Omnova sells rubber facility in India

Beachwood, Ohio – Speciality chemicals and polymers maker Omnova Solutions Inc. has shed a non-core business in India to put more focus on its primary product segments.

It sold its Indian rubber production operation, Omnova Solutions India Private Ltd., to Apcotex Industries Ltd., based in India, for about $5 million (€4.5 million) in an all cash transaction. Papers were signed on the transaction 5 Feb, a spokeswoman said, and the money transfer was completed on 8 Feb.

The deal includes a manufacturing facility in Valia, India, and its associated product lines: acrylonitrile butadiene rubber in bale form, high styrene rubber masterbatches and NBR-PVC polyblends. Omnova said the sale is not expected to have any material impact on its operating income for 2016.

While the Valia plant is the only Omnova site that made those particular product lines, the spokeswoman said, the company continues to make latex products at its facilities in North America, Europe and Asia. “The India plant did not make the latex that is part of our core strategic business,” she said.

All the lines sold were part of Omnova's acquisition of the Eliokem global specialty polymers business and did not fit well with the rest of Omnova's product portfolio.

Omnova will maintain a sales and market development office in Mumbai, India, to manage the company's specialty polymers in the Indian market through imports from other Omnova plants in Asia, Europe and North America. “The Indian market remains important to us,” according to Kevin McMullen, chairman and CEO of the firm.

He said India “presents exciting opportunities to grow the more strategic specialty chemicals and additives that we are currently selling into that market: specialty coatings reinforcing resins, tire cord latex, elastomeric modifiers, antioxidants and products for oil and gas drilling.”

Omnova plans to leverage its manufacturing and technology capabilities on three continents to remain a strong supplier of differentiated solutions to the country and surrounding region, McMullen said.

It sold the Indian operation, which recorded sales of about $28.2 million and had a net loss of $400,000 in fiscal 2015, to focus more on its strategic priorities, including growth of its specialty businesses, he said.

Those business units include specialty coatings, nonwovens, oil and gas additives, elastomeric modifiers, construction materials laminates and films, and coated fabrics.

Omnova Solutions India is the only producer of nitrile rubber in India and one of only two manufacturers, with Apcotex being the other, to make high styrene rubber in the country.

While it didn't fit with Omnova, it does with Apcotex, which gains new product lines, new technologies and new processes “with a potential to scale up significantly” with the acquisition, said Abhiraj Choksey, managing director of the company.

Apcotex's long-term strategy is to expand within the emulsion polymers industry through organic and inorganic growth, the firm said.

Adding the business gives the company the opportunity to grow in a number of new segments, including nitrile rubber, rice de-husking rolls, rubber hose, moulded rubber products and others.

The company manufactures products used in industries such as paper, carpet, construction, footwear, automotive components, textile and non-woven goods.

“We will continue to focus on improving market share in India, improving capacity utilization, reducing high cost structures and optimizing usage of capital,” Choksey said.