IG Petrochemicals buys Mysore Petro Chemicals' maleic anhydride business

IG Petrochemicals Ltd, one of the leading manufacturers of phthalic anhydride (PAN) in India, has acquired the maleic anhydride (MA) business of Mysore Petro Chemicals Ltd (part of the same promoter group) for Rs 74.48 crores. 

"The board of directors of the company decided to purchase from Mysore Petro Chemicals Ltd (part of the same promoter group & a related party) its maleic anhydride business including all the assets and liabilities in relation to its MA business situated at Taloja (Maharashtra) as a going concern on a slump sale basis at a lumpsum consideration of Rs 74.48 crores payable in one or more tranches subject to closing date adjustments," said IG Petrochemicals in a BSE filing yesterday.

Mysore Petro Chemicals Ltd (MPCL), which is the only company engaged in the manufacture of maleic anhydride in India, procures wash water (a raw material required for the production of MA) from IG Petrochemicals. Being toxic chemical, disposal of wash water is subject to the stringent norms. Under the current economic scenario, it is considered viable to acquire the MA business from MPCL to optimise the end realisation, added IG Petrochemicals.

In its BSE filing, MPCL said, "The board of directors considered the feasibility of continuing its operations which is primarily governed by the scarcity of raw materials have decided to sell the MA business to IGPL.” MA business of MPCL registered a revenue of Rs 23.29 crores (about 95.87 percent of total turnover) in 2015-16.

Two companies expect to conclude the proposed transaction by April 1, 2017.

Maleic anhydride is used in the manufacture of alkyd resins (which are in turn used in paints and coatings), agrochemicals, malic acid, copolymers, fumaric acid, lubricant additives, surfactants and plasticisers.