Asian Paints to invest Rs 960 crore in its Gujarat Unit Expansion

Asian Paints to invest Rs 960 crore in its Gujarat Unit Expansion

Asian Paints Ltd said it is investing Rs 960 crore to expand the production capacity of its facility located in Ankleshwar, Gujarat. The expansion is to be completed in 2-3 years with a total investment of approximately Rs 960 crore in machinery and equipment at current prices.

In a recent press release, Asian Paints notified about their new investment in their manufacturing facility situated at Ankleshwar in Gujarat. Considering the future price hikes, the investment is estimated at around 960 crores at the current market valuation. This approach is subjugated towards improving their capacity and aid in their expansion and demand-supply.

Asia Paint CEO and Managing Director Amit Single stated in the press, “We are pleased to inform that we have signed an MOU (Memorandum of Understanding) with the Government of Gujarat to initiate a proposal to expand the resin and emulsion from 130,000 to 250,000 cl and from 32,000 to 85,000 metric tons.

The enterprise’s MOU with the Government of Gujarat states on commencing the proposed expansion. This expansion will increase the plant’s manufacturing capacity and increase the paint production from 1.3 lakh Kiloliters to 2.5 lakh Kiloliters and resins and emulsions from 32,000 MT to 85,000 MT, Asian Paints said in a regulatory filing.

The expansion is expected to be completed in the next 2-3 years with a total investment of Rs 960 crore approximately on plant and machinery at the current prevailing prices. As a result of the news, the company’s shares were trading higher by 0.19 percent at Rs 3,150 on BSE. The stock’s current price sits as Rs 3151 by the time of writing.

The expansion will be carried in their own land; they stated in the document released. No new land will be purchased for this expansion project.

“At current prices, it will be completed over the next 2-3 years with a total investment of Rs 960 crore (approx.) in the plant and equipment.” As per the officials of Asian Paints.

 Asian Paints reported that its consolidated net profit for the second quarter was Rs 595.96 crores, which is down by 28% compared to the same period last year due to high raw material costs. The cost of raw materials increased 72.70% year-on-year basis to Rs 4,570.53 crores. At the same time, the company’s profit before Depreciation, Interest, Tax, and Other Income (PBDIT) dropped to 12.73% in the second quarter of fiscal 2022, from 23.64% in the same period of the previous year Q2 of fiscal year ‘21.

 Since the beginning of the year, the sharp inflation seen in commodity prices has been phenomenal and has affected the gross margins of all businesses in the quarter.

The company has made several price alterations and is considering further price increases to mitigate the effects of this consistently high inflation. The MD stated, “we are confident that we can reverse the financial situation dramatically in the next quarter.”

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