Dcm Shriram To Hive Off Pvc Business Into Jv

Based at Kota in Rajasthan, the 60 tonne per day plant, is one of the leading PVC compounds manufacturing facilities in the country.

The company was the first to make prfoile-grade compound, used by Maruti Udyog Ltd for its vehicles. It has also developed a special grade footwear compound for Bata.

Earlier, the company had initiated talks for a joint venture with Geon of the US, specialists in vinyl compounds. But Geon merged with another company in the US called Hena, an expert in non-vinyl compounds. The new entity was called Polyone.

DSCL continued its dialogue with the company. The joint venture, if it happens, will give DSCL's PVC compounds business new expertise in vinyl as well as non-vinyl PVC compounds.

 

Explaining the rationale for the hive-off, Badjate said the tie-up had become essential for the company to develop compounds for newer applications like window frames.

"Besides, Polyone is one of the two biggest players in the business world-wide. If DSCL ties up with Polyone, the others will think twice before entering India," he said.

Right now, each party is trying to fix a value to DSCL's PVC compounds business. While the company has internally valued it at Rs 60-80 crore, Polyone is yet to come out with a figure. According to Badjate, the US company is discounting future cash flows from the business to arrive at a value.

The valuation is necessary as DSCL's contribution to the equity capital will be in the form of existing PVC compounds manufacturing facility.

The Kota plant, housed in DSCL complex, is spread across 791 acres. The complex also houses the company's naphtha-based urea plant, an 85mw power unit, a cement plant, a chemicals plant and a plastics unit manufacturing calcium carbide and PVC resin apart from PVC compounds.