On 22nd January 2025, Clean Science and Technology Ltd (CSTL) made a significant investment by subscribing to additional shares of its wholly owned subsidiary, Clean Fino-Chem Ltd (CFCL), through a rights issue. This move represents a cash investment of ₹64.89 crore, marking a strategic step towards expanding CFCL’s operations in the specialty chemicals sector.

As per the rights issue, CSTL acquired 10,85,117 equity shares, each with a face value of ₹10 at a premium of ₹588 per share. This subscription ensures CSTL's continued control over CFCL, further consolidating its position in the market. The newly acquired shares will rank pari passu (equally) with the existing equity shares in CFCL. This investment aligns with CSTL's long-term goals of strengthening its portfolio in the specialty chemicals industry.

The Strategic Objective Behind the Investment

The primary purpose of this capital infusion is to fund CFCL's ongoing and upcoming projects. With the chemical industry evolving, particularly in India, CFCL aims to expand its production and market reach. The additional funds will help the subsidiary scale its operations and enhance its product offerings, thereby increasing its market share in this competitive sector.

This step is part of CSTL's broader strategy to diversify its portfolio and reinforce its dominance in the specialty chemicals industry. By ensuring continued growth through investments in subsidiaries like CFCL, CSTL is positioning itself as a key player in this niche market.

Related Party Transaction at Arm's Length

It is important to note that this acquisition falls under the category of related party transactions as CFCL is a wholly owned subsidiary of CSTL. Despite being a related party transaction, the investment has been made at arm’s length, ensuring that the terms and conditions are fair and equitable. This aligns with SEBI's regulations on transparency and fairness in such transactions.

Impact on CFCL and the Industry

The additional equity subscription will not only provide CFCL with the much-needed capital to expand its operations but will also help CSTL strengthen its foothold in the specialty chemicals sector. The growth of CFCL is expected to contribute significantly to the overall performance of CSTL, enabling the parent company to leverage this growth for better market positioning.

As CFCL continues to grow, it will be better equipped to meet the increasing demand for high-quality specialty chemicals. This investment will also help CFCL cater to new industries, opening up avenues for further revenue generation.

Regulatory Approvals and Completion Timeline

As per the communication, no additional regulatory approvals are required for this investment as it is a rights issue within an existing subsidiary structure. Furthermore, there is no specific timeline for the completion of the acquisition as it is already executed through the rights issue process. This swift and strategic move indicates CSTL's confidence in CFCL's potential to grow and succeed.

Conclusion: Clean Science's Commitment to Growth

This investment reaffirms Clean Science and Technology Ltd’s commitment to its subsidiary, Clean Fino-Chem Ltd, and highlights its ongoing efforts to strengthen its position in the specialty chemicals industry. By subscribing to the rights issue, CSTL has ensured that CFCL will have the necessary capital to expand its operations and capitalize on the opportunities in the market.

The continued support from CSTL also sends a strong signal to stakeholders about the financial health and future prospects of CFCL. This investment will likely have a positive impact on both companies' growth trajectories, paving the way for more developments in the specialty chemicals industry.

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