MUMBAI (NewsRise) -- Adani Group has signed an initial agreement with Germany's BASF to jointly invest 160 billion rupees ($2.3 billion) in a petrochemicals venture that will take on billionaire Mukesh Ambani's flagship Reliance Industries.
The two companies signed a memorandum of understanding to evaluate an acrylics value chain at Mundra port in the western Indian state of Gujarat, they said in a statement. The potential investment comprises the development, construction, and operation of plants that make products to serve local industries including construction, automotive and coatings, it added.
"India continues to be a very large importer of petrochemicals given the rapid expansion of the middle class," billionaire Chairman Gautam Adani said in the statement. "This partnership will allow us to produce several of the chemicals along the C3 chemical value chain that we are currently importing."
Adani will hold a minority stake in the venture, for which a feasibility study will be completed this year. Aside from the investment, BASF also plans to co-invest as a minority partner in a wind and solar park.
India, Asia's third-largest economy, is witnessing a surge in demand for automobiles, paints, and plastics that use this derivative of oil and gas. In the fiscal year ended in March, Reliance Industries, one of the largest petrochemical producers in the world, reported a 36% jump in revenue from petrochemicals. In the latest quarter ended in December, Reliance Industries reported a 37% jump in revenue from petrochemicals to 462.5 billion rupees.
According to the International Energy Agency, petrochemicals are set contribute more than a third of the growth in world oil demand by 2030, and almost half the growth by 2050.
For Adani Group, the proposed investment comes as it seeks to emerge as a large business behemoth with interests straddling across oil and gas, coal infrastructure, power, and renewable energy.
In 2017, Adani set up the world's largest solar energy plant with 648-megawatt capacity in the southern Indian state of Tamil Nadu that can power up to 150,000 homes. It also runs a joint venture with Wilmar International, which is into crushing oilseeds and also imports edible oil.
The group is in the process of setting up the world's largest thermal coal mine in Australia worth $13 billion, though the project has long been delayed due to numerous court challenges from environmentalists concerned about climate change and potential damage to the Great Barrier Reef.
--Dhanya Ann Thoppil