Astral acquires 51% stake in Gem Paints by subscribing to OCDs of Rs 194 crore
22nd Jun 2022

Astral has acquired 51% stake in Gem Paints, by subscribing to Optionally Convertible Debentures (OCDs) of Rs 194 crore issued and allotted by Gem Paints. Further, the Company has appointed majority directors on the Board of Gem Paints and Esha Paints and control is established in terms of the aforesaid Debenture Subscription Agreement. Accordingly, Gem Paints and Esha Paints have become subsidiary and step down subsidiary of the Company respectively in terms the applicable provisions of the Companies Act 2013.

Earlier, Astral’s board had approved to acquire 51% controlling equity stake in Operating Paint Business of Gem Paints. Accordingly, Astral had entered into definitive agreements with Gem Paints and its shareholders. 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. The name of Esha Paints is proposed to be changed to Gem Paints under the demerger scheme. 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.

Astral is among the country’s leading manufacturers of plastic pipes used across the industries and is now making strong inroads into the adhesives segment and infrastructure products.