InvestorQ : What is the agreement between Grasim of the Birla group and Berkshire Hathaway of Warren Buffett fame?
Lavanya Subramanian made post

What is the agreement between Grasim of the Birla group and Berkshire Hathaway of Warren Buffett fame?

Anamika Sodhani answered.
10 months ago

Grasim Industries, the holding company of the Aditya Birla group, entered into a definitive agreement with Lubrizol Advanced Materials, based out of Ohio in the US. Lubrizol is a subsidiary of Berkshire Hathaway, the investment engine of Warren Buffett.

The deal is to manufacture and supply chlorinated polyvinyl chloride or CPVC resin in India. The initial production is expected to commence only in late 2022. This special polymer material is widely used in hot and cold water pipes and will be made by Grasim’s Chlor Alkali unit at a facility in the Western state of Gujarat.

The total capacity of the plant when completed will be 100,000 tonnes and will be done in phases. When the plant is completed and commissioned, it is expected to be the single largest site capacity for CPVC resin production globally. That is real global scale for Grasim.

Lubrizol will invest in the project in two phases and will bring in capital and the technology. Grasim will provide its manufacturing expertise required for the project. Grasim will provide land, materials and utilities and will receive commercial charges over and above costs. In short, this could be a major outsourcing project under Make in India.

There is a huge domestic market because currently India is one of the largest consumers of CPVC. This is primarily in the plumbing pipes and fittings. With the government likely to focus on access to clean drinking water, the prospects for this business could be humungous.

Lubrizol is the largest manufacturer of CPVC resin and CPVC compounds worldwide. It is also the originator of the product. Lubrizol products have been instrumental in bringing safer water to over 200 million citizens across the length and breadth of South Asia.

Eventually, for Lubrizol, Grasim may become the manufacturing hub for CPVC for the entire South Asian region. It will also test how quickly India can move on its chosen Make in India as well its chosen Atma Nirbhar path.