American petrochemical major LyondellBasell, for which Reliance Industries had mounted an unsuccessful takeover bid a few years ago, today entered into a definitive agreement to acquire the polypropylene compounding assets of Zylog Plastalloys for an undisclosed sum.
On completion of the deal, likely by early 2016, LyondellBasell will double its automotive customer base in the country and become the third largest producer of polypropylene (PP) compounds with an annual capacity of 44,000 tonne.
Set up in 1984, Zylog is a privately-held firm that produces PP compounds, thermoplastic vulcanisates and thermoplastic elastomers based on ethylene propylene diene monomer rubber and styrene chemistry. The firm has two PP compounding units at Sinnar in Maharashtra, and in Chennai.
Under the pact, LyondellBasell is acquiring Zylog's PP compounding and warehousing assets, and the trademarked brands Hipolyene, Hiflex and Entek.
LyondellBasell, one of the world's largest plastics, chemical and refining companies and the largest producer of PP compounds with an annual capacity of 1.2 million tonne, had acquired Ahmedabad-based SJS Plastiblends, a manufacturer of PP compounds.
"We are very optimistic about India's economic growth and its rapidly expanding automotive market," said Bhavesh Patel, Chairman of LyondellBasell, commenting on the new buy.
"The acquisition of SJS and Zylog are part of our plan to strategically expand our footprint where it makes sense from an economic and strategic perspective. With these investments, we will be a leading producer of PP compounds in all major automotive growth regions of the world", he added.
India is the fourth largest growth market for automobiles with 3 million new vehicles produced each year. As per an IHS Inc study, the domestic automotive market is expected to continue growing by 6-8 per cent annually through 2021.
