Momentive Specialty Chemicals Inc announced that it has signed a non-binding Memorandum of Understanding (MOU) with Kanoria Chemicals & Industries Limited ("Kanoria") to form a joint venture ("JV") that would construct a new phenolic specialty resins plant in India at Kanoria's existing production facility at Visakhapatnam, Andhra Pradesh.
In addition, under the agreement, for a cash consideration, Kanoria would transfer its currently existing manufacturing facility in Visakhapatnam to the proposed JV, while Momentive Specialty Chemicals would provide technology supporting its specialty phenolic resins, formaldehyde and hexamine businesses, as well as its current business in India, to the JV. It is envisioned that both parties would have equal (50%) ownership of the JV. Under the MOU, the companies will work to identify and evaluate additional growth opportunities for specialty chemicals in such vertical markets as automotive, industrial and construction.
"We are pleased to have the opportunity to partner with Kanoria, a leading manufacturer of chemical intermediates in India," said Craig O. Morrison, Chairman, President and CEO. "India is a critical market for specialty chemicals and the MOU represents another example of our commitment to strategically invest in the region."
"The end markets for specialty phenolics and formaldehyde continue to grow rapidly in India and the proposed JV would leverage the proven approach of combining technology and application development with world-class manufacturing expertise," said R. V. Kanoria, Chairman and Managing Director, Kanoria Chemicals.
The non-binding MOU is just a first step in the process of setting up the contemplated JV, outlining the main principles around which the JV should be structured, Although both parties are committed to further pursuing this transaction, at this time no assurances can be given that the envisaged transaction will eventually materialize.