Asian Paints surges 1.61% on subsidiary's ₹2,100-cr ethylene facility deal with GCPL

Shares of Asian Paints rallied more than 2% on Thursday after the company announced its subsidiary entering into an agreement with Gujarat Chemical Port Limited (GCPL) to set up a ₹2,100-crore ethylene storage and handling facility in Dahej, Gujarat.

The stock of Asian Paints opened slightly weaker but gained as much as 2.35% to a high of ₹2,894 apiece on NSE. Shares of Asian Paints were trading 2.34% higher at ₹2,893.45 apiece on NSE at 1:06 pm.

"Asian Paints (Polymers) Private Limited (APPPL), a wholly-owned subsidiary of Asian Paints, would be setting up a facility for manufacturing Vinyl Acetate Ethylene Emulsion (VAE) and Vinyl Acetate Monomer (VAM) at Dahej, Gujarat. The approximate cost of setting up the manufacturing facility would be ₹2,100 crore," Asian Paints said in an exchange filing on Wednesday.

Commenting further on this agreement, the filing said that Asian Paints has entered into a requisite agreement with GCPL to set up this ethylene storage and handling facility in Dahej. Ethylene is a key raw material for the manufacture of VAM/VAE.

Under this agreement with GCPL, Asian Paints (Polymers) Private Limited will provide a security deposit of ₹460 crore to the former. The security deposit will be refunded over 17-18 years. This amount is in addition to the cost of setting up the VAM and VAE manufacturing facility as envisaged before.

GCPL, a joint venture promoted by the Gujarat Government, has been operational since 2000. It stands as a strategic commercial port in Dahej, boasting an annual turnover of around ₹650 crore. GCPL owns and operates a network of shore-based tank farm installations designed for the receipt, storage and handling of bulk chemicals.

For Q3FY24, Asian Paints reported a consolidated net profit of ₹1,475.16 crore, up 34.4% from ₹1,097.06 crore in the previous fiscal year. Revenue for the same period rose 5.4% YoY to ₹9,104 crore from ₹8,636.7 crore in Q3FY23.