- 21 Oct 2022
- ICICIdirect Research
Asian Paints announces investment of Rs 2650 crore for backward integration plans
ASIANPAINT - 3127 Change: 10.95 (0.35 %)News:
On October 20, Asian Paints announced its major capex plan of Rs 2650 crore over three to four years. The company is focusing on backward integration.
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Asian Paints will be investing Rs 2100 crore to manufacture Vinyl Acetate Ethylene Emulsion (VAE) and Vinyl Acetate Monomer (VAM) in India. The capacity for the same will be 1.5 lakh tonnes p.a. for VAE and 1 lakh tonnes p.a. for VAM. VAE is the key emulsion used for making paints and VAM is the key raw m for VAE. This step will help the company significantly in optimizing its raw material cost. The company has also formed a 60:40 JV with Riddhi Siddhi Group to set up a white cement plant. The investment for the same will be Rs500 crore. White Cement is the key raw material for putty and used as undercoat for painting. Asian Paints has also acquired 51% stake for Rs12.75 crore in Harind Chemicals, a nanotechnology company. The remaining 39% will be acquired over the next 5 years. We believe that Asian Paints is likely to benefit from these investments and grow its core business. In-house manufacturing of raw material will help the company to expand its margins.
Impact:
Positive.