Mumbai: Bhansali Engineering Polymers (BEPL) has formed a 50:50 joint venture with Nippon A&L Inc (NAL), which will allow the company to manufacture NAL's specialised grades of ABS polymer approved by the Japanese automobile manufacturers globally.
"The ABS market is growing in the country and poised to increase its application basket. However, we want to focus on the automobile sector, where we expect huge opportunities mainly because of innovation-led consumption.
"This partnership will help our buyers access to their entire ABS requirement from a single-sourcing destination in the country. Nippon A&L will also direct their buyers in India to source ABS from us," Bhansali Engineering Polymers Executive Director Jayesh Bhansali said here.
Nippon A&L Inc is jointly owned by Japan's Sumitomo Chemicals Company and Mitsui Chemicals.
This JV will become an integrated part of auto OEM's supply chain and help them procure ABS (Acrolynotrile Butadine Styrene) of international standard locally in a cost effective manner, he added.
With automobile manufacturers using more of speciality polymers and expanding their domestic capacities, the demand for ABS is expected to grow in double digits in 3-5 years.
The JV will give BEPL right to use intellectual property rights of NAL and technical assistance to manufacture, make and sell the licensed products.
It will also provide recipes, compounds, sales support, R&D support, new application development for manufacturing ABS and other resins.
BEPL is country's second largest producer of ABS with 51,000 tonne per annum capacity manufactured in Abu Road in Rajasthan and Satnoor in Madhya Pradesh.
BEPL is planning to increase its capacity to 70,000 tonnes by April, 2014 and to 1,25,000 tonnes by September, 2015, with a total capex estimated at about Rs 300 crore, Bhansali said, adding that the funds will be raised through a mix of equity and external commercial borrowing (ECB).
The country's annual ABS demand is currently estimated at 1.5 lakh tonne, 25 percent is met through imports, mainly from Japan.
"We are expecting to capture 50 percent of the total imports immediately," Bhansali said.
The company also produces 600 tonne per month SAN (Styrene Acrylonitrile) and enjoys 40 percent market in this segment.
In 2012-13, the company is expected to cloak a sales turnover of around Rs 480 crore.