Primo Chemicals plans to acquire the remaining 51% of Flow Tech Chemicals, aiming for full ownership by March 2027. This move is set to enhance its chlor-alkali operations and vertical integration.
Primo Chemicals to Acquire Full Control of Flow Tech Chemicals
Primo Chemicals Ltd announced plans to acquire the remaining 51% stake in Flow Tech Chemicals, a move that will make Flow Tech a wholly-owned subsidiary by March 31, 2027. The acquisition will be a cash transaction.
Reader Takeaway: Deeper integration achieved; shareholder approval needed for acquisition below fair value.
What just happened
Primo Chemicals is set to acquire the remaining 51% stake in its subsidiary, Flow Tech Chemicals, for a cash consideration of ₹1,418.20 per share. This transaction, pending member approval via postal ballot, aims to bring Flow Tech under 100% ownership by March 31, 2027.
Why this matters
This acquisition is a strategic step towards deeper vertical integration for Primo Chemicals. Flow Tech has been instrumental in consuming Primo's chlorine byproduct, thereby supporting higher production levels and improved asset utilization in Primo's chlor-alkali operations. Full ownership is expected to strengthen strategic control and unlock further synergies.
The backstory
Primo Chemicals initially acquired a 49% stake in Flow Tech. Since then, Flow Tech has significantly increased its consumption of chlorine, a byproduct of Primo's chlor-alkali business. This has led to better evacuation of chlorine and enhanced capacity utilization for Primo Chemicals.
What changes now
Upon completion, Primo Chemicals will have complete control over Flow Tech's operations. This formalizes the integration, allowing for more streamlined management and operational efficiencies. The move is expected to solidify the strategic relationship and generate long-term benefits.
Risks to watch
An independent valuation by BDO Valuation Advisory LLP dated July 01, 2026, placed the fair value of Flow Tech shares at ₹1,545.40 per share. However, the agreed acquisition price is ₹1,418.20 per share. The company stated that existing shareholders have agreed to this lower price based on previous commercial understandings. Shareholders will be watching the postal ballot outcome closely.
Peer comparison
While specific peer acquisition data is not provided in the filing, the trend in the chemicals sector often involves consolidation and vertical integration to manage byproducts and secure market share. Companies with integrated operations often show better cost efficiencies.
Context metrics (time-bound)
Flow Tech Chemicals reported:
- Turnover of ₹341.66 crore in FY 2025-26 and ₹227.96 crore in FY 2023-24.
- Profit After Tax (PAT) of ₹9.80 crore in FY 2025-26 and ₹1.02 crore in FY 2023-24.
What to track next
Investors should monitor the outcome of the postal ballot for member approval. The finalization of the acquisition and the realization of projected synergies will be key factors to track.
Additionally, the company announced board changes, including the appointment of Shri Dibakar Sarkar and Shri Sobhag Mal Jain as Non-Executive Independent Directors, and the approval of remuneration for the Managing Director and Executive Director.