French polyamide supplier Rhodia signed a binding agreement to acquire PI Polymer, a compounder of engineering plastics based in India. The acquisition represents Rhodia's first plastics compounding capacity in India.
According to Rhodia, it has big plans for the polyamide market in India, with its intent to control more than 15% of the demand there for polyamide compounds by 2015. PI Polymer forecasts about $13 million in sales revenue for its fiscal year 2010/11. The acquisition price represents an estimated 2010/11 EBITDA multiple of around 7x. The transaction includes all of PI Polymer's assets, including its lone compounding facility that employs more than 80; its R&D capabilities, customer base and logistics network in India. Rhodia expects the transaction to be complete by the end of March 2011.
PI Polymer compounds PC, mPPE, PBT, polyamide, PP, ABS, SAN and elastomeric materials including TPU, TPO, and TPVs. The company claims its CAGR (compound annual growth rate) has been at or above 30% for the past few years and that it is India's fastest growing company in the engineering thermoplastics market.
Jérôme Pisani, global communications and public affairs director for Rhodia Engineering Plastics, in answer to questions from MPW, replied that India's entire demand for engineering thermoplastics (ETP) currently is greater than 100,000 tonnes/yr, Although very fragmented, Rhodia says the ETP demand growth rate there is about 14% annually (CAGR for the years 2009 through 2015), he explained. "We expect polyamide-based engineering plastics to grow faster. We estimate polyamide represents around 25% of total ETP market" in India, or about 28,000 tonnes processed in 2010).
Pisani added that Rhodia now controls about 7% of India's polyamide market through its distribution network there. "That (distribution network) needs to be reinforced with an actual industrial presence and dedicated sales force to become a true 'Indian player'." He explained, and with this acquisition the supplier gains both. Rhodia already imports its Technyl-brand polyamide 6 and 6.6 into India. Rhodia has operated in the country since 2001 through its surfactants business, serving the home & personal care and coatings markets.
Selling PI Polymer is its parent company, PI Industries Ltd., which following the sale will have two divisions, involved respectively in agricultural chemicals and in fine chemicals/pharmaceutical intermediates. PI Industries entered the plastics compounding business in 1994.
"This acquisition will reinforce the already strong positions we have in fast-growing economies. We have identified strong synergies with our engineering plastics business in terms of product range and customer portfolio that will dramatically accelerate our growth in India", stated François Hincker, president of Rhodia Engineering Plastics. He said his company also planned soon to increase capacity at PI Industries. Rhodia executives have told Modern Plastics in the past that they see huge potential in India's automotive market, citing motorcycle fuel tanks as one of the many applications there they believe hold promise for their company. —Matt Defosse