- 28 Mar 2025
- ICICIdirect Research
ASIAN PAINTS ANNOUNCED ADDITIONAL CAPEX OF RS.690 CRORES
ASIANPAINT - 2426 Change: -25.40 (-1.04 %)News: Asian Paints announced additional capex of Rs.690 crores for pre-operative expenses and cost escalations to their ongoing capex of Rs2560 cr for setting up VAM (Vinyl Acetate Monomer) and VAE (Vinyl Acetate Ethylene Emulsion) facility in Dahej, Gujarat. The company approved the capex and entered into definitive agreements including technology licence for manufacturing VAE and VAM in 2022 with a capacity of 1lakh tonne of VAE and 1.5Lakh tonne of VAM. VAE is used for manufacturing environment friendly paints and improve paint quality while VAM is a key ingredient for manufacturing VAE hence, the company is expected to form backward integration which will help them navigate fluctuation in raw material cost by reducing dependence on imports. The plant was set up in October 2022 and is expected to start operations in late 2025.
View: With the project expected to commission/start operations in late 2025 or early 2026, the cost advantages and synergies are expected to flow once the plant is operationalised (largely in FY27 & FY28). The quantum of cost saving can be analysed once the plant starts operations at full capacity.
Impact: Neutral