Reliance Industries Ltd., or RIL, on Tuesday announced a $450- million joint venture with Russian petrochemical company 'Sibur' to set up a 100,000-ton butyl rubber plant at RIL's Jamnagar refinery in India. The JV has been christened 'Reliance Sibur Elastomers Pvt Ltd.'
The JV will be India's first butyl rubber manufacturer and the world's fourth largest supplier of the material.
RIL will have 74.9 percent stake in the JV and Sibur the remaining 25.1 percent. The plant is expected to be commissioned by mid-2014.
Initial agreement for the JV was made by RIL in December 2010 during the visit of Russian President Dmitry Medvedev.
Butyl rubber is a variety of synthetic rubber with many industrial applications ranging from inner tubes for tyres to adhesives and sealants. Sibur has proprietary technology for making the rubber and it will be made available to the JV.
RIL and Sibur also signed a technology licence agreement facilitating use by the JV of Sibur's proprietary butyl rubber production technology at the new production facility. The Russian company will develop basic engineering design for the facility and also train the JV's personnel at its production site in Togliatti, Russia.
The JV will cater to the demand for synthetic rubber from the Indian automotive industry of over 75,000 tons per annum, which is currently met by imports. Investment in the JV is in line with RIL's vision of emerging as a significant player in the global synthetic rubber market.
RIL Executive Director Nikhil Meswani said the whole demand was being met only by imports with prices ranging from $4,000 to $7,000 a ton, adding that after a full year of production, the joint venture would have a turnover of around Rs.2,500 crore.
RIL will have to pay a certain royalty to Sibur for accessing the proprietary technology for rubber making, he said but declined to disclose the quantum of royalty.
Sibur is the leading petrochemical company in Russia and Eastern Europe. It operates across the entire petrochemical process chain from gas processing to the production of monomers, plastics and synthetic rubbers, as well as the processing of plastics. It produces more than 2,000 different types of products employing more than 40,000 people in 20 regions of Russia.
At the BSE, RIL shares are currently trading at Rs.850.80, up by Rs.9.00 or 1.07 percent on a volume of around 302,000 shares.
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