Welspun arm plans Rs 807-cr manufacturing unit in Telangana, stock trades down

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The share price of Welspun Corp was down 1.5 percent in early trade on December 18 after the company's arm decided to invest up to Rs 807 crore to set up a manufacturing unit in Telangana.

At 9:26am, Welspun Corp was quoting Rs 524.00, down Rs 7.90, or 1.49 percent, on the BSE

Welspun's wholly owned subsidiary Sintex BAPL has finalised an investment of up to Rs 807 crore for setting up a manufacturing unit in Telangana through a step down subsidiary, Sintex Advance Plastics Limited (SAPL), which will be spread over the next three financial years starting FY25.

The project will be funded through a combination of debt and equity.

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The proposed investment is for manufacturing 59 KMTPA of plastic pipes, 5,300 MTPA of water storage tanks and 8,900 MTPA of sandwich-moulded tanks. The pipes and fittings would include CPVC, UPVC, HDPE, and OPVC pipes and shall cater to the exponentially growing water distribution segment, the company said in a statement.

"This is in sync with our stated plan at the time of acquisition of Sintex BAPL to leverage the brand and enter into different types of plastic pipes segment," it added.

The market for plastic pipes in India is likely to record a CAGR of 10-12 percent to reach Rs 60,000 crore in the next five years. "Foray into the plastic pipes segment thus provides a huge opportunity for Sintex to leverage its brand value, optimise its distribution channel and rationalise its logistics cost, thereby charting out a strong growth outlook and further strengthening our position into the B2C segment," the company said.

“Sintex is an iconic brand for its water storage tanks and plastic pipes will strengthen our presence in the building material vertical further and provide significant value creation for our stakeholders. As a group, we are already running our operations in the state. This project will create further employment in the state," said Welspun Group Chairman BK Goenka.

Sintex BAPL had entered into a contract with the Telangana government in September to set up a manufacturing unit in the state with up to Rs 350-crore investment.