Financial Daily from THE HINDU group of publications
Friday, Dec 13, 2002
TPL revamp to hike LAB capacity to involve Rs 128 cr ECH, caustic soda capacities may also be expanded
CHENNAI, Dec. 12
TAMILNADU Petroproducts Ltd proposes to spend Rs 128 crore on the `revamp project' that has just got under way. The company has raised Rs 100 crore through an issue of non-convertible debentures for the project. The rest of the money would come from internal generation.
Alongside, the company is mulling a proposal to expand both epichlorohydrin and caustic soda capacities.
The revamp project will increase the company's LAB (linear alkyl benzene, used in the detergents industry) capacity from 97,500 tonnes per annum to 1,20,000 tonnes. The project was conceived a couple of years ago, but the company waited to determine technically, whether the increase in capacity would happen or not.
The TPL Managing Director, Mr D. Arunachalam, told Business Line that epicholorohydrin (or ECH, a chemical used in the epoxy resins industry) sales had picked up after the Government imposed a 12 per cent safeguard duty on imported ECH.
Therefore, the company has so far sold about 5,000 tonnes of the chemical, which is more than what it sold in any year, since the ECH project was put up in 1995. Mr Arunachalam said that the company expected to close the current year with sales of around 7,000 tonnes. Next year, production will touch 10,000 tonnes, or 100 per cent of capacity.
An order from a Saudi Arabian company for 1,000 tonnes (valued at around Rs 5 crore) also helped boost sales. "This (order) will pave the way for further export possibilities," Mr Arunachalam said, adding that the importer was happy with the quality of the ECH.
Answering a question, he said that the product was being sold on "no cash loss basis". When the production increases further, TPL would be able to make profits on ECH also.
Since the market is buoyant, the company proposes to expand the ECH capacity, by 50 per cent, to 15,000 tonnes per annum.
Alongside, TPL "is seriously considering" expansion of its caustic soda capacity, by around 30 tonnes per day.
A study for assessing the feasibility of expanding the capacities of ECH and caustic soda is underway, and is expected to take three months to finish. If the study is positive, it would take another 12 months to complete the projects, Mr Arunachalam said.
He said that the company had at the back of its mind, a thought over the possibility of reworking the newly set-up 20 MW captive power plant, so that it can operate on coal, instead of furnace oil.
This is being thought of, in the context of rising furnace oil prices (which move in tandem with international crude prices). However, the viability and the environmental impact of running the plant on coal would have to be studied, Mr Arunachalam said.
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