The European business of Nuplex Industries, Nuplex Resins BV, has signed a memorandum of understanding (MOU) to establish a joint venture company with KVIL Group (KVIL), a Russian paint and resins producer.

Initially, the 50:50 venture will be responsible for the exclusive sales and marketing of resins produced by KVIL and Nuplex. The joint venture is expected to be formed during the 2012 March quarter, at which time Nuplex will invest €3.5 million mainly for working capital.

The MOU also provides for the venture to build a resins manufacturing site at Belgorod, Russia, within a period of two years, subject to market conditions.

The cost of building a new site is estimated to be around €20 million.

“As the Russian coatings market continues to grow, the joint venture with KVIL will enable Nuplex to participate in this growth,” said Nuplex’s chief executive, Emery Severin. “With a number of our large multi-national customers expanding their Russian operations, the joint venture provides us with the opportunity to supply them and the growing local coating companies, with our European standard resins.

“Entering into Russia through a joint venture enables us to take a low risk approach to building our presence in this emerging market,” Severin added. “Together with our partner KVIL, a highly regarded local producer, we will have the opportunity to build on-the-ground experience before committing a larger investment in a manufacturing site.”