Shalimar Paints Limited (SPL) has received an update on its credit ratings from CARE Ratings Limited. The rating agency has reaffirmed the ratings for SPL's bank facilities, with a 'Negative' outlook. Specifically, the long-term bank facilities totaling ₹135.88 crore have been reaffirmed at CARE BB+; Negative. The long-term/short-term bank facilities amounting to ₹68.50 crore are also reaffirmed at CARE BB+; Negative / CARE A4+. Short-term bank facilities of ₹0.67 crore remain at CARE A4+. The Non-Convertible Debentures facility has been withdrawn as the company has not availed it. The 'Negative' outlook reflects the likelihood of sustained operating losses in the coming quarters, potentially impacting the company's liquidity. The ratings are constrained by weak debt coverage indicators and vulnerability to raw material price volatility. However, these are partially offset by strong financial support from its promoter, Hella, and promoter group companies, which has led to significant equity infusions. SPL's long track record, experienced management, established brand, and dealer network also support the ratings. The company's financial performance in FY26 showed a topline of ₹569.03 crore, with an operating loss of ₹20.81 crore and a net loss of ₹63.34 crore. To address these challenges, SPL is implementing cost optimization measures, including manpower rationalization and reduced administrative costs, alongside capex for automation to improve efficiency. The company expects to contain losses in the near term and achieve profitability over the medium term.
