ("IT") has become an integral part of the manufacturing and revolutionizing processes, real time monitoring, improving efficiency and driving innovation & adoption. The automation brought about by IT has revolutionized various departments and their processes, enabling us to introduce several industry-first initiatives over the past year. Last year was very crucial where various strategic decisions were taken which set the base of future technological advancements and their impact on operations & service delivery.

IT Department is working collaboratively with different Departments to enhance productivity and address business problems. During the year under review, Sales Plan board system was implemented which is having scientifically system driven output and has inbuilt review mechanism & analytics. This has brought uniformity in terms of sales planning across the organization. Sales Force Automation was implemented which measures different KPI against the targets. All relevant data linked to customer and stock is synced to an application which provides useful insights to team on ground. Reports and analytics help the management and RMs to take preventive and corrective actions. Visit plans can be made in system, automation of order booking process has empowered the team, and this has improved the SLAs.

Different backend process automation and refinement like Secondary Freight Automation has been implemented which helps to measure different KPI of transporter, Timely POD, mismatch reporting, reconciliation of vendor bills, load planning and vehicle tracking. Efforts are in progress to have system driven primary and secondary freight based on the different contracts with vendors and to have system driven reconciliation. Warehouse Management System is being implemented in all Plants which has enabled better inventory planning and brought efficiencies in warehouse operation. Gate entry module has been implemented which has shortened the cycle and everything is tracked through system which has helped in reconciliation as well.

BI is in place and has reached to a matured level. All major reports are system driven. Rebate and discount, margin analysis finance dashboards, supply chain dashboard, inventory analysis etc. are driven through BI.

Our IT Infrastructure has also improved. IT Policies and SOPs have been implemented. To empower field staff with data, as a major step TABs were given to all field staff. We have upgraded the Desktop and Laptops of almost all the employees. With the implementation of S4 HANA we are moving to a more powerful server with better computes.

Last Year SAP S4 HANA RISE implementation was started and this year, we will go live in Q2 with core module. We will introduce authorization matrix, Fiori application, workflow and will go to advance level of these features as well. Implementation of COPA and GRC is also in pipeline. We are implementing the Supply Chain Automation tool which will go live in Q3. This is going to have its positive impacts on Integrated Demand Management, Supply Planning, Material Planning, Production Planning and Scheduling, Inventory Norms Planning and Distribution Planning.

In this digital era, our commitment to innovation and efficiency through IT is stronger than ever. As we continue to invest in cutting- edge solutions, we remain focused on fostering a culture of continuous improvement and digital transformation.

Supply Chain

In the competitive world where organizations face tremendous pressure to cut costs, the supply chain plays a pivotal role. At Shalimar, the supply chain not only strives to fulfil customer demands but also builds trust among customers.

Aligned with the above commitment, during the year under review, we were operating with 49 warehouses to improve serviceability and speed in deliveries, as well as increasing warehouse storage capacity to build up sufficient stocks. This year, our aim is to modernize our warehouses to improve efficiency and bring discipline in warehouse operations in line with organization values. As a result, we introduced 3PL partners to manage warehouse operations. We introduced transport management system (TMS) to streamline secondary transportation and facilitate faster order execution. We will focus more on strengthening our system to bring transparency in operations performed at our warehouses. This year we will be introducing new demand planning tools to improve accuracy in forecasting, production planning & distributions which will enable us to rationalize inventories and bring control over stocks.

To have better supervision, we introduced cluster head concepts based on the geographies of warehouses. We have placed resources to improve warehouse operations efficiency and fast addressal of customer complaints.

HR Initiatives

Employees are the core strength of any business, organization or for any industry. How to live and work better is a complex question. Throughout most of human history our endeavour has been to enhance both. With changing times, there has been evolution in the way we approach manpower and talent from the days when HR was just a personnel department managing employee files and processing payroll to now being a business partner driving business growth, we have seen it all.

