Kansai buys out Goodlass Nerolac

01 October 1999

The Tata group company, Forbes Gokak Ltd, together with associates have decided to sell their entire stake of 28.56 per cent in Goodlass Nerolac Ltd. to Japanese collaborator, Kansai Paint Company Ltd. With this, Kansai’s shareholding in Goodlass Nerolac will rise to above 64 per cent from the current 35.96 per cent. Goodlass shares have been sold to Kansai at Rs 250 per share (Rs 10 face value). Consequently, Goodlass Nerolac will become a subsidiary of Kansai Paints, Japan’s largest paint company. Financial institutions hold a stake of 17.67 per cent and the public, about 16 percent of Goodlass’ equity capital of Rs 15.3 crore.

According to Forbes officials, the entire deal works out to Rs 110 crore out of which Forbes Gokak, which alone holds 25.84 per cent stake will receive Rs 98.56 crore. The proposed sale of Forbes’ stake is in accordance with the terms of the original agreement between Forbes and Kansai under which either party is required to offer its stake to the other in the first instance. Forbes is the main promoter of Goodlass Nerolac and the acquisition of its stake by Kansai is exempt from the provisions of SEBI regulations.

Forbes officials say that the deal has been concluded on the basis of a friendly and mutually acceptable agreement. Forbes officials say that though Goodlass Nerolac has been a profitable investment, its own business interests are unrelated to paints. The company feels that it considered it appropriate to divest its investment in Goodlass to be able to use the funds in a manner which would directly benefit its own shareholders. Though Forbes has been the chief promoter of Goodlass since 1976, its main interests are in fields like shipping, manufacture of engineering goods and specialized yarn.

Kansai first acquired the stake of Cooksons of the UK in 1986. Prior to this, Goodlass had a technical collaboration with Kansai. As a result of its collaboration with Kansai it is able to meet the paint requirements of automobiles at all stages. This gives it an edge over competition. Among its other tie-ups is a collaboration with US-based EI Du Pont de Nemours and Company Inc., US, for the manufacture of sophisticated coatings for the automobile Sector, and Nihon Tokushu Toryo, Japan, for automotive paint technology.

Goodlass Nerolac’s alliance with Kansai has ensured it access to world class and the latest paint technology as well as a preferred clientele. It is the largest manufacturer of industrial paints in India with a market share of about 43 per cent, while in decorative paints it has a share of around 13 per cent. Goodlass dominates the OEM segment with a 70 per cent share of passenger cars, a 40 per cent share of the two-wheelers and a 20 per cent share of commercial vehicles OEM market. It has a major share of alkyd and amino paints, which are rapidly replacing NC lacquers, traditionally used for automobile coatings.

Goodlass Nerolac supplies around 70 percent of Maruti’s automobile paint requirements. Its other customers include Mahindra Ford, Pal-Peugeot, Bajaj Auto, Telco, Ashok Leyland, M&M, TVS Suzuki and Hero Honda. The company has also bagged contracts for the Lancer car project of Hindustan Motors. In white goods, the major customers are Godrej, Voltas and Whirlpool.