India Glycols plunges 9 per cent on forming JV with Clariant for speciality chemical business

The shares of commodity chemicals company, India Glycols slipped by 9 per cent on Friday after its board approved the transfer of the company's BioEO (speciality chemicals) business to IGL Green Chemicals Pvt Ltd (IGCPL), a wholly-owned subsidiary.  

The speciality business (BioEO) accounted for around 12.85 per cent of the total revenue and around 26 per cent of the total net worth of India Glycols as of March 2020. The company has stated that it is evaluating its position and business strategy as well as exploring various options to remain ahead of the competition in the bio-ethylene oxide derivatives segment.

The company had earlier announced that it would set up a 49-51 per cent joint venture with Clariant, a speciality chemical player in renewable ethylene oxide (EO) derivatives. India Glycols will contribute its renewable BioEO derivative business to the JV, which includes a multipurpose production facility located in Kashipur (Uttarakhand). On the other hand, Clariant will introduce its local Industrial and consumer specialties business in India, Sri Lanka, Bangladesh, and Nepal, held by Clariant India Ltd, as well as a net cash payment to secure a 51 per cent stake in the joint venture. 

On Friday, India Glycols closed at Rs 533.55, down by 7.78 per cent or Rs 45 per share. Despite Friday’s fall, it has outperformed the market by surging 72 per cent in the past three months, against an 11 per cent rise in S&P BSE Sensex.