Adani Group to foray into petrochemicals via joint venture with BASF

To jointly invest Rs 16000 crore for making products in acrylics value chain

Foraying for the first time into petrochemicals, Adani Group has announced a joint venture with German major BASF SE worth Rs 16000 crore (€2 billion) for manufacturing plants of acrylic value chain at the former's Mundra port in Gujarat. 

Signed as a memorandum of understanding (MoU) Vibrant Gujarat Global Summit 2019, the JV will see BASF hold the majority, apparently its largest investment in India to date. As per an official statement by Adani Group, a feasibility study will be completed by the end of 2019. 

The potential investment comprises the development, construction and operation of production plants including propane dehydrogenation (PDH), oxo C4 complex (butanols and 2-ethylhexanol), glacial acrylic acid (GAA), butyl acrylate (BA) and potentially other downstream products. Meant predominantly for the Indian markets, the products are aimed at serving a wide range of local industries including construction, automotive and coatings, whose growing demand is currently supplied via imports.

"India continues to be a very large importer of petrochemicals given the rapid expansion of the middle class, and this leads to a significant outflow of precious foreign exchange. Our partnership with BASF will allow us to produce in Mundra several of the chemicals along the C3 chemical value chain that we are currently importing. Mundra's infrastructure is ideally suited to enable chemicals production, and our ability to deliver renewable power makes this a unique partnership on several fronts," said Gautam Adani, Chairman of the Adani Group.

Given BASF’s carbon neutral growth strategy, the chemical site in Mundra would be the company's first CO2-neutral production site. Further, both Adani and BASF SE have jointly developed an overall plan including new technologies and the supply of the site with 100 per cent renewable energy. As a result, in addition to the investment outlined in this MoU, BASF also plans to co-invest as a minority partner in a wind and solar park.

According to Martin Brudermüller, Chairman of the Board of Executive Directors, BASF SE, the group's intention to invest in a new site for acrylics value chain is in line with its long-term commitment towards its Indian customers. 

"Together with the Adani Group, we would have the opportunity to provide our customers with high-quality chemicals and support them in growing their business. With our production powered by renewable energy, we would be able to minimize our impact on the environment," Brudermüller added.