Billionaire Gautam Adani-run Adani Group will partner German chemical giant BASF to foray into the petrochemicals sector with a Rs 16,000 crore factory at Mundra in Gujarat.
Besides investing in the chemical factory, BASF will also invest in wind and solar power plant at the site to meet the electricity requirement of the unit, the two companies said in a statement.
BASF will hold a majority controlling stake in the new venture. It will, however, hold a minority interest in the power venture.
BASF SE and Adani Group signed a Memorandum of Understanding (MoU) on the eve of the Vibrant Gujarat Global Summit 2019 "to evaluate a major joint investment in the acrylics value chain", they said.
This would be BASF's largest investment in India to date, it said without giving details.
A feasibility study will be completed by the end of 2019.
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"According to the MoU, BASF and Adani want to establish a joint venture with an investment totaling about Euro 2 billion (about Rs 16,000 crore), in which BASF will hold the majority," it said.
The companies did not give details of the joint venture.
The potential investment comprises the development, construction and operation of production plants including propane dehydrogenation (PDH), oxo C4 complex (butanols and 2-ethyl hexanol), glacial acrylic acid (GAA), butyl acrylate (BA) and potentially other downstream products.
"The products are predominantly for the Indian market to serve a wide range of local industries, including construction, automotive and coatings, whose growing demand is currently supplied via imports, thus supporting the 'Make in India' initiative," the statement said.
Headquartered in Ahmedabad, Adani Group is one of India's largest integrated infrastructure conglomerates with interests in resources (coal mining and trading), logistics (ports, logistics, shipping and rail), energy (renewable and thermal power generation, transmission and distribution), agro (commodities, edible oil, food products, cold storage and grain silos), real estate, public transport infrastructure, consumer finance and defence sectors.
Gautam Adani, chairman of the Adani Group, said, "India continues to be a very large importer of petrochemicals given the rapid expansion of the middle class, and this leads to a significant outflow of precious foreign exchange. Our partnership with BASF is a big step forward in enabling our country's 'Make in India' program, as this partnership will allow us to produce in Mundra several of the chemicals along the C3 chemical value chain that we are currently importing."
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