Reliance, SIBUR plan India butyl rubber venture
By GURDEV SINGH VIRK and ANIRBAN CHOWDHURY
Reliance Industries said Tuesday it has agreed to form a joint venture with Russian petrochemical company SIBUR to make 100,000 tpy of butyl rubber at Jamnagar in the western Indian state of Gujarat.
Reliance will own a 74.9% stake in the joint venture to be named Reliance Sibur Elastomers, with SIBUR holding the rest, the company said in a statement.
The joint venture will invest $450 million to build the facility, which is expected to be commissioned by the middle of 2014.
The Mumbai-based company - controlled by billionaire Mukesh Ambani - has been recently forming joint ventures and tie-ups with global peers to gain technological know-how and expand its businesses.
The company last year concluded a deal to sell a 30% stake in 21 oil-and-gas exploration blocks to UK explorer BP and has in the last few years signed pacts with US companies for shale gas exploration.
The joint venture, which will be India's first butyl rubber manufacturing plant, will cater to the demand for synthetic rubber from the local automotive industry that currently relies on imports.
"India is a very large automobile market," Reliance executive director Nikhil Meswani said at a news conference. "There are some 23 million automobile vehicles in use, whether they are two-wheelers, three-wheelers or four-wheelers and these numbers are set to increase as India becomes an automobile hub in the world."
India's vehicle sales rose 13% over first nine months of the current financial year that ends March 31, to 12.75 million units, helped by demand for two wheelers and commercial vehicles as the world's second fastest-growing major economy expands infrastructure.
"The joint venture company is expected to post a revenue of INR23 billion to INR25 billion ($463 million-$503 million) in the first year itself and we are putting up this at the Jamnagar plant because of the ready availability of feedstock," Meswani said.
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