Shares of Astral (formerly Astral Pipes) rose 2 per cent to hit a new high of Rs 1,990 on the BSE in intra-day trade on Thursday, taking its gains to 5 per cent in the past four days, after its board on Monday approved the scheme of amalgamation of Resinova Chemie and Astral Biochem Private (ABPL) with the company. Astral holds a 97.45 per cent equity stake in Resinova and a 100 per cent equity stake in ABPL.
In the past one month, the stock of Astral has rallied 27 per cent, as compared to a 5 per cent rise in the S&P BSE Sensex.
Astral said the proposed merger, subject to necessary statutory and regulatory approvals, is a part of the company’s long-term strategy to leverage the brand ASTRAL, create synergy between both the business and optimise the resources.
Post-amalgamation, promotor group holding of Astral shall increase from 55.74 per cent to 55.85 per cent and public holding shall decrease from 44.26 per cent to 44.15 per cent. The merger process is expected to be completed by March 2022 (Q4FY2021-22).
The company said the biggest advantage with this merger will be the opening of cross-selling opportunity of various products of both the companies within their existing dealers and distributor network. The company will be able to generate branding synergy between both the business as now one brand “ASTRAL” will be marketed. Hence, the company will be able to optimally utilise its branding budget, it said.
"There will be a huge advantage of logistic cost due to consolidation of various warehouses across the country for both the businesses. Due to the consolidation of the two companies the financial structure and cash flow management will be improved to a great extent. The company can get rid of inter-company transactions and domestic transfer pricing challenges. This will further improve investors’ confidence," the company added.
Astral is engaged in manufacturing and supply of CPVC, PVC and corrugated pipes and fittings, which are widely used for piping requirements in different segments like plumbing, drainage, industrial, agriculture, infrastructure etc. and plastic water tanks.
Resinova Chemie is engaged in manufacturing and supplying of a highly diversified range of adhesives, sealants, putties, sanitisers, surface cleaners, disinfectants and construction chemicals used in various applications.