Asian Paints plans to set up a manufacturing facility for Vinyl Acetate Ethylene Emulsion and Vinyl Acetate Monomer with an investment of ₹2,100 crore over three years.
The company has also entered into an agreement with Riddhi Siddhi Crusher & Land Transport, Fujair, UAE and Associated Soap Stone Distributing Company and others to set up a joint venture in Fujairah, United Arab Emirates with an investment of about ₹550 crore over the next 2 years.
Asian Paints’ move comes on the back of Aditya Birla Group, UltraTech Cement, and JK Cement making a foray into the paint business with massive investment plans.
The investment is subject to entering into definitive agreements. The installed capacity would be 1 lakh tonnes per annum for Vinyl Acetate Monomer and 1.50 lakh tonnes per annum for Vinyl Acetate Ethylene. Vinyl Acetate Monomer is a key input for manufacturing Vinyl Acetate Ethylene, which is considered to be the emulsion of the future and the key constituent for manufacturing environment friendly paints.
The move would be a key backward integration project for the company. The setting up of a facility for the manufacture of Vinyl Acetate Monomer would be based on a licensed technology tie-up with Kellogg Brown & Root LLC, US, which has a presence in over 80 countries.
Amit Syngle, Managing Director, Asian Paints, said the product developed is an environmentally friendly emulsion based on Vinyl Acetate Monomer technology, which gives a robust competitive edge to Asian Paints in the coatings business.
He added that it would be the first paint company to get into backward integration and would be a true game changer in the Indian market.
Joint venture
The proposed joint venture will be set up with a 60:40 partnership to manufacture and export white cement and white cement clinker. The initial capacity of the manufacturing facility, to be set up in Fujairah, UAE, would be 2.65 lakh tonnes per annum. In addition, clinker grinding units would be set up in India.
The project would be funded through a combination of equity funding by the company and external debt financing.
The company reported that its consolidated net profit was up 33 per cent in the September quarter at ₹804 crore (₹605 crore) while sales revenue increased 20 per cent to ₹8,431 crore (₹7,037 crore). The board has approved an interim dividend of ₹4.40 per share.