The future of work is also being shaped by rapid technological innovation, globalisation and demographic shifts in workforces around the world. We are experiencing a groundbreaking transition to artificial intelligence and the automation of traditional workplace practices. To promote a great place to work in which employees go above and beyond to achieve organizational goals, we need to lead by example and collaborate with everyones strengths to build higher employee value proposition. In order to achieve the same, during the financial year 2023-24, various initiatives were taken by the Company under multiple HR domains:

Attracting Talent: Your Company hired 225+ new employees across functions including the Leadership team and next line to the Leadership team. With this, we have a strong team at the senior level who can guide and coach the team below to drive growth for the Company. Besides new hiring, we have also done a significant number of replacement hiring particularly in Sales team.

Your Company has started using Social media platform like Linkedin for job postings as well as an opportunity for posting major events and activities within the Company to help us in attracting talent. With this, we have seen a significant increase in the number of subscriber base for our Companys Linkedin. We have created some success in converting this to our hiring needs. This activity has helped us to give a message to the market about Shalimar 2.0 and the way we are transforming the Company for future. Driving Strong Connect @ Social Media (Linkedin, Twitter, Instagram, Facebook) by 2-3 posts monthly on Employee Speak /Event Coverage /Anniversary (Work) /Employee Experience / Career Posts.

With so much happening within the organization with respect to creating the right employee experience, we have seen some fantastic reviews about Shalimar on social media platforms like Glassdoor, Ambition Box & Indeed. This is due to focussed and consistent effort on "Sampark" our employee onboarding and engagement platform, "Unnati" our training and learning platform and various other open houses and townhalls. Consequently, Companys rating on Glassdoor platform got increased from 3.7 to 4.4 in a span of one year.

Your Company has also started Brand building activity & encouraging industry academic interface in which our Senior Leadership team members directly share their industry experience and give sessions /Talent Talks at the institutes and hiring GET/s for R&D, Manufacturing & Industrial Business.

Early in the year, considering the importance of generating the secondary sales for the Decorative business and hence to support our business, the Company hired about 22 Business Development officers, whose primary task is to generate leads from the Painter, Contractor and Architect base and convert them into our painter programs. Seeing the success in Decorative Business, we have started this for our Industrial business as well.

For reducing our dependency on Contractual labours in our plant locations, we are continuing with the program of hiring ITI and Diploma engineering graduates who can give us better productivity and a better stability. We have seen good success of this program in our Plants.

Employee Engagement and Retention:

Reward and Recognition: As rewarding and recognizing employees leads to greater employee engagement, increased retention, increased productivity, increased peer competition and helps to create a positive overall workplace. In line with this philosophy, Company is appreciating and rewarding exceptional performers from sales team every month based on their monthly performance through Shalimar Premier League and celebrating the success by organizing family trip at Goa for the winners.

Coffee with HR & Sampark: Monthly engagement programs have been started in Plants and Depots i.e "Coffee with HR" & "Sampark" for all new joinees & others. Some benefits are:

1. Improved communication: Coffee with HR & Sampark provides a casual sitting for employees to ask questions and share their thoughts with HR representatives. This helps HR to better understand employee needs and concerns, and fosters a culture of open communication.

2. Increased engagement: Employee engagement is critical for retention and productivity. By providing opportunities for employees to interact with HR, companies can improve engagement and create a more positive work environment.

3. Better understanding of policies and procedures: Through Coffee with HR & Sampark, employees have been able to gain a better understanding of HR policies and procedures, which helps them make more informed decisions and avoid misunderstandings in the future.

4. Enhanced company culture: A company that values employee input and feedback is more likely to foster a positive culture than a company that does not. Coffee with HR & Sampark has helped to create a culture that encourages collaboration and transparency and building trust between employees and management.

Celebrations: Fun at workplace plays an important role in keeping the work environment lively and enthusiastic. In terms of celebration, we had celebrations on all important occasion such as Diwali, Holi, Christmas, Womens Day, Companys success on breaking old records, Birthdays, International Yoga Day, Environment Day etc.

Flexi Benefit Plan (FBP): We have further enhanced the plan for all employees this year by introducing Sodexo benefits and also increased limits under some benefit heads to increase the coverage, thus allowing them to choose for flexible basket of options to help in saving taxes at maximum level. Employees can now restructure their special allowance and get tax benefits.

Paternity Leave Policy: Company has introduced paternity leave policy to all permanent male employees under which they will be entitled to 5 days of paternity leave at the time of child birth.

