The Hindu Business Line : BOC India plans unit at Bellary

AS part of its ongoing effort to enhance presence in the South, BOC India Ltd proposes to set up a plant in Bellary, Karnataka, the company's second plant in the region, mainly to meet the requirements of Jindal Vijayanagar Steel Ltd (JVSL).

The 1,700-tpd capacity air separation unit, which will produce oxygen and nitrogen in gas and liquid forms and argon in liquid form, is estimated to cost a little less than Rs 200 crore.

According to the 15-year agreement signed in this regard, BOC India will supply 1,400 tonnes of oxygen and nitrogen to JVSL every day. "In addition to meeting JVSL's demand, we will also serve the local merchant market," said Mr Sanjiv Lamba, Managing Director, while speaking to newspersons on Thursday.

The cost of the project would be financed by borrowings (60 per cent) and internal generation (40 per cent). " Funding will be no problem; we are sitting on a pile of cash."

JVSL's requirement of gas is slated to increase in view of the doubling of its capacity to four million tonnes per annum. The company's current requirement is met by Praxair.

BOC India is already working on a 190-tpd capacity plant at Hyderabad, the company's first plant in the South, mainly to meet the merchant market demand.

"We may scale down the capacity of the Hyderabad plant to 100 tpd for the present as the second plant in the region is coming up," Mr Lamba said, adding that the Hyderabad plant would cost around Rs 40 crore.

The commissioning of the Hyderabad plant was due in end-2005 and the Bellary plant a year later.

Mr Lamba sounded bullish about the prospects of the southern region's merchant market for gas. The market was growing at around 12 per cent, which was significant considering the national average of 6-8 per cent growth.

Right now, BOC India's share of the market was around 12 per cent, which is likely to rise to 25 per cent once the Bellary plant started production.

Describing the Southern market as fragmented, with no single company dominating the scene, the BOC India MD said: "In Tamil Nadu, Praxair is pitted against various small units whereas in Karnataka it is Bhoruka. There is no clear leadership in Andhra Pradesh and Kerala again is served by a number of small producers."

BOC India's Hyderabad plant would certainly help the company establish its hold in the State, and with the commissioning of the Bellary plant there would be a move to enter the Kerala market, he added.

Two-thirds of BOC India's gas business is linked to the steel industry; Tata Steel accounts for 50 per cent of the total volume of gas supplied to the steel sector.

Currently, two plants are meeting the requirement of Tata Steel. "We look forward to more business from Tata Steel, which is going in for further expansion including setting up of a new plant."

Mr Lamba added: "We will continue to invest in Tata Steel projects."