Ahmedabad-based, Kiri Dyes and Chemicals limited (KDCL) has join hands with Zhejiang Lonsen Group, a Rs 4.2 billion Chinese chemical firm for the setup of a manufacturing unit at Vadodara in Gujarat for production of reactive dyes.

Under the pact, KDCL and Zhejiang Lonsen Group have inked a memorandum with an initial investment of US $10 million in 60:40 ratio.

Reactive dyes are used in cotton textile, leather, and paint and printing ink industries.

The JV will start with an initial production capacity of 20,000 tonnes a year. The capacity will be enhanced to 50,000 tonnes a year after successful execution of the project.

The JV is expected to become operational by the end of 2008.

Kiri Dyes is entering the capital market with its initial public offering (IPO) of 37.5 lakh equity shares on March 25. The price band has been fixed between Rs 125 to Rs 150.