JK Paints and Coatings, a wholly-owned subsidiary of JK Cement, has entered into a share purchase agreement with Acro Paints and its shareholders to acquire 60% controlling stake in the company, it said in a BSE filing.
The company plans to initially (at first tranche) invest an amount of Rs 153 crore for the acquisition. Remaining 40% shall be acquired over a period of 12 months as per the definitive agreement entered between the parties.
Charanjeet Gaind and Ashok Gaind, current promoters of Acro Paints, will continue to remain in the company for the next one year. They will also continue to remain on the board of the company.
Raghavpat Singhania, managing director, JK Cement said, “We are committed to ensuring a smooth and successful integration of our businesses and are excited to bring our combined expertise and experience to the table.”
Acro Paints is a manufacturer of architectural and high-performance paints and coatings in Northern India. JK Cement, on the other hand, is a manufacturer of wall putty and this segment has a significant overlap with the paint industry.
Acquiring a financially strong company like Acro with zero debt and healthy margins is a strategic move to leverage the strengths of company’s putty distribution network, thereby utilizing the synergies created thereof. It is also a step towards fast-tracking company’s entry into the paints business, expanding its product offerings and potentially foray into new markets, it said in the regulatory filing.
Madhavkrishna Singhania, deputy MD and CEO of the company said, “We have a focused launch plan to gradually deepen our presence in our strong markets over the next few years, and have identified specific geographic, product, and channel niches where we will dominate. We will leverage the strengths of both our brands as we expand our presence in the paint industry.”
The acquisition will also provide an opportunity to foray into the growing vertical of construction chemicals & waterproofing products which has a current market size of over Rs 5,000 crore, growing at over 10% per annum, the company said.
Acro Paints has two manufacturing facilities in Bhiwadi with a post-expansion capacity of 60,000 KL in decorative &
textured paints & 6,700 KL in construction chemicals. The ongoing capacity expansion is expected to be completed by Q2 FY24.