Asian Paints Limited has announced an expansion in its planned manufacturing facility for Vinyl Acetate Ethylene Emulsion (VAE), Vinyl Acetate Monomer (VAM), and Ethylene storage & handling in Dahej, Gujarat. The project is being undertaken by Asian Paints (Polymers) Private Limited (APPPL), a wholly-owned subsidiary of the company.
Increased Investment in the Facility
Initially, the estimated capital expenditure for the facility was set at ₹2,560 crores. However, due to pre-operative expenses and escalations in project costs, the Board of Directors of Asian Paints has approved an additional investment of ₹690 crores. This brings the total project cost to ₹3,250 crores. The project will be funded through a mix of equity contributions from Asian Paints and external debt financing.
Significance of the Project
The establishment of this manufacturing facility is a strategic move by Asian Paints to strengthen its supply chain and reduce dependency on imports for critical raw materials like VAM and VAE. These compounds are widely used in the paint, adhesive, textile, and packaging industries, making this facility an important addition to the company’s infrastructure.
Future Developments
Asian Paints has committed to providing timely updates regarding the progress of the facility. The company aims to enhance its production capabilities and ensure a stable supply of key raw materials for its operations.
This expansion aligns with Asian Paints' long-term vision of enhancing its manufacturing capabilities and supporting India's "Make in India" initiative by localizing production.
In the Short Term Asian stock has faced challenges over the past year, declining approximately 18.29% in the last 12 months.
Factors Behind the Stock's Decline
The primary reason for this underperformance is the rising competition in the Indian paint industry. New entrants like Birla Opus and JSW Paints have adopted aggressive pricing strategies and higher dealer incentives. As a result, Asian Paints' market share has dropped from 60% to 55%.
Additionally, concerns about financial performance have affected investor sentiment. In the Deceber 2024 quarter, the company reported:
Asian Paints Limited reported its Q3 FY25 (October-December 2024) results, showing a decline in both revenue and net profit due to muted demand and rising competition.
Consolidated Financial Performance:
Net Sales: ₹8,521.5 crores (down 6.1% YoY)
Net Profit: ₹1,110.5 crores (down 23.3% YoY)
Standalone Financial Performance:
Net Sales: ₹7,289.2 crores (down 7.5% YoY)
Net Profit: ₹1,108.6 crores (down 23.2% YoY)
Disclaimer:The information provided in this article is for informational purposes only and is based on official disclosures and publicly available financial reports of Asian Paints Limited. While we strive for accuracy, we do not guarantee the completeness or reliability of the details mentioned.
