Lanxess Boosts Footprint In China And India

Lanxess will pay $115 million to acquire the chemical business of Gwalior Chemical, an Indian company listed on the Bombay Stock Exchange. The German chemical maker will also buy Jiangsu Polyols, a Chinese producer of trimethylpropane, used in lubricants, paints, and coatings.

The Gwalior deal will triple Lanxess' India headcount to 600 people. One of India's largest producers of benzyl products and a global supplier of sulfur chlorides used to make agrochemicals, pharmaceuticals, and flavors and fragrances, Gwalior operates two production sites, one in Nagda, Madhya Pradesh, and the other in Ankleshwar, Gujarat. Lanxess says future production will mainly take place at the Nagda site, where capacities are being expanded.

Neeraj Atri, vice president of marketing at the Indian consulting firm IndusView, tells C&EN that multinational companies see India as largely immune to the global economic downturn. Foreign firms are also making Indian acquisitions, he says, in telecommunications and other sectors. "If conditions are negative in other major countries and India is still maintaining positive growth, then you see various sectors attracting buyers," he says.

Gwalior says it will remain in business and invest the cash it gets from Lanxess in power generation and chemicals not involved in the sale. According to Lanxess, the chemical business it is acquiring achieved operating margins of about 18% on sales of $64 million in the first nine months of the fiscal year that ended March 31. The German company notes that India's rising middle class is driving demand for chemicals in an economy that is likely to grow about 6% in the current year.

Lanxess already operates a leather chemicals plant in Madurai, Tamil Nadu, India. In Jhagadia, Gujarat, it is relocating a rubber chemicals plant and building an ion exchange resin facility.

In China, the acquisition of Jiangsu Polyols, on the country's eastern coast near Shanghai, will add 170 people to Lanxess' current headcount of about 900. With sales of about $14 million in 2008, Jiangsu Polyols is a major Chinese producer of trimethylpropane, Lanxess says.

Meanwhile, Kemwell, a Bangalore-based contract manufacturer of drug ingredients, has broken ground on a new $50 million biopharmaceuticals plant that will supply Boehringer Ingelheim and other customers. The facility will make use of cell-line development technology provided by the German pharmaceutical company and will comply with current Good Manufacturing Practices, Kemwell says. It will produce active ingredients for drugs in the preclinical and clinical study stages.