Lanxess could buy Indian peer Gwalior Chemical Industries Ltd. or another small or mid-sized company on the subcontinent, a person familiar with the plans told Reuters on Wednesday.

Gwalior, among other Indian companies, "is on Lanxess's radar screen", the source said, adding that the German company had already been given access to some of Gwalior's accounts.

A Lanxess spokesman declined to comment.

Lanxess Chief Executive Axel Heitmann said in a newspaper interview last week that he would seek to buy companies that were put on offer for an attractive price even though the ongoing economic downturn would warrant particular caution.

Gwalior posted net income of 243 million rupees ($8.60 million) on sales of 2.95 billion rupees in the fiscal year through March 2008, supplying ingredients for crop chemicals, drugs, dyes and flavours.

The Mumbai-based group boasted an operating profit margin of 18.8 percent.

Lanxess -- a leading maker of rubber for tyres which also produces chemicals for drugs, insecticides and for the treatment of leather -- has stressed that its investments for growth would be focused on emerging markets.

The group, spun off from Bayer in 2005, has hived off low-margin businesses while expanding production of more profitable specialty chemicals such as synthetic rubbers in Latin America and Asia.  

Still, it could not escape the maelstrom of slumping global demand for chemicals and has delayed a key rubber investment in Singapore and has temporarily curtailed production.

The company has described India as its second-most important future market in Asia after China.

Lanxess is building a 50 million euro ($66.02 million) site for the production of ion exchange resins to be used for industrial water treatment in Gujarat, which would become the company's second production site in the country.

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