The Hindu Business Line : Finolex set to double PVC resin capacity

FINOLEX Industries Ltd is set to double its poly vinyl chloride (PVC) resin manufacturing capacity from the current 1,30,000 tonnes to 2,60,000 tonnes.

Talking to a group of visiting journalists at the company's plant, Mr Saurabh Dhanorkar, Director Commercial, said: "The Rs 500-crore capacity expansion project will be completed in a period of two years after we obtain all the requisite clearances. Though we had obtained all the permissions we re-drafted our proposal to include an all-weather jetty to import the raw material and naphtha, round the year."

"Now fresh clearances from the Ministry of Environment and Forests as well as those from the Ministry of Surface Transport are awaited. With the election process in progress, the company anticipated some delay in obtaining the clearances and consequently in the execution of the project," he said.

"The capacity expansion was planned in the backdrop of a major shortfall in PVC resin production in the country. With the infrastructure for the present factory in position, the project cost can not only be contained, but the increased capacity would also offer greater economies of scale for the operation," Mr J.S. Arora, Director Operations, pointed out.

The project cost will be raised from a combination of accrued internal resources and from debt. The company also planned to tap the foreign debt market, which has often proved to be a lot more attractive in the recent past.

Finolex is the third largest PVC resin producer in the country after Reliance Industries and IPCL. The demand last year was so high that the company performed at well over 100 per cent capacity to produce 1,40,000 tonnes against the rated capacity of 1,30,000 tonnes.

PVC is converted into rigid pipes and is extensively used in agriculture, irrigation, housing and the telecom industry.The upswing in the rural economy, housing and telecom sectors is already translating into increased demand. The company had gone in for backward integration and is currently manufacturing PVC resin for its own pipe division and for the domestic market as well. This being a petrochemical business, Finolex has the double advantage to benefit from the growth in the industrial as well as the rural sector.

The current market share is: Reliance and IPCL together have the capacity to produce 5,05,000 tonnes PVC with a market share of 64 per cent, Finolex with its 1,30,000 tonnes has a market share of 16 per cent, Chemplast and DCW with 60,000 tonnes each have a market share of 8 per cent each and DCM Shriram with 33,000 tonnes has 4 per cent.