Chemplast buys Egyptian co for $ 200 m
Company plans to buy majority stake in a German engineering firm, too
In a strategic move for assured and cost-effective raw material supplies to its Indian operations, Chemplast Sanmar is acquiring the entire chemicals business of Egyptian company Trust Chemical Industries for $200 million.
Sanmar Group has signed an agreement with Trust Chemical Industries, which owns a caustic soda plant with a capacity of 2,00,000 tonnes a year at Port Said, Egypt. The plant is in operation for a year now, said N Shankar, chairman, Sanmar Group. He added that after the acquisition, the Egyptian company will remain a separate entity.
“Over a period of time, the Egyptian company will become a raw material sourcing point for our PVC and other chemical operations,” he said, adding, “We are looking at various options, including going in for an international issue or investing through private equity, or raising loans. We expect to complete the transaction in the next three to four months.”
After the acquisition, Sanmar Group will evaluate the possibility of manufacturing ethylene dichloride (EDC) and vinyl chloro monomer (VCM), using the chlorine available with the Egyptian plant. Both these chemicals are feedstock for manufacturing PVC. But this would call for significant investment, Shankaran added.
At present, Sanmar Group manufactures 60,000 tonnes per annum (tpa) of PVC and is setting up a Rs 500-crore, 1,70,000-tpa greenfield PVC project at Cuddalore in Tamil Nadu.
Sanmar Group has also entered into a memorandum of understanding to acquire majority stake in a German engineering firm, which makes SG iron castings and designs and machining of auto components.
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