Astral's JV with Warren Buffett firm Lubrizol hits legal hurdle

Last Updated: Tue, Nov 20, 2012 05:52 hrs

The ambitious chlorinated polyvinyl chloride (CPVC) project, which Ahmedabad-based Astral Poly Technik Ltd intended to develop jointly with billionaire investor Warren Buffett's firm, Lubrizol Corporation at Dahej has hit a legal hurdle. According to company officials, the project is no longer viable due to legal complexities associated with transportation of liquid chlorine, a key raw material for CPVC project.

"Indian laws do not permit transportation of liquid chlorine through pipelines. Since, we were planning to source liquid chlorine from nearby suppliers at Dahej through pipeline, it seems that the project is not viable considering the legal hurdle," Sandeep Engineer, MD, Astral Poly Technik had told Business Standard at an industry meet in Ahmedabad recently.

However, according to Engineer, the project can still take shape provided they make an additional investment to install a chlorine gasification plant at the supplier end and then liquify the gas at its own premises. "But such an arrangement looks difficult, as it requires additional investments as well as suppliers readiness to install a gasification plant in their premises," he said.

US-based speciality chemicals maker Lubrizol Corporation, a wholly owned subsidiary of Buffett's investment company, Berkshire Hathaway Inc had announced its investments in Gujarat in September last year.

Senior officials of Lubrizol Corporation had visited state chief minister, Narendra Modi and announced to make an investment of US $ 245 million (approx Rs 1,177 crore) for the project at Dahej GIDC. The construction work of the unit was expected to start in January 2013 and the production was estimated to begin from October 2014.

Tom Frubus, chief of Lubrizol Corporation had then said, "Considering the investor-friendly and transparent policies and best infrastructural facilities in Gujarat the company has chosen the state for setting up of its unit."

The joint venture (JV) agreement between Astral and Lubrizol was slated to be signed by March 2012. However, that has not taken shape so far.

Lubrizol Corporation was planning to set up a CPVC compound and CPVC pipe manufacturing plant in Dahej jointly with Astral, which was already associated with Lubrizol as an importer of CPVC pipes.

Astral Poly Technik manufactures plumbing systems for residential and industrial applications. It offers a range of plastic products including Astral FlowGuard CPVC, FlowGuard Bendable, Astral Aquarius uPVC and Astral Under Ground, and also has technical tie-ups with global majors like Tyco, Spears and Wavin.

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