LyondellBasell to buy polypropylene compounding business of India’s Zylog

LyondellBasell has entered into a definitive agreement to acquire the polypropylene (PP) compounding assets of Zylog Plastalloys (Zylog) of India, the global chemicals company announced on Monday.

Upon completion of the acquisition, LyondellBasell will double its automotive customer base in India and become the third largest producer of PP compounds in the country with an annual capacity of 44,000 tons (97 million lb). 

Earlier this year, LyondellBasell also acquired SJS Plastiblends (SJS), a manufacturer of PP compounds located in Aurangabad, Maharashtra, India. The Zylog acquisition includes manufacturing sites in Sinnar, Maharashtra, and in Chennai, Tamil Nadu.  

"We are very optimistic about India's economic growth and rapidly expanding automotive market," said Bhavesh (Bob) Patel, CEO and chairman of the management board of LyondellBasell. "The acquisition of SJS and Zylog are part of our plan to strategically expand our footprint where it makes sense from an economic and strategic perspective. With these investments, LyondellBasell will be a leading producer of PP compounds in all major automotive growth regions of the world."

LyondellBasell is the world's largest producer of PP compounds, with an annual capacity of 1.2 million tons (2.6 billion lb). These compounds are used to manufacture automotive parts, home appliances and other products. LyondellBasell has supplied the Indian market through imports and tolling arrangements since 2009.

India represents the fourth largest growth market for automobiles globally, with 3 million new vehicles produced each year. According to IHS, India's automotive market is expected to continue growing by 6% to 8% annually through 2021. Additionally, the World Bank has predicted India's GDP to grow at a rate of 8% by 2017.

The transaction is expected to close in early 2016. Until the transaction is complete, Zylog says it will conduct business as usual and continue to provide the same level of support, service and high quality products to its customers.

Specific investment terms were not disclosed.