Industry

Chemplast to spend ₹620 crore on expansion

Vijay Sankar.  

City-based Chemplast Sanmar Ltd. will spend ₹620 crore on expansion and development over a period of two to three years, according to a top official.

“All our manufacturing units are in Tamil Nadu as it offers best investment climate. We have a strong position in the South with respect to manufacturing and markets,” Vijay Sankar, chairman, told The Hindu.

He also said that they would prefer to stick to Tamil Nadu as they had been here for over five decades. “We don’t believe in going outside Tamil Nadu for now as it is conducive for putting new plants,” Mr. Sankar said.

On expansion, he said: “We are restarting our growth journey. Last year, we made a combined operating profit of ₹900 crore. The cash accrual at company level is substantial in the balance sheet. Capex will be met through internal accruals.”

“There are two major projects. The first is a brownfield project to increase the annual production capacity of speciality paste PVC resin by 50% to 1.01 lakh tonnes at an investment of ₹256 crore. It will be commissioned by FY23/24,” said Ramkumar Shankar, MD.

“We are also investing ₹340 crore in custom manufacturing business, which will be done in phases over the next three to four years. And, we should start seeing the benefits on a phased basis from this year itself. We are also investing ₹20 crore in debottlenecking the PVC resin plant, which would increase the capacity by 10% by end of this fiscal,” Mr. Shankar said.

Chemplast Sanmar, meanwhile, will be re-entering the capital market on August 10 to raise ₹3,850 crore to part pare its debt and boost corporate growth. It has fixed a price band at ₹530-541 a share. The issue closes on August 12.

The primary offer consists of a fresh issue of ₹1,300 crore and an offer for sale (OFS) of ₹2,550 crore shares by the promoters. Promoters Sanmar Holdings (SHL) and Sanmar Engineering Services (SESL) will offload equity shares worth ₹2,463.44 crore and ₹86.56 crore respectively via the OFS.

Chemplast Sanmar is a specialty chemicals manufacturer in India with a focus on specialty paste PVC resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.

It is also the third-largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide in South India on the basis of installed production capacity as of December 2020, and one of the oldest manufacturers in the chloromethanes market in India.


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Printable version | Sep 28, 2021 9:38:16 AM | https://www.thehindu.com/business/Industry/chemplast-to-spend-620-crore-on-expansion/article35754235.ece

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