Astral Limited to acquire 80% stake in Nexelon Chem for up to Rs. 120 crore, aiming for raw material self-sufficiency. This strategic move is announced against the backdrop of the company's recent first-quarter results, which saw a notable decline in profit and revenue.
Astral Limited, a leading manufacturer of PVC pipes and plastic products, announced a significant strategic move on Monday with the board's approval to acquire an 80% equity stake in Nexelon Chem Private Limited. The transaction, which includes a total investment of up to Rs. 120 crore over time, is a key step for Astral to secure its raw material supply chain and improve operational margins.
The primary driver behind the acquisition is the manufacturing of CPVC resin, a crucial raw material for Astral's products. By bringing the production of this resin in-house, the company aims to achieve substantial cost optimization and margin improvement. This move is particularly noteworthy as it signals a long-term strategy to build resilience and reduce dependency on external suppliers, a factor that can often lead to price volatility and supply chain vulnerabilities. The capital structure for the investment is expected to be finalized within the next 60 days, with the deal projected to be completed within two to three months. The purchase of shares will be executed in cash at a par value of Rs. 80,000.
Nexelon Chem, the target of the acquisition, was established on July 31, 2023, and operates in the business of manufacturing chemicals and chemical products. While the company is in the process of setting up its manufacturing unit, it has yet to commence revenue-generating operations. Upon the completion of the transaction, Astral Limited will hold an 80% equity stake in Nexelon Chem on a fully diluted basis, positioning it to take control of the new venture's strategic direction and operations.
The announcement of this forward-looking acquisition is contrasted by Astral's recent financial performance. For the first quarter that ended June 30, 2025, the company reported a considerable year-on-year (YoY) decline in its financial results. Net profit fell by 32.7% to Rs. 81 crore, a sharp drop from Rs. 120 crore in the corresponding quarter of the previous fiscal year.
Similarly, the company's revenue from operations experienced a slight dip of 1.6%, coming in at Rs. 1,361.2 crore compared to Rs. 1,383.6 crore in the same period last year.
The decision to invest in Nexelon Chem can be seen as a strategic response to these operational challenges. By controlling the production of a key raw material like CPVC resin, Astral is proactively working to counter rising costs and protect its margins, which have recently been under pressure.
