Mumbai: German speciality chemicals firm Lanxess AG plans to invest more than €1 billion (Rs5,800 crore) in a chemicals complex in India, according to a source close to the development who did not wish to be identified.
A team of senior executives from the company’s headquarters will be visiting India next week to finalize the investment and other details, the source added.
The move, which indicates India’s growing importance as a market as well as a manufacturing hub, comes a little over a month after the visit of Axel C. Heitmann, the company’s chairman, to India.
“For us, India is the most important growth market in Asia after China,” he had said then. “We are working on the assumption that the country will take over from Japan and move into second place in terms of sales by 2010,” he had added.
When contacted over mail, Andrea Kohnen, the company’s spokesperson, echoed Heitmann’s comment on India, but declined to confirm the investment in the proposed chemical complex.
Lanxess already has a presence in India, and one of its units, Lanxess ABS Ltd, is even listed on the Bombay Stock Exchange.
The business unit makes plastics, which go into a clutch of automotive components, including fenders, radiators and headlamps.
Although Lanxess has six manufacturing facilities in India, none is of the scale of the proposed chemicals complex. In 2006, the company’s revenue in India grew 15% to €185.5 million. The parent’s revenue in 2006 was €6.9 billion. India already accounts for 15% of the company’s sales in the Asia-Pacific region.
The company has already shortlisted Gujarat and West Bengal as suitable locations for the project in India, since the chemicals complex will require a huge tract of land in an established chemicals zone, said the source.
He added that the first unit in the complex would be a facility to make ion-exchange resins that are used as industrial water purifiers.
Joerg Strassburger, country head, Lanxess India Pvt. Ltd, said the company was setting up a facility to make ion-exchange resins in either Gujarat or West Bengal.
“There will be significant amount of investment in this greenfield project and further investments in the complex will continue once other areas of products are identified for the Indian base,” he added.
Strassburger also said the company was looking for “the most competitive cost of land, infrastructure, power, through the bidding process”, and that it would invite bids from the industrial development corporations of West Bengal and Gujarat soon.
While Strassburger declined to give any details of the investment planned in the ion-exchange resins project, and the overall investment, the source said Lanxess’ investment in the first-stage of the project would be around €100 million. The chemicals complex, the source added, would be operational by 2010.
In an email response, spokesperson Kohnen said that Lanxess’ investment in the ion-exchange resins project would be its biggest ever in the business since the late 1990s.
“In order to keep site costs as low as possible, we have initiated an international bidding process in three countries including China, Singapore and India,” she added.
Lanxess currently operates in 50 countries and has four business units: performance rubber (or chemically treated rubber), engineer plastics (largely used in the automotive components business), chemical intermediaries and performance chemicals.
Its listed entity in India Lanxess ABS earned a revenue of Rs496.62 crore in the 12-months ended 31 December 2006 compared to Rs412.3 crore a year ago. Its net profit in 2006 was Rs27 crore.
The Lanxess ABS share closed at Rs133.50 on the Bombay Stock Exchange on Thursday, down from its high of Rs199 on 9 January.