The Hindu Business Line : Dow Chemicals signs pact with Gujarat Alkalies

The country’s largest caustic soda maker Gujarat Alkalies and Chemicals Ltd (GACL) and the second largest global chemical giant, Dow Chemicals, have decided to “synergise” their efforts in the State and are in the process of giving this agreement a shape for a long-lasting co-operation.

Confirming this, the GACL Managing Director, Mr Guru Prasad Mohapatra, told Business Line on Wednesday that a memorandum of understanding (MoU) was signed in this regard about a couple of weeks ago.

“Both the companies have decided to cooperate and synergise. But only the first round of talks has taken place. It will take some time to decide on the scope and scale of cooperation. No time-frame can be set for this, as of now.”

Under study

He declined to confirm reports that the two companies would set up a 50:50 joint venture for a proposed chemical plant at Dahej in Gujarat or enter into a product sharing and marketing agreement, or the size of the plant and the investments involved.

“At this stage, nothing can be said. We are still studying the different aspects involved,” he added.

On Tuesday, GACL informed the Bombay Stock Exchange (BSE) that the company and Dow Europe GmbH have signed a memorandum of understanding (MoU) for exploring a long-term and strategic business relationship in the area of chlorinated organics based on the inherent strengths of both the companies.

GACL’s Board of Directors’ meeting is scheduled to take place at Vadodara on July 13 for considering quarterly un-audited financial results (provisional) for the quarter ended June 30.

According to sources, the Gujarat Government is likely to divest its entire 40 per cent stake in GACL this fiscal year. GACL had seen a good turnaround during the last four years with its turnover expected to cross Rs 1,200 crore this year.

Modalities

The State Government had given a go-ahead last year for outright sale of its entire stake and appointed a committee to study various modalities.

The committee had then appointed Kotak Mahindra Capital Ltd to study the issue and propose restructuring the company in which 26 per cent shares are with the public and the remaining with financial institutions such as Life Insurance Corporation of India.

GACL was incorporated in 1973 by its core promoter, Gujarat Industrial Investment Company Ltd (GIIC), a wholly-owned company of the State Government.

It commenced its operations in 1976 with 37,425 tonnes per annum of caustic soda production at the Vadodara plant. This capacity was subsequently increased to become 3,58,760 tpa now.

Besides the Vadodara plant, GACL also has another unit at Dahej, Bharuch district, which has its own 90 MW captive power plant for regular and economic electricity supply.

GACL is the single largest producer of caustic soda in India with production capacity of 1,087 tonnes per day. It is a leader in caustic chlorine with a basket of 26 diversified products.

GACL’s annual sales are nearly Rs.1,000 crore and its market capitalisation was Rs 1,350 crore.

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