India's Aditya Birla group is to invest $120 million in a carbon black manufacturing plant in the southern tip of Sri Lanka.
The plant is to be located in the Export Processing Zone (EPZ) at Koggala, near Galle, said a statement from the Sri Lankan ministry of enterprise development.
Carbon black is used to manufacture tyres. The Koggala plant is meant to serve customers in Sri Lanka, India and other countries of South Asia.
The agreement on the investment was finalised at a meeting between Sri Lanka's Enterprise Development Minister Sarath Amunugama and the Birla group in New Delhi recently.
Amunugama had convinced the Birlas that Sri Lanka would be a better option than a location in western India, which the company was looking at. Sri Lanka tops in the export of solid tyres, the minister had pointed out.
The Aditya Birla group has large carbon black manufacturing plants in Thailand and Egypt. The turnover of the Thai plant is said to be over $3 billion.
The group has an annual turnover of $24 billion and a market capitalization of $31 billion, placing it in the league of Fortune 500 companies. Over 50 percent of the group's revenues come from its overseas operations.
The Aditya Birla group is no stranger to Sri Lanka. UltraTech-Ceylinco Cement, which is a joint venture, has a 0.6 million tonne cement packing plant in the island. It has a local market share of 16 percent.
Recently, there were reports saying that the group was trying to rebuild and run the Sri Lankan government's abandoned cement plant at Kankesanthurai in war-ravaged Jaffna in northern Sri Lanka.