LyondellBasell LYB has agreed to buy the polypropylene (PP) compounding assets of India-based Zylog Plastalloys Pvt. Ltd. The acquisition includes manufacturing sites in Sinnar, Maharashtra, and in Chennai, Tamil Nadu. The transaction is expected to consummate early next year.
Polypropylene compounds are used to make thermoplastic materials for automotive, home appliances and other markets. LyondellBasell is the world's biggest PP compounds maker with an annual capacity of 1.2 million metric tons.
The buyout will allow LyondellBasell to double its automotive customer base in India. The chemical giant will also become the third-biggest producer of PP compounds in India with an annual capacity of 44,000 metric tons. Zylog will continue to provide the same level of support, service and high quality products to its customers till the transaction is complete.
India represents the fourth-biggest growth market for automobiles with 3 million new vehicles produced annually. The country’s automotive market is expected to grow 6%-8% annually through 2021, according to IHS Inc.
LyondellBasell remains focused on expanding its foothold in India and reinforce its position in the country’s growing automotive plastics market. The company, earlier this year, completed the acquisition of India-based polypropylene compounds maker – SJS Plastiblends Pvt. Ltd – for an undisclosed price.
The acquisition is in sync with the company’s strategy to grow by expanding its competitive position in lucrative markets. LyondellBasell has supplied the Indian market through imports and tolling arrangements since 2009.
LyondellBasell currently holds a Zacks Rank #3 (Hold).
Better-ranked companies in the chemical space include Celanese Corporation CE, Innospec Inc. IOSP and The Dow Chemical Company DOW. While both Celanese and Innospec sport a Zacks Rank #1 (Strong Buy), Dow retains a Zacks Rank #2 (Buy).
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