Shalimar Paints Ratings Update: Bank Facility Ratings Reaffirmed by CARE Amid Operating Losses

Shalimar Paints Ratings Update: Bank Facility Ratings Reaffirmed by CARE Amid Operating Losses​

CARE Ratings Limited has reaffirmed the ratings assigned to various facilities and instruments of Shalimar Paints Ltd (SPL). The ratings were issued on June 2, 2026, reflecting the company’s financial position, operations, and ongoing strategic moves within the highly competitive paints industry.

The rating update covered several key bank facilities for SPL, including Long Term Bank Facilities, Non-fund-based LT/ST-Bank Guarantee, Short Term Bank Facilities, and Long Term / Short Term Bank Facilities.

As per the rating details, the current ratings are as follows:


The reaffirmation incorporates continued operational losses in FY26, attributed to high fixed overhead costs related to employee salaries and marketing expenses for warehouses and sales depots, coupled with declining sales realization due to intense competition.

Operational Performance and Financial Stability​

SPL reported a topline of ₹569.03 crore in FY26, which was a moderation from the ₹599.25 crore reported in FY25. The company recorded an operating loss of ₹20.81 crore in FY26, down from ₹56.48 crore in FY25 and ₹80.11 crore in FY24.

Financial analysis highlights that the industry is fragmented, with the unorganised segment accounting for approximately 25% market share, while organized players hold 75%. SPL faces significant competition from both existing large players (such as Asian Paints, Berger Paints, Kansai Nerolac) and emerging competitors (including Birla Opus and JSW Group).

Despite these challenges, the company’s financial structure remains satisfactory. As of March 31, 2026, the tangible net worth (TNW) stood at ₹234.53 crore. The overall gearing ratio was comfortable at 0.76x as of March 31, 2026, slightly higher than the previous year's 0.61x.

Key Strengths and Risk Factors​

One of the significant strengths noted by CARE Ratings is SPL’s strong parentage under Hella, which holds a controlling stake of 52.85% in the company as on March 31, 2026. This relationship provides operational synergies, enhanced marketing capabilities, and ongoing financial support from Hella, who operates in similar construction materials segments.

SPL also possesses a long track record spanning over 100 years, operating across various locations including Howrah (West Bengal), Nasik (Maharashtra), Sikandrabad (Uttar Pradesh), and Chennai (Tamil Nadu). The company maintains an established brand name and a network of 48 sales depots and over 7300 retail touchpoints.

However, the ratings remain constrained by several negative factors:

• Debt Coverage: Debt coverage indicators are poor in tandem with subdued profitability due to sustained operational losses.
• Liquidity Stress: SPL’s liquidity position is described as stretched because the company has been unable to service debt obligations through internal cash accruals due to continuous losses. As of May 15, 2026, available free cash and bank balances were ₹7.24 crore against repayment obligations estimated at approximately ₹18.30 crore in FY27.
• Profitability Risk: The company’s profitability margins are vulnerable due to the working capital intensive nature of operations and volatility in raw material prices derived from crude oil derivatives.

Outlook and Mitigation Strategies​

The ratings carry a "Negative" outlook, reflecting the likelihood of sustained losses at the operating level in the coming quarters which could potentially deteriorate the liquidity position. The outlook may be revised to 'stable' if SPL can successfully turnaround its operations to achieve desired profitability while continuing to receive financial support from Hella.

In response to operational challenges and a strategy to curb losses, management has undertaken strategic cost optimization measures, including manpower contraction, closure of excess warehouses/sales depots, and reduction in administrative, sales, and marketing costs. The company also invested in automation and infrastructure development across its three operational plants with the goal of achieving profitability over the medium term and ramping up operations at underutilized facilities in Chennai and Nasik.

SHALPAINTS Stock Price Movement​

As of 12:37 PM, Shalimar Paints Limited sheds value in live trading, slipping by 0.42% to trade at ₹50.11 following a modest dip of ₹0.21. The stock is seeing a volume of 6,021 shares traded as it moves through the market session.