Indian compounder Welset Plast Extrusions Ltd. is divesting its PVC compounding business to Japan's Mitsubishi Chemical Corp., but keeping and expanding its core masterbatch operations.
The deal will allow Mitsubishi to enter the PVC medical compound business. Terms were not disclosed.
Welset will expand its operations in masterbatch, polyethylene and polypropylene compounding.
"Increasing demand from sectors like electronics, automobile, infrastructure and agriculture drives us to double the masterbatch capacity," said Arvind Mehta, chairman of Mumbai-based Welset. "Although demand from the packaging side plummets due to environmental concerns, other sectors continue to grow."
He said Welset is spending 250 million Indian rupees ($3.6 million) to nearly double its masterbatch capacity, from 55 million pounds a year up to 99 million pounds. It expects to complete that by March.
Welset is adding three extrusion lines at its factory in Silvassa, about 125 miles north of Mumbai. The company plans to add oxobiodegradable materials to its product mix, he said.
Currently about 40 percent of its masterbatch capacity is exported, Mehta said.
The company has annual sales of about 2.5 billion rupees ($35.66 million) with 20-25 percent of that coming from the divested PVC compounding business, he said.
"We hope to recover the shortfall in turnover by expanding the masterbatch capacity," Mehta said.
Welset started in PVC compounding in 1998.