DSM Buys Indian Engineering Plastics Maker
In a transaction due to close in this year’s third quarter, the Indian subsidiary of DSM has agreed to acquire the engineering plastics business of SRF for $45.6 million. The business segment of the Indian chemical and textiles conglomerate is a leading player in development, production and sale of specialty polymers.
The Dutch chemicals and life sciences group said the buy will further cement the position of its Materials segment (DSM Engineering Plastics) in this sector in India. It also fits with management’s strategic aim of generating leading positions in fast-growing economies, DSM added.
With sales of close to $37 million in 2018, SRF’s engineering plastics business has seen double-digit growth since its founding in 1979. DSM said the business is “highly complementary to its own, which will allow further growth without the need for a significant amount of fresh capital spending.
The Indian company’s portfolio encompasses PA 6 and PA 6.6 as well as PBT, polycarbonate, PET and PPS. It also has a polymer R&D and application center at Manali, near Chennai. DSM Engineering Plastics produces PA, PBT and PET.
In addition to engineering plastics, the SRF group, which is active in India, Thailand and South Africa and by its own account has commercial interests in more than 75 countries, manufactures industrial and specialty intermediates including technical textiles, fluorochemicals, specialty chemicals and packaging films.
Most of the manufacturing operations are based at Pantnagar in Uttarakhand state.
Ashish Bharat Ram, SRF’s managing director, said that while the engineering plastics business has been a profitable and niche business for the Indian group, it was felt that scaling it into a large business would have taken too much time.
In a stock exchange filing, SRF said the sale will strengthen its balance sheet and allow it to focus its resources on developing newer technologies for the chemicals business.
With India expecting strong market growth in the coming years, fueled by increasing domestic demand, especially to substitute metal in automotive applications, DSM said the acquisition will help it meet the current and future needs of its customers in India without having to build up capacity on its own.
DSM employs 550 people in India, where it had sales of about €250 million in 2018, some 17% more than in 2017.
DSM Engineering Plastics operates a compounding facility and an R&T center in Pune.