Warren Buffett-investee Lubrizol to set up $50 mn CPVC compounding plant in Gujarat

Explores possibilities of a CPVC resin manufacturing plant as well

In what will be Warren Buffett's first investment in Gujarat, the Lubrizol Corporation, a wholly owned subsidiary of Buffett's Berkshire Hathaway Inc. on Thursday announced setting up of a chlorinated polyvinyl chloride (CPVC) compounding plant in Dahej.

To be set up at an investment of over $ 50 million (Rs 300 crore roughly), the upcoming plant is part of the company's previously announced $400 million global expansion of its resin and compounding manufacturing capacity. What's more, according to senior Lubrizol officials, the company is also exploring possibilities of setting up a CPVC resin manufacturing plant in India.

"Many of the raw materials required for Lubrizol's specialty chemical product portfolio are produced in GIDC. Hence, Dahej makes sense due to raw material availability and proximity to South Asia, the Middle East and East Africa markets. We are also evaluating sites in India for a possible CPVC resin manufacturing plant in India. The plant will depend on how the industry grows in the country," said Eric Schnur, president of Lubrizol Advanced Materials and corporate vice president of Lubrizol Corporation. Schnur stated that if set up, the CPVC resin plant would entail an investment of around $100-150 million.

The Dahej plant which is one of the largest chemical parks in India is located at the Gujarat Industrial Development Corporation (GIDC). The said CPVC compounding plant will carry a capacity of 55,000 metric tonnes and will be operational by first quarter of calendar 2015.

It needs to be mentioned here that Ahmedabad-based Astral Poly Technik Ltd, one of the Lubrizol franchisees, was earlier supposed to be part of the project through a joint venture. However, Lubrizol later decided to set up the plant on its own.

"We were acquired by Warren Buffett's Berkshire Hathaway around 2011 and we had access to capital. Hence we realised that it was the best option to set up the plant on our own. However, our relationship with Astral is going strong and much of the CPVC compound manufactured at the Dahej plant will be used by Astral for manufacturing CPVC pipes and fittings," Schnur added.

Meanwhile, subject to market opportunities, Lubrizol has also planned to expand capacity at the Dahej plant in near future.