Astral acquires 51% stake of Gems Paints operating biz. for Rs 194 cr

2 May 2022 , 12:30 PM

As a part of the companys strategy to expand its product line under building material segment, Astral shall initially invest Rs 194 crore in Gem Paints by subscribing to optionally convertible debentures equivalent to value of 51% equity stake of operating paint business of Gem Paints.

The operating paint business of Gem Paints is proposed to be demerged to a wholly owned subsidiary of Gem Paints viz. Esha Paints. Upon the completion of demerger, Astral will acquire 51% equity shares of Esha Paints against the redemption of OCDs (Optionally Convertible Debentures). The name of Esha Paints is proposed to be changed to Gem Paints under the demerger scheme.

The cash consideration for acquiring 51% equity stake of operating paint business of Gem Paints is Rs 194 crore. The acquisition of 51% equity stake in the operating paint business of Gem Paints is expected upon completion of demerger i.e by 31 March 2023 (tentative).

The balance 49% equity stake will be acquired by Astral over a period of 5 years in tranches as per the Share Purchase Agreement entered between the parties, the company stated.

Gem Paints is into the business of manufacture and supply of various types of paints, varnishes, coatings, products related to home d?cor, industrial paints and as dealers in all types of chemicals, essences, enamels, polishes, distempers, colours etc. The turnover of operating paint business of Gem Paints stood at Rs 215 crore (provisional) during FY22, Rs 201 crore in FY21 and Rs 183 crore in FY20.

Astral is engaged in the business of manufacturing and trading of pipes, fittings and adhesive solutions. The comapany reported a 3.2% increase in consolidated net profit to Rs 127.9 crore on a 22.4% rise in net sales to Rs 1,098.9 crore in Q3 FY22 over Q3 FY21.

Shares of Astral lost 4.89% to Rs 2,047.70 on BSE.

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