Mukesh Ambani-led Reliance Industries Limited (RIL), an oil-to-retail conglomerate, has joined forces with Russia and East Europe’s largest petrochemicals company Sibur to facilitate development of butyl rubber production in India. The joint venture (JV) between both petrochemicals giant has been titled ‘Reliance Sibur Elastomers Private Limited’ and will work towards producing 100,000 tonnes of butyl rubber per year in Jamnagar, India. The joint venture will be the first manufacturer of butyl rubber in India and the fourth largest supplier of butyl rubber in the world.
While Reliance Industries will hold 74.9 per cent share in the JV, Sibur will account for the remaining 25.1 per cent. A facility for the JV will be commissioned by mid-2014, and is expected to call for an investment of approximately US$ 450 million. Nikhil Meswani, Executive Director of Relaince Industries Limited said, “The joint venture company is expected to post a revenue of INR23 billion to INR25 billion ($463 million-$503 million) in the first year itself and we are putting up this at the Jamnagar plant because of the ready availability of feedstock.” RIL and Sibur have also signed a licensing agreement whereby Sibur’s proprietary butyl production technology will be accessible to the JV. Sibur, it is expected, will develop basic engineering designs for the facility and will also train the JV’s personnel at its production site in Togliatti, Russia.
RIL is one of the largest producers of polymers in world. Its partner, Sibur, is known to have one of the most refined and high-end petrochemical process chains, including gas processing, production of monomers, plastics and synthetic rubbers to the processing of plastics. Collaborating with Sibur is a reflection on RIL’s part to make way for developing domestic capabilities in meeting demands for products like butyl rubber.
Given the rise in demand for butyl rubber, particularly from India’s automotive sector, the RIL-Sibur JV comes as a major boon for meeting domestic demand for the product. India’s automobile sector is one of the fastest growing sectors in the country. With rampant rise in production of two-wheelers, three-wheelers and four wheelers, the prospects of India becoming the hub of automotive sector are very promising. At present, India’s automotive industry requires 75, 000 tonnes of butyl rubber every year, a requirement presently being satisfied by imports. Following institution of RIL-Sibur joint venture, the demand for butyl rubber could be met domestically, with possibilities of export opportunities as well.