02 May 2005 00:01 [Source: ACN]
ITALIAN engineering plastics major Guarniflon SPA is to set up a wholly owned subsidiary in India. The subsidiary, Guarniflon India (GI), will set up two joint ventures with an investment of Euro12m (US$9.12m) over the next 2-3 years.
The first joint venture will produce polytetrafluoroethylene (PTFE) resins. Guarniflon’s subsidiary will own 26% of the joint venture and an Indian partner the rest.
The second joint venture will be for PTFE processing and PTFE-based product manufacturing. The subsidiary will hold a 74% stake. The other 26% share will be offered to an Indian partner.
The Italian company has not disclosed the names of the prospective Indian partner in both cases, according to sources associated with Guarniflon’s application to the Foreign Investment Promotion Board (FIPB).
Sources told ACN the FIPB had recommended that grant-of-investment clearance be given to the company and that finance minister P Chidambaram was expected to approve the recommendation soon. This would pave the way for FIPB to announce the clearance and issue a letter of approval to the company.
Apart from promoting the two joint ventures, Guarniflon India will set up a research and development centre for the development of PTFE compounds, semi-finished, and finished products. It will also transfer PTFE processing-related technology to the two joint ventures.
Guarniflon has told FIPB that the subsidiary will provide financial assistance to the joint ventures, if required. This help may be in the form of loans.
GI will export virgin as well as processed PTFE through Guarniflon’s global network. The group has manufacturing and marketing operations in Germany, France, the UK, Romania, and the US.
A few months back, Guarniflon had withdrawn its offer to buy India’s monopoly PTFE producer Hindustan Fluorocarbons Limited (HFL). The Italian major’s bid to acquire a controlling stake in HFL faced legal and procedural hurdles created by HFL’s parent, Hindustan Organic Chemicals Limited (HOCL).
Both HOCL and HFL are ‘sick’ companies. Guarniflon had bid twice for a controlling stake in HFL in 2002 and 2001. The controlling stake of about 57% is held by HOCL.
The bids were solicited by Industrial Development Bank of India under the auspices of the Board for Industrial and Financial Reconstruction, a statutory authority that decides the fate of loss-incurring manufacturing companies.
HFL’s manufacturing facilities in Medak, in Andhra Pradesh, have a capacity to produce 500 tonne/year of PTFE resins and 1265 tonne/year of intermediate chloro difluoro methane. It produces several grades of PTFE.
HFL had set up the PTFE plant in technical collaboration with Atochem of France in the late 1980s.
PTFE is produced in different grades, such as moulding, fine powder, aqueous dispersions, and compound grades. It is used mainly in electronic, electrical, mechanical, and chemical industries.
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