Essar Chemicals Ltd has signed a memorandum of understanding with Eastman Chemical Company to produce oxo and oxo derivatives for the domestic market.
Both the companies will undertake a feasibility study for a 1,50,000-tonne-per-year oxo aldehyde plant. These are used to manufacture end-use products such as coatings, paints, solvents and plasticisers. The project is estimated at $125 million. The unit will be set up near Essar Oil’s refinery at Vadinar in Gujarat from where the main feedstock, propylene, will be supplied.
Essar Group director Anshuman Ruia said, “The group is firmly on the path of expanding value chain in all its businesses and this foray would enhance the potential of Essar Oil’s refinery. Joining hands with Eastman is the first step in the value chain integration of Essar’s refining business.”
Eastman manufactures and markets chemicals, fibres and plastics worldwide. It provides key differentiated coatings, adhesives and speciality plastic products. It is the world’s largest producer of PET polymers for packaging and is a major supplier of cellulose acetate fibres. Founded in 1920 and headquartered in Kingsport, US, Eastman posted sales of $7 billion in 2005.
“This relationship will help us expand our presence in India. We have the oxo and oxo derivatives technologies and Essar has refinery products upstream of oxo processes at a significantly advantaged cost. The combination will ensure that the investment secures the margins we need,” Robert J. Preston, vice-president and managing director of Eastman’s Asia-Pacific, said.
Meanwhile, the Ruias are planning to delist two of their remaining companies — Essar Steel and Essar Oil — from local stock exchanges.
The two companies would seek approval from their boards on January 29 and 30 to delist from Bombay and National stock exchanges.
Last year, the group delisted three other companies — Essar Shipping and Essar Teleholdings from domestic bourses and BPO arm Aegis Communications from the US market.
The group, which is eyeing Hutchison Telecom's 67 per cent stake in Hutchison Essar, said the delisting was aimed at gaining more flexibility in running the companies.
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