Dow joins hands with Gujarat Alkalies

The much-talked about entry has finally happened. Marking its debut in India, global chemical major Dow Europe has agreed to partner with the state-owned Gujarat Alkalies and Chemicals (GACL) to manufacture chlorine-based products at the latter's Dahej project site.

GACL Managing Director G Mohapatra said, "We have signed an MoU with Dow Europe to form a joint venture to manufacture chlorine-based products."

He added that both the sides were working on the modalities of the joint venture, which was expected to sell the products in India and abroad.

Sources said the JV, for which Dow will provide technology, will be located at Dahej and will use chlorine as main feedstock.

Mohapatra confirmed the company had additional chlorine stocks at its Dahej plant and was exploring ways to set up more manufacturing facilities.

The JV, the sources said, might either churn out chloromethane group products such as methylene chloride or opt for chloro acitic acid derivatives.

The Dahej project has a caustic soda manufacturing capacity of 735 tonnes per day which produces 680 tonnes of chlorine per day. GACL supplies chlorine to its neighbouring units as feedstock for downstream products. However, even after this, GACL is left with around 500 tonnes of chlorine per day.

This is a major challenge as chlorine cannot be stored like other products. Here comes the role of Dow. The company will provide a platform for GACL to convert chlorine for commercial use.

The global chemical major's move may force the existing chlorine-based product manufacturers such as RIL and Nirma to press the panic button as the Gujarat government is planning to divest its stake in Gujarat Alkalies, and Dow's synergy matches with GACL's product portfolio.

The joint venture has given Dow an opportunity to revisit India after a gap of almost nine years. The company had expressed interest in Indian Petrochemicals Corporation (IPCL) in 1998 when the government of India announced its decision to divest its stake.

Later, Dow backed out owing to a delay in the divestment process. The proposed joint venture with GACL has paved the way for the global major to make a quiet entry into India.

In August last year, the Gujarat government had announced about GACL divestment. The tie-up will help Dow to make a firm landing in the Indian market with equity investment in GACL. The sources said the government is planning to divest as much as 40 per cent equity in GACL.