Travel Portal: To make travel bookings more convenient, we introduced MakemyTrip online portal for our employees where the employees can do a self-booking which gets debited from the Companys wallet. This has helped in saving booking time and also helped in saving cost.

Rewarding SIP programs: Driving Sales Incentive Programs for the year to boost growth as well as to reward the Sales team for their effort and results. This year the SIP earnings have been one of the highest.

Quarterly PLVP (Performance Linked Variable Pay): Revision in the earning potential under PLVP for Non sales team was made this year to boost employees morale and effectiveness.

Developing Talent: In terms of development and to support the business growth, various inhouse and external training programs related to Companys products, technical skills, selling skills, negotiation skills, MDP/ Leadership (IIM Lucknow for few leaders) etc. were organized by the Company. Besides these interventions, regular Induction/ Orientation programs for new joiners are being organized to bring them upto speed and to familiarize with company policies/ practices and culture.

Train the Trainer program: Train the Trainer program was conducted for certain eligible employees working in Manufacturing,

Quality, R&D & HR fraternity across all three Plants to train them in conducting training sessions effectively through various activities like brainstorming, role plays, process checks, etc., to ensure effective learning in respective areas. Major objectives of TTT Program were :

• Training essentials of Trainer

• Tools required to prepare the relevant PPTs

• Audience Management & Meeting Etiquettes

Reward & recognition is carried out for the eligible employees and they get Amazon Vouchers & Certificates.

Managerial Essentials: Managerial Essential program was conducted for certain eligible employees working in Manufacturing, Quality, R&D, Industrial Sales, IT, Finance & Accounts, Supply Chain along with HR fraternity across all three Plants, Regional Offices & Gurugram HO to train them on "KEY ESSENTIALS" of becoming a "SUCESSFUL MANAGER" through various activities like brainstorming, process checks, tools & technique to use @ work place etc., to ensure effective learning in respective areas.

Coverage of "Managerial Essentials Program" was as under: Communication, influencing, coaching, giving feedback, motivating team, problem solving, delegation and decision making.

Assessment & Development Centre ("ADC") for Sales Team: Company has carried out ADC for certain Sales professionals with the help of external partner ‘Jombay in which they gathered understanding from Shalimar Paints internal stakeholders about the competencies and behaviors essential for Regional Managers/ Zonal Managers.

Analyse and identify critical competencies and behaviours required for successful performance.

Designed and executed a scientific and standardised assessment centre on the mutually agreed upon competency framework.

HR Automation: The Company is working on an end-to-end HRMS tool which would help us digitize entire employee life cycle be it recruitment, performance management, travel and expense management, leave and attendance management, employee engagement etc.

We have integrated Sales Force Automation (Rise App) with I connect HRMS which provides the actual real time data with regards to employees dealer visits and distance travelled by employee.

Culture of Safety: Safety of our employees at plant is of utmost importance for us. Hence, the Company organized various trainings like Emergency & Safety Awareness & Fire Fighting & Techniques etc. at our Sikandrabad, Chennai & Nashik plants. In relation to prevention of illness, free Annual Health Check Camps were organized across Chennai, Nashik and Sikandrabad Plants. We also organise "Safety Week" at every plant.

RACE Program: "RACE" is the campaign in Plants, which stands for - Reduction in plastic usage, Awareness among masses, Circular solution to disposal and Engagement of one and all. In a bid to phase out single-use plastic items, Centre has announced that India will ban the manufacture, import, stocking, distribution, sale, and use of identified single-use plastic items with low utility and high littering potential. All Plants of the Company had organised Rally program in all Industrial/nearby area with taking Pledge and sharing ideas for alternate of single use Plastic items in our life.

Benefits: Company has carried out several employee benefits which are helping out to boost employee motivation and morale likewise:

• Company has revised the grade benefits with regards to monetary coverage limits in Group Medical Coverage policy covering all permanent employees.

• Company is providing nutritious food in lunch on highly subsidised prices to all employees at corporate office & at plant levels.

