Asian Paints, one of India's leading paint manufacturers, signed a Memorandum of Understanding (MoU) with the Gujarat government on Monday to establish a manufacturing facility in Dahej. The agreement was signed through Asian Paints, the company's newly formed wholly-owned subsidiary (Polymers).

In Dahej, Gujarat, an Asian Paints subsidiary will establish a manufacturing facility for Vinyl Acetate Ethylene Emulsion (VAE) and Vinyl Acetate Monomer (VAM).

Asian Paints stated in its regulatory filing that "the company will make necessary disclosures on any material developments in this regard from time to time."

Asian Paints established Asian Paints (Polymers) with a share capital of Rs 100 crore last month.

The company's board of directors approved the establishment of a VAE and VAM manufacturing facility in India last year. Asian Paints announced in October that it will invest Rs. 2,100 crore over a three-year period.

The stated manufacturing facility would have an installed capacity of 100,000 tonnes per year for VAM and 150,000 tonnes per year for VAE. VAM is an important input in the production of VAE.

Asian Paints revealed in its regulatory filing on October 20, 2022, that VAE is the future emulsion and the key constituent for manufacturing environmentally friendly paints. VAE improves paint properties and has the potential to significantly improve paint performance in customer-facing attributes.

Currently, Asian Paints already imports VAE & VAM for its internal consumption. This would be a key backward integration project for the company.

To manufacture VAM, the company has also entered into a technology and other allied agreements with KBR.

On BSE, Asian Paints' share price closed at ₹2,827.35 apiece down by ₹7.95 or 0.28% on Monday. The company's market cap is over ₹2.71 lakh crore.