Shalimar Paints Limited has released its Annual Report for FY26 and issued notice of its 124th Annual General Meeting (AGM) scheduled for Wednesday, September 09, 2026, at 12:30 p.m. (IST) through video conference. The company, established in 1902, reported a narrowing of its standalone net loss to ₹63.34 crore in FY26 compared to ₹80.11 crore in the previous year, even as revenue from operations declined approximately 5% year-on-year.

Financial Performance: FY26 vs FY25

The following table summarises the company's standalone and consolidated financial performance for FY26 and FY25:

On a standalone basis, the negative EBITDA improved to ₹18.54 crore in FY26 from ₹46.81 crore in FY25. The gross margin declined from 34% to 29% due to product mix changes, primarily a shift in the water-based emulsion portfolio. Finance costs rose to ₹25.26 crore from ₹17.55 crore, reflecting higher borrowings. The exceptional item of ₹4.60 crore in FY26 relates to past service cost arising from the implementation of new labour codes notified by the Government of India on November 21, 2025, which revised the definition of wages applicable to gratuity computations.

Key Financial Ratios

The following table presents key standalone financial ratios for FY26 compared to FY25:

The current ratio declined to 0.82 from 1.00, primarily due to an increase in current borrowings. As at March 31, 2026, the company's standalone accumulated losses stood at ₹543.73 crore, and current liabilities exceeded current assets by ₹65.48 crore.

Business Segments and Operations

The decorative paints division accounted for approximately 67% of total standalone sales in FY26. The share of water-based paints within the decorative category stood at 64%, with a stated objective of taking this to 70%. Revenue contribution from new products launched under the Hero and Zero Damp brand umbrellas stood at 28% of total sales. Nine new products were launched during the year across decorative and industrial categories, including Hero Weatherguard12 (12-year warranty exterior emulsion), Hero Insignia (10-year warranty interior emulsion), Hero Floorshield, Zero Damp Interior, and a PU gloss enamel.

The industrial paints segment faced significant headwinds during FY26, including a slowdown in the iron and steel sector, fund flow disruptions in the Jal Jeevan Mission, and raw material price volatility. The company operates three manufacturing facilities at Chennai, Nashik, and Sikandrabad (Uttar Pradesh), all certified under ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018. The R&D laboratory at Nashik holds NABL accreditation under ISO/IEC 17025:2017.

The company's distribution network comprised 47 sales depots and over 7,500 retail touchpoints in the decorative segment. Inventory levels were reduced by ₹25 crore and six non-profitable warehouses were closed during the year. Foreign exchange inflows stood at ₹1,468.61 lakhs in FY26 compared to ₹701.85 lakhs in FY25, while outflows were ₹888.87 lakhs versus ₹493.49 lakhs in FY25.

124th AGM: Key Agenda Items

The 124th AGM is scheduled for September 09, 2026, at 12:30 p.m. via video conference. Remote e-voting will be available from September 05, 2026 (9:00 a.m.) to September 08, 2026 (5:00 p.m.), with the cut-off date for e-voting entitlement set at September 02, 2026. Five resolutions are proposed:

The proposed increase in authorised share capital involves creating 290,00,00,000 additional equity shares of ₹2 each and adding 200,00,00,000 Non-Cumulative Non-Participating Compulsory Convertible Preference Shares of ₹2 each at a coupon rate of 0.001% per annum. These preference shares will be compulsorily convertible within a period not exceeding twenty years from the date of issue.

Corporate Governance and Auditors

The statutory audit for FY26 was conducted by M/s. Walker Chandiok & Co LLP (Firm Registration No. 001076N/N500013), appointed at the 120th AGM for a five-year term ending at the 125th AGM. The auditors' report does not contain any qualification, reservation, or adverse remark. Secretarial audit was conducted by M/s. MAKS & CO., Company Secretaries (FRN P2018UP067700), appointed at the 123rd AGM for a five-year term from FY26 to FY30. The secretarial audit report is also free of qualifications.

The company's credit ratings were reaffirmed by CARE Ratings Limited at 'CARE BB+; Negative' for long-term bank facilities and 'CARE A4+' for short-term bank facilities. As at March 31, 2026, the promoter and promoter group held 74.96% of the paid-up equity share capital of 8,37,11,178 shares, with Hella Infra Market Limited holding 52.85% and Virtuous Tradecorp Private Limited holding 12.62%.

The Board of Directors did not recommend any dividend on equity shares for FY26 in view of the losses during the year. The company has two subsidiaries: Shalimar Adhunik Nirman Limited (99.99% held) and IM Inicio Projects Private Limited, formerly Eastern Speciality Paints & Coatings Private Limited (100% held). The Gurugram commercial plot held by Shalimar Adhunik Nirman Limited has been classified as an asset held for sale in the consolidated financial statements at a carrying value of ₹27.13 crore.

Shalimar Paints has scheduled an extraordinary general meeting (EGM) for September 11, 2026, to seek shareholder approval for a transformative acquisition of Hella Infra Market Limited (HIML). The proposed transaction values HIML at approximately ₹10,454 crore, executed through a combination of cash, equity shares, and compulsory convertible preference shares (CCPS).

The board of directors approved the deal structure on August 12, 2026, aiming to integrate Shalimar’s manufacturing heritage with HIML’s pan-India scale across ready-mix concrete, aggregates, steel, and tiles. The acquisition is expected to create a stronger platform to capitalize on India’s infrastructure growth story.

Deal Structure and Valuation

The total consideration for acquiring up to 40.59% stake in HIML on a fully diluted basis is split into three components:

All securities are priced at ₹85 per share/CCPS. This price is higher than the floor price of ₹82.50 determined by registered valuer Saksham Valuer Private Limited, which was based on the 10-day volume-weighted average price preceding the relevant date of August 12, 2026.

Capital Raise and QIP

In addition to the acquisition, the EGM will consider a Qualified Institutions Placement (QIP) of up to ₹1,000 crore. The proceeds from this QIP are earmarked for working capital, investment in subsidiaries, repayment of borrowings, capital expenditure, and general corporate purposes. A SEBI-registered monitoring agency will track the utilization of these funds.

What the Numbers Show

The financing structure reveals a heavy reliance on equity-linked instruments rather than immediate cash outflow. Of the total ₹10,546 crore valuation, only ₹105.9 crore (1%) is being raised via fresh cash infusion from non-promoters (Hathor Corporate Advisors LLP, Plutus Capital Management LLP, and Pro Fin Capital Services Ltd). The remaining ~₹10,440 crore is funded through share swaps with existing HIML shareholders. This suggests the promoters of HIML, including Aaditya Sharda and Souvik Sengupta, are retaining significant economic interest via the newly issued CCPS and equity, rather than exiting completely. The CCPS carry a negligible dividend rate of 0.001% and must convert into equity within 18 months, indicating a clear path toward full consolidation without immediate dilution pressure from dividend payouts.

Key Dates and Voting

• EGM Date: September 11, 2026, at 12:30 pm via Video Conference.
• E-voting Window: September 7, 2026, to September 10, 2026.
• Record Date: September 4, 2026.
• Scrutinizer: Mr. Ankush Agarwal, Partner at M/s. MAKS & CO., Company Secretaries.

The allotment of securities must be completed within 15 days of passing the special resolution, subject to regulatory approvals. The new equity shares and converted CCPS will rank pari passu with existing shares.