• Free Transportation Facility for permanent employees at plant level

Marketing

In this highly competitive industry, marketing and brand building holds a significant importance to not only differentiate the brand and its products in the market but also to create top of the mind recall in the minds of consumers. In paints category, the consumer and the buyer are different i.e. the influencer (Painter) is the buyer and homeowner or project owner is the consumer.

In FY 2023-24, with an unwavering commitment to aligning our offerings with the ever-evolving needs of our consumers, we went ahead and undertook extensive market research to delve into their thought processes and preferences. The insights garnered from this endeavor have served as the cornerstone of our strategy for building the new SHALIMAR 2.0.

We upgraded ourselves with technically advanced products to meet the needs of the modern consumer, who is also looking for feature loaded high quality product.

To address this need, we launched our new product range at mega events conducted across major metros in the country like Delhi, Lucknow, Pune, Kolkata and Bangalore. We hosted these grand events in the presence of more than 1,000 trade partners who enjoyed the ceremonial nights and engaged with our products.

Our new products are designed to meet modern- day demands. One such product is HERO 5-in-1 interior emulsion, which has multiple features like Washability, Stain resistance, Zero VOC and antiviral defence. We also launched multiple new products like CareWood Wood coatings range - Melamine & 1K PU, Magic brushes & rollers range. Responding to interior trends, we also introduced PU Satin Enamel for the premium consumer looking for aesthetic appeal to its home interiors and Zero Damp waterproofing to provide effective waterproofing solutions for common seepage problems that prevails in almost every Indian household.

In FY 2023-24, we ramped up our marketing activations in all domains, whether it was to activate the painters at dealer shops, in the field or at the nakkas, we left no stone unturned to engage with them and enroll them in our Painter Loyalty Program.

Shalimar Expert Painter Loyalty Program grew by 200% during the year highlighting the loyalty of existing painters as well as activity by new painters in the program. The program also saw 160% growth in terms of painter activity rate. The painter base surged from 90,000 to 1.55 Lacs during the year which was a result of robust on ground painter meetings and activations.

Apart from the painter meet ups at dealer shops and at independent venues where the sales team educates them about our new product offerings, schemes and offers, we also started a new mobile painter training vans initiative that focuses on activating the painter where they are i.e. nakkas, hardware markets, dealer shops, streets, etc. The Mobile training van covered over 10,000 kms across the UP market covering cities like - Lucknow, Kanpur, Ghaziabad, Gorakhpur, Agra and Allahabad, visited over 500 Shalimar Dealers and on boarded over 5000 new painters.

While focusing on painters, we not only gave them the opportunity to earn more with us but also to educate them by conducting Digital Training Sessions at the painter meet ups. We also started a Painters social media club on Facebook to engage them digitally with educational content and engaging contests. The community quickly gained following and participation from more than 5000 painters.

To engage with consumers, we used a combination of online and offline media. We continued to strengthen the brand by using the power of social media and garnered more than 20,000 new followers across Facebook and Instagram.

We took our festive campaign to the next level by partnering with top-tier social media influencers, transforming word-of-mouth advertising into a powerful marketing force. The results were phenomenal - our campaign exploded on social media, amassing over 2 million views and capturing the attention of a vast audience with over 10,000 engagements.

In just one year, our social media presence skyrocketed. We achieved an astonishing 100% growth in followers on Facebook and Instagram, solidifying our brands influence & reach and the momentum doesnt stop there - we are rapidly gaining traction on YouTube, engaging with more fans and followers every day.

To further improve the consumer connect, we ran a brand promotion campaign on radio for a period of 2 months in North India that covered the entire Uttar Pradesh and Uttarakhand market. The campaign not only reminded the listeners about brands strong legacy of over 1 20 years but also created awareness about the commitment of brand to deliver great quality products to its consumers. The campaign was run across 19 radio stations covering an airtime of over 3 lac seconds. Radio Jockeys also visited key Shalimar dealers and engaged with the consumers at the stores, driving awareness about the new products by the brand.

To drive brand visibility across tier 2 and 3 markets, we went ahead with a massive 2.8 lakh sq ft wall painting campaign in Uttar Pradesh, Punjab, Haryana, and Jammu, transforming highways its vibrant brand color red. The activity was conducted in the upcountry region giving visibility to consumers across main highways connecting different cities of the region in North India.

