India Glycols dips 9% on forming JV with Clariant for BioEO biz

Shares of India Glycols, on Friday, slipped 9 per cent to Rs 529; falling 13 per cent from day’s high, on the BSE in intra-day trade after its board approved the transfer of the company's BioEO (speciality chemicals) business to IGL Green Chemicals Private Limited (IGCPL), a wholly owned subsidiary. BioEO accounted for 12.85 per cent of the total revenue and 26.20 per cent of the total net-worth of India Glycols, as on March 31, 2020.

The commodity chemicals company's stock hit a 52-week high of Rs 610 in intra-day trade. Despite today’s fall, it has outperformed the market by surging 77 per cent in the past three months, against 11 per cent rise in the S&P BSE Sensex.

On the rationale for the slump sale, India Glycols said that it has been evaluating its position and business strategy and exploring various options to remain ahead of the competition in the Bio Ethylene Oxide derivatives segment. The Company believes that rationalizing its structure will provide opportunities to enhance shareholders' value in the Company.

India Glycols, a leading company in the manufacturing of green technology-based chemicals, on also announced a strategic partnership to establish a 49-51 per cent joint venture with Clariant, a focused, sustainable and innovative specialty chemical company, in renewable ethylene oxide (EO) derivatives. Both companies contribute their relevant existing business in scope and India Glycols to receive relevant equalization payment to create the 49-51 joint venture, the company said.

Subscription of shares by Clariant resulting in divestment of a majority stake in IGCPL by the Company in favour of Clariant is subject to approval of the members of the Company.

Under the terms of the proposed agreement, India Glycols will contribute its renewable Bio-EO Derivative business to the joint venture, which includes a multipurpose production facility including an alkoxylation plant located in Kashipur, Uttarakhand (India). Clariant will also introduce its local Industrial and Consumer Specialties business in India, Sri Lanka, Bangladesh and Nepal, held by Clariant India Ltd., as well as a net cash payment to secure a 51 per cent stake in joint venture, it said.

By combining production and distribution capacity, the joint venture is expected to become a leading supplier of renewable materials to the rapidly growing consumer care market in India and neighboring countries. The partnership is subject to customary regulatory approvals, the company said in a press release.