AHMEDABAD: The city based Kiri Dyes and Chemicals Ltd (KDCL) has joint-ventured with China's Zhejlang Longsheng Group Company Ltd (Lonsen) with a total investment of $10 million, Mr Pravin Kiri, Chairman, and Mr Manish Kiri, Managing Director said.
Under JV, KDCL would set up a new plant in the state to manufacture dyestuff for domestic and international markets.
KDCL has filed a draft red herring prospectus to raise up to Rs 70 crore through an IPO in the next few weeks, diluting 25 percent of equity. On the other hand, its Chinese partner has, in a pre-IPO placement, agreed to take 7.5 percent stake at Rs 115 per share.
However, KDCl would continue to manufacture its current range of products at its two plants with a total capacity of 10,800 MTPA, in Ahmedabad and Vadodara districts. It is in the process of setting up a backward integration project to produce sulfuric acid, oleum and chlorosulfuric acid as raw materials for dye intermediaries.
However, the company clarified that proceeds from the IPO would not be used for the new project, a separate entity. Lonsen or its affiliates and KDCL, as per their MoU, will hold 60 and 40 percent equity in the new endeavor and contribute $6 million and $4 million respectively, towards initial capital investments during 2007-08 and 2008-09.
The new plant is expected to be operational by end-2008. The JV will start with an initial production capacity of 20000 tons per annum of reactive dyes. The company could enhance capacity to 50000 tons a year after successful execution of the project.
Lonsen is one of the largest private-sector Chinese companies in dyestuff segment and the only public-company listed on Shanghai Stock Exchange in this segment with a turnover of more than Rs 3,000 crore through its 13 subsidiaries. Lonsen is a producer of dyestuffs, based at Shangyu.