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Astral Poly Technik Limited to venture into plastic water storage tank business

Posted On: 2020-11-25 06:35:06 (Time Zone: Arizona, USA)

Astral Poly Technik Limited, pioneer in manufacturing of CPVC pipes & fittings announced its entry into the Plastic Storage Tank Business. The highlights of this business are as under:

- The Plastic Storage Water Tank business has an Opportunity of Rs. 5000 Cr. Plus in India and growing @ 8-10% in FY-18 which was earlier growing at 10-12% CAGR prior five years and 70% of which is controlled by Unorganized Players. (As per CRISIL report the size of Industry will be 8700 Cr by Fiscal 2022 growing at 13%-15% CAGR 2017-2022).

The Objective of Astral to enter into this Business:

1) The Size of Industry is Huge and growing at a fast run rate;

2) 70% of it is controlled by Unorganized Players which give huge space to Brand Like ASTRAL to grow fast in this category (Post GST/Demon Shift from Unorganized to Organize is getting Momentum and now COVID-19 is fueling it);

3) Many of ASTRAL dealers and distributors are already into business of water Tank;

4) ASTRAL is a very strong Brand across the country in Pipes & Adhesive Business and having sizeable Dealers and Distributors Network across the county, it will be a logical extension of brand ASTRAL among Its PAN INDIA network.

5) Astral has Multi location Plants across all the four zones of Country which has a strategic advantage of Logistic cost. As logistic is a very critical part for success of Water Tank business.

- As a part of the strategy to enter into the plastic water storage tank business, the Company intends to acquire certain assets from Shree Prabhu Petrochemicals Private Limited ("Shree Prabhu"), which is an established player in this market segment.

- The Company has entered into a framework agreement to identify the assets that intends to acquire from Shree Prabhu, its affiliates and certain other entities, where the aggregate considerations of all the assets together shall not exceed Rs 51,00,00,000. However, this may undergo change subject to further valuation exercise and other price adjustments as agreed between the parties. The Company, at present, intends to acquire certain land parcels along with building, plant and machinery, stock and inventory, and certain intangible assets such as the trademark 'Sarita', certain customer and dealer relationships along with the associated goodwill.

Acquiring of Assets of Shree Prabhu Petrochemicals Private Limited, its affiliated & others has following strategically advantages to ASTRAL:

(1) Shree Prabhu along with its affiliates and certain other entities together have sizeable Land with Appx Area of 3,62,000 Sqr. Ft.

(2) Land acquires from Shree Prabhu, its affiliates and other entities already has a Ready Building with Constructed Area of Appx. 92,200 Sqr Ft.

(3) Shree Prabhu has already presence in Tank Business for Many Years hence ASTRAL can take advantage of its expertise, existing ready facilities & its Brand "SARITA". and its existing appx. 550 dealers network.

(4) Due to ready capacity of Appx. 500 Mn. Liters Tanks - Roto and Blow Molding ASTRAL can enter into this business immediately without any delay. Sizes from 500 Liters tanks to 5,000 Liters tanks in Blow Molding Sizes from 200 Liters tanks to 10,000 Liters tanks in Roto Molding Sizes from 200 Liters tank to 1200 Liters in Loft Tank.

(5) Not only this location (Aurangabad- Maharastra) ideal for Tank Business but very well suitable for ASTRAL's existing business of CPVC/PVC piping solutions also. Shree Prabhu has already ready capacity of 4,500 MT of pipe (HDPE/ Drip Irrigation - Category in which Astral doesn't have presence) and further space is available for expansion of piping capacity in near future with minimum capex as all the utilities are readily available with the company.

(6) Shree Prabhu is the only company in India which has capacity up to 5,000 Ltr. water Tank in Blow Molding.

Commenting On the entering of the new business of Water Tank Mr. Sandeep Engineer, Chairman & Managing Director said, "This business is perfectly fitted to the synergy of ASTRAL to leverage Brand ASTRAL and its huge network of dealers and Distributors. It's going to be huge beneficial to all our stake holders such as Dealers / Distributors and Investors at large. Astral being a quality player in India We are confident that we will take this new category to a new height in near future with our Brand Strength and a Quality player for which ASTRAL is known in market".

Shares of ASTRAL POLY TECHNIK LTD. was last trading in BSE at Rs.1451 as compared to the previous close of Rs. 1407.6. The total number of shares traded during the day was 13811 in over 1905 trades.

The stock hit an intraday high of Rs. 1460 and intraday low of 1408.65. The net turnover during the day was Rs. 19884341.

Source: Equity Bulls

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