Indorama Ventures (IVL), Thailand and India’s Dhunseri Petrochem (Dhunseri) have agreed to enter into a 50:50 joint venture (JV) to manufacture and sell polyester (PET) resins for Indian domestic markets and for exports. Dhunseri will purchase a 50-per cent stake in the 216,000 ton Micro Polypet (MicroPet), a company owned by Indorama Ventures in, Haryana. IVL in turn will acquire a 50-per cent stake in a carved out entity, called Haldia, of Dhunseri, with an effective capacity of 480,000 tonnes PET manufacturing located in West Bengal. The JV is subject to regulatory approvals and expected to complete in H2 2016.

In India, PET usage per head is just 0.6 kg per annum compared to 2.6 kg per annum in China and 10.9 kg per annum in the United States. This JV is a win-win situation for both the producers with 700,000 ton per annum of combined capacity in the strongest growth market having a population in excess of a billion people, as well as having favorable trade agreements with logistically advantaged countries in the region. The JV will gain significant synergy benefits being the sole producer of PET resin in North and East India and with both sites being effectively integrated with third party PTA suppliers, which will bring savings in SG&A and procurement. IVL’s global market reach and high utilisation rates are expected to supplement Haldia’s location benefit at Eastern India’s largest port while micropet enjoys a strong location advantage in the high-demand territory of North India.