Nerolac inks JV with Japan's Kansai

JV to acquire paint business of Malaysian company for Rs 30 cr.

Goodlass Nerolac, the country's second largest paint manufacturer, has formed a joint venture with Japan's Kansai Paint Company. The venture will invest Rs 30 crore in a Malaysian firm.

Nerolac will hold 55 per cent stake in the joint venture and the new company will acquire the paint business of the Malaysian company Sime Coatings Sdn Bhd.

The market seems to have approved Nerolac's investment with its scrip increasing by 0.2 per cent to Rs 717. Company officials were unavailable for comments.

Interestingly, the Rs 6,900 crore Kansai has a stake in both Nerolac and Sime Coatings. In 1999, Goodlass Nerolac became a wholly-owned subsidiary of Kansai Paints after the latter acquired a 64.5 per cent stake.

The largest paint manufacturer in Japan is also building a plant in the outskirts of Delhi. Subsequently in 2002, Kansai Paints acquired Sime Kansai Paint as its subsidiary.

The investment augurs well for the Rs 925 crore Nerolac which is the market leader in the industrial/automotive segment supplying over 90 per cent of the original equipment manufacturer (OEM) requirements.

Similarly, Kansai Paints is known for its industrial paints. Keeping up with their profile, Sime Coatings is the largest manufacturer of automotive OEM coatings in Malaysia and leads the automotive plastics and coil coatings market. The new company is expected to consolidate Kansai's hold over the Asian market.

Kansai will be hoping to do better than its venture with DuPont which was called off in 2003. The company has major stakes in other Asian countries including China, Philippines and Indonesia.

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Colourful Ventures

Nerolac will hold 55 per cent stake in the joint venture and the new company will acquire the paint business of the Malaysian firm

In 1999, Goodlass Nerolac became a wholly-owned subsidiary of Kansai Paints after the latter acquired a 64.5 per cent stake

Kansai is also building a plant in the outskirts of Delhi