The Chatterjee Group buys Mitsubishi Chemical's PTA business in India

Japan’s Mitsubishi Chemical Corporation (MCC) has signed an agreement to sell its purified terephtalic acid (PTA) business in India, MCC PTA India Corp Private Limited (MCPI), to Chatterjee Management Company - a part of Purnendu Chatterjee-owned The Chatterjee Group (TCG) - in a deal estimated at $ 48 million (about Rs 320 crore). Mitsubishi Chemical has a manufacturing facility of PTA, a raw material for polyester, in Haldia, West Bengal.  

Along with Indian PTA business, Mitsubishi Chemical has also decided to sell two Chinese firms - Ningbo Mitsubishi Chemical Co Ltd (NMC), also engaged in PTA business, and MCC Advanced Polymers Ningbo Co Ltd (MAP), which makes poly tetramethylene ether glycol (PTMG).

At present, MCC holds 95 percent stake in MCC PTA India, while West Bengal Industrial Development Corporation holds the remaining 5 percent stake. 

As per the deal, MCC will first convert its loans to MCPI into MCPI common shares, and then increase MCPI capital share with MCC as underwriter by the share transfer date (scheduled for the end of October 2016). This will increase the percentage of the MCPI common shares held by MCC to a maximum of 99.4 percent. After completion of this capital increase, MCC will transfer all the shares (except for a shareholding ratio of 9 percent) to the Chatterjee Group on the share transfer date. As a result, MCPI will become a non-consolidated affiliate of MCC.

Acquisition of MCC PTA India will help TCG, which owns majority stake in Haldia Petrochemicals Limited (HPL) that operates a petrochemical facility near MCPI’s Haldia plant, to consolidate its petrochemicals business in India. HPL is one of the largest petrochemical companies in the country with a total capacity equivalent to 700,000 TPA of ethylene.

For MCC, divestments of PTA businesses in India & China and MAP are part of its ongoing restructuring process for its petrochemicals business. As part of its growth strategy to focus on its high-performance and high-value-added business portfolio, Mitsubishi Chemical Holdings Corporation has been carrying out structural reforms in the petrochemical business, which included restructuring production facilities of ethylene - one of the key ingredient for manufacturing polyester.