The company has 4 manufacturing facilities - at Lote in Maharashtra, Bawal in Haryana, Jainpur in U.P. and the latest state-of-the-art plant at Hosur in Tamil Nadu. The geographical set up of the plants has been advantageous in providing high service levels and supply chain efficiency. Recently the company inaugurated its new emulsion plant at Jainpur and new polyester resin plant at Lote.

The company has over the years developed a variety of products in order to meet customer demand in the Decorative, Automotive, Auto Refinish, Performance Coating and Powder Coating segments of the market.

December 2015 quarter results

In quarter ended December 2015, sales grew 9% to Rs 968.06 crore. OPM jumped 190 basis points to 14.1% which saw OP growing 26% to Rs 136.49 crore. Most of the company's raw materials are crude oil-based and their prices have fallen in the past few months. This has boosted OPM.

Other income grew 55% to Rs 5.90 crore and interest cost was NIL.

As depreciation fell 1% to Rs 16.92 crore, PBT grew 32% to Rs 125.47 crore.

After providing for taxation (up 40% to Rs 41.05 crore), PAT jumped 29% to Rs 84.42 crore.

Nine months results

For the nine months ended December 2015, sales grew 7% to Rs 2939.15 crore. OPM jumped 230 basis points to 15.0% which saw OP growing 27% to Rs 439.42 crore.

Other income grew 16% to Rs 18.46 crore and interest cost was NIL.

As depreciation stagnated at Rs 50.69 crore, PBT grew 31% to Rs 407.19 crore.

After providing for taxation (up 33% to Rs 131.86 crore), PAT jumped 30% to Rs 275.33 crore.

Parent support continues

The continued technology focus from the parent Kansai Paint Co. Ltd. (which holds 69.27% stake in the company), Japan has helped bring the latest technology products. Based on the excellent track record and new technology offerings, Multiple New OEM Business have been awarded for future business prospects. In addition the company's state-of-the-art Hosur plant is now fully operational and has been approved as a factory of supply by Industrial customers as well.

Leader in Industrial Paints

Kansai Nerolac is the leader in the Industrial Coatings market space and it continues to increase its market share in this space. It has extended its close interaction with customers to the areas of Performance coatings which has helped it increase its market share. The company now serves a vast array of OEM industries with a variety of products.

Complete system capability with advanced technological products introduced over the years has been instrumental in sustaining the leadership for industrial business segment. KNPL has always launched products for customers across various market segments which are innovative and technologically superior.

The industrial team has undertaken the initiative of "Train the customers". The team imparted training, gave colour presentations and also suggested many improvement areas related to painting and safety to Multiple OEMs and Auto ancillaries.

Made inroads in Railways business for coaches and wagons

The Company made inroads in Railways business for coaches and wagons. In Performance Coatings Segment, New business and new products were the focus. The company continues to focus on gaining approvals from large buyers of paint. New products like Direct to metal coatings for Industrial application have been introduced. The Company launched Floor Coatings Products during the year with favourable response.

Enhancing its market leadership

Towards the end of the year, the Company enhanced its market leadership by entering into a long term technical collaboration with Protech Oxyplast of Canada for Powder Coatings. Protech Oxyplast is a leading global player in the powder coating space. The collaboration will help KNPL to bring numerous new technologies in powder coatings to the Indian market.

Government's focus on the infrastructure sector is a boon for the company

The new government has raised focus towards the infrastructure sector. The increase in infrastructure spend will be a boon to the paint industry as it will give a push to Public-private partnerships (PPPs) and increase in paint demand.

Vast Auto market

With entry of more foreign players and a slew of new launches being lined up by major OEMs, the auto industry is bound to grow in the country. There is a huge opportunity in the auto-refinish market which the company can capitalize by leveraging its leadership position in the industrial sector.

To set up new plants

Board of Directors of the company at its meeting held in May 2015, approved setting up of a paint manufacturing unit at Sayakha Industrial Estate in Gujarat having capacity of 42000 MT / year, which is expandable in phases, at an estimated cost of Rs 350 crore.

The company will also set up a paint manufacturing unit at Goindwal Sahib near Amritsar in Punjab having capacity of 38000 MT per year, which is expandable in phases, at an estimated cost of Rs. 180.50 crore.

It will also set up a Global R & D Centre at Vashi, Navi Mumbai, at an estimated cost of Rs. 40 crore.

Valuation

The share price trades at Rs 267.