Mumbai: Reliance Industries (RIL) and Russian rubber giant Sibur, Eastern Europe's largest maker of petrochemicals, on Tuesday announced the formation of a joint venture company called Reliance Sibur Elastomers that aims to become the fourth largest supplier of butyl rubber - an input for tyres - in the world.
"In the first year of production the company could target a turnover of 2,500 crore," said Nikhil Meswani, executive director, RIL.
The company will produce 100,000 tons of butyl rubber per year at a new plant located in the industrial complex in Jamnagar, Gujarat that also contains the world's largest greenfield refinery. The JV will be the first manufacturer of butyl rubber in India, and will cater to the demand for synthetic rubber from the Indian automotive industry.
That demand, a little more than 75,000 tonnes per year, is currently satisfied by imports.
"Our product will be significantly cheaper than the $4,000-5,000 per tonne cost of imported butyl rubber as it will be manufactured locally and our refinery feedstock will be used," added Meswani
Reliance will own 74.9% of the joint venture company with Sibur accounting for the rest. The JV will invest $450 million to construct the facility, which is expected to be commissioned by mid-2014.
The two partners have also signed a technology licensing agreement facilitating the use Sibur's proprietary butyl rubber production technology at the new production facility.
Sibur will develop basic engineering design for the facility and also train the JV's personnel at its production site in Togliatti, Russia.
"We plan to cater to the large domestic demand and will use the existing supply contracts of Sibur," added Meswani. RIL had first announced its intent to form this JV in December 2010 and will now commission the facility in the second half of 2014.
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