Why is DCM Shriram planning to invest Rs.1000 crore in its chemicals business?
Answer
Answer
On the same day that Delhi based DCM Shriram announced stellar results with profits growth of a whopping 44% on a yoy basis, it also made another interesting announcement. The announcement pertained to the major expansion that it was undertaking in its chemicals business in which DCM Shriram plans to invest Rs.1000 crore
The entire expansion program will be funded from the internal cash flows of the company and there will not be any debt assumed nor will there be any equity dilution. The company is a cash rich company and hence it does not need to raise funds from outside and to that extent its solvency and leverage ratios will not be negatively impacted.
The investment of Rs.1000 crore pertains to its chemicals manufacturing facility in Bharuch in the state of Gujarat. With the fresh investment, the plant will now produce 150 tons of hydrogen peroxide per day, 150 tons of ECH on a daily basis and additionally, it will also enhance aluminium chloride production from 60 tons per day to 150 tons per day.