LG Polymers, the company behind the deadly styrene gas leak that left many dead and hundreds injured on Thursday, is a subsidiary of LG Chemicals, which in turn is part of South Korea’s LG group. The company’s Vizag plant manufactures plastics and plastic compounds like polystyrene, expandable polystyrene, and enhanced plastic compounds.
LG Chemicals had taken over erstwhile Hindustan Polymers in 1997 to enter this lucrative business in India. Nearly two decades earlier, Hindustan Polymers, a company founded in 1962 by the Shriram group, had been taken over by the United Breweries group in 1978. According to LG Chemicals’ annual report, LG Polymers is one of its several subsidiaries operating chemicals, plastics, life sciences and battery businesses across the world. Besides LG Polymers, LG Chemicals has three other subsidiaries in India, some of which are involved in the petrochemicals value chain. Their products are used in the manufacture of cutlery and plastic containers, and have an invaluable use in various other industries.
LG Polymers contributes just a fraction of LG Chemicals’ Rs 1.7-trillion annual revenues globally. In 2019, LG Polymers India’s revenue stood at Rs 142 crore, less than 0.1 per cent of LG Chemicals’ global revenue that year. It clocked a profit of just around Rs 4 crore, which too was a minuscule part of the parent’s global profits.
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In 2010, LG Polymers had run into trouble with income-tax authorities when its royalty payment of over Rs 1 crore to its parent company was flagged as inappropriate. The company’s payment to the parent for use of the ‘LG’ trademark was not seen as amounting to an ‘arm’s length’ transaction that could be excluded from taxation. The case was decided temporarily in LG Polymer’s favour by the income-tax tribunal.
LG Polymers is part of a powerful industry association and lobby group called the Chemicals and Petrochemicals Manufacturers Association, which includes other polystyrene and petrochemical product manufacturers like Reliance Industries, ONGC, DCM Shriram, Chemplast, GAIL and Finolex.
Parent company LG Chemicals, meanwhile, aims to be one of the world’s biggest manufacturers of lithium ion batteries, competing with the likes of Tesla, to power electric transport and help protect the environment. The company, along with other LG Group units, has donated several thousands of coronavirus diagnostic kits in Indonesia, where it has a large business presence.