Indorama invests in IRSL, India to access high potential fiber market

Polyester FiberIndorama Ventures Public Company Limited (IVL) is a global chemical producer which recently announced about the completion of the share purchase of 83,000,000 newly issued shares in Indo Rama Synthetics (India) Limited (IRSL). This equals to around 31.79% of IRSL’s enlarged share capital (the “Share Purchase”) priced at INR 36 per share. IRSL has established itself as a fiber manufacturing facility in Nagpur, India. This facility has a huge capacity of 605,000 tonnes/ annum. It also consists of polyester chips, fibers, and filament yarns.

IRSL seems to have a perfect strategic fit with IVL’s Fiber strategy in home and apparel. This is so because the company aims on getting into a low-cost position in Asian operations and availing of the innovation in high-margin flourishing markets. This strategic investment allows IVL entry into the huge domestic market wherein local presence offers duty and logistic advantages.

IVL has been consistently investing in India for over three years in the PET business line. India stands as the second largest polyester market base across the world after China with consumption expanding at more than 7.0% per annum and a population of 1.2 billion.

India’s PPC (per capita consumption) of polyester is around 3 kg in comparison to 14 kg in China. Such a low level of per capita consumption is likely to rise along with the increase in India’s per capita GDP. This also brings in the possibility of affluence-related consumption and opportunities for growing into more functional and High Value-added (HVA) products. IVL is in a strong position to benefit from this evolving trend supported by its strong R&D capabilities.

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