As dealer shops hold a significant importance - both consumers as well as influencers visit the dealer shops to buy the product, we launched a signage and branding campaign at over 1500+ dealer outlets nationwide in which we deployed Brand

Signages at all our dealerships, provided dealership certificates, new dealer kits as well as branded their shops with latest product brandings highlighting the USPs of our products. New ways of highlighting our products were used like using shelf highlighters and backlit product brandings to differentiate our products from others and make them eye catchy while they are on the shelves.

The internal control system is an integral part of the general organizational structure of the Company. The Company has in place the necessary control systems to ensure transparency and security of its transactions. However, the same are being upgraded keeping in view the increased threats. The purchase, sales, procurement, payment and other operations are being automated. Checks and balances are being strengthened at each level. The system is highly structured and totally in sync with the size and nature of its business. External audit firms are appointed at various locations of the Company to conduct regular audits. The internal control system is basically a set of rules, regulations, policies and procedures which run on softwares with in-built authorizations for enhanced control. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.

Financial Performance

Your Company during the year under review has suffered a loss of Rs. 73.75 crore as against loss of Rs. 36.10 crore in the previous year, on standalone basis. The revenue from operations of the Company for the financial year 2023-24 stood at Rs. 534.91 crore as against Rs. 483.81 crore in the previous year.

While revenues of the company have grown by about 10%, mainly due to healthy change in the mix of water based products and in specific emulsion portfolio, the profitability has been impacted mainly due to one time cost, manpower cost and marketing expenses. The gross margin of the Company has improved from 28% to 29%.

(Rs. in Crore)

Particulars	Standalone		Consolidated
	FY 2023-24	FY 2022-23	FY 2023-24	FY 2022-23
Revenue from Operations	534.91	483.81	534.91	483.81
Other Income	8.17	7.21	8.17	7.21
Profit/(Loss) before Finance Cost	(60.79)	(20.20)	(60.89)	(20.25)
Finance Cost	12.96	15.90	12.96	15.90
Profit/(Loss) before Tax	(73.75)	(36.10)	(73.85)	(36.15)
Exceptional Items	-	-	-	-
Tax	-	-	-	-
Profit/(Loss) after Tax	(73.75)	(36.10)	(73.85)	(36.15)

Key Financial Ratios and details of significant changes therein vis-a-vis immediately preceding financial year

Particulars	As at 31-03-2024	As at 31-03-2023	Reasons of Variance
Debtors Turnover Ratio (in times)	4.92	5.20	Reduction in debtors turnover ratio is mainly due to higher sales in last months for which the collection has been done subsequently
Inventory Turnover Ratio (in times)	3.37	3.41	Continuous monitoring and controlling of inventory has kept the inventory turnover ratio in line with the last year.
Interest Coverage Ratio	-3.55	-0.47	Change in ratio is primarily due to increase in losses.
Current Ratio (in times)	1.42	1.39	Current ratio is in line with the last year because of no major changes in the current assets and liabilities
Debt Equity Ratio (in times)	0.27	0.41	Change in ratio is primarily due to repayment of loans during the year and fresh equity infusion through conversion of share warrants into equity shares.
Debt Service Coverage Ratio (DSCR) (in times)	-3.55	-0.47	Change in ratio is primarily due to increase in losses.
Operating Profit Margin (%)	-13.8%	-7.5%	Change in ratio is primarily due to increase in losses.
Net Profit Margin (%)	-13.8%	-7.5%	Change in ratio is primarily due to increase in losses.
Return on Net Worth (%)	-12.58%	-4.24%	Change in ratio is primarily due to increase in losses.
Earnings per Share (EPS) (Rs.)	-9.51	-5.00	EPS has declined due to increase in losses.

Forward-Looking Statement

Certain statements made in the Annual Report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements within the meaning of applicable laws and regulations. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect managements current expectations and are inherently uncertain. Actual results may differ from such expectations whether expressed or implied. Several factors could make significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations, taxation, pandemic and other natural calamities over which the Company does not have any direct control. The Company assumes no responsibility to amend, modify or revise any such statements. The Company disclaims any obligation to update these forward-looking statements except as may be required by law.