The Hindu Business Line : Growth trend seen in chlor-alkali industry

Increase in power costs, high interest rate of borrowed capital and imports are the major reasons for the under utilisation of domestic capacity in the chlor-alkali industry in India, according to Dr M.P. Sukumaran Nair, Managing Director of the state-owned Travancore Cochin Chemicals Ltd (TCCL) here.

Speaking to Business Line in connection with the inauguration of IV Stage expansion of the company's membrane cell caustic soda plant by the Chief Minister, Mr V.S. Achuthanandan, he said the average capacity utilisation in the industry in the country stood at 83 per cent and nearly a lakh tonnes of caustic soda per annum was imported to the country. However, the industry is showing a growth trend, of late, from the recession hit days during 1998-2003.

Notwithstanding this situation, TCCL's performance during April-November 2006-07 has been good due to moderate growth in demand and competitive price per electrochemical unit, he told Business Line. The company could achieve a turnover of Rs 94 crore during this period compared to 84 crore in the same period last fiscal. The profit amounts to Rs 4.53 crore and it is estimated to be around Rs 9 crore by March 31, 2007, he said.

Given the current sales trend, the total turnover during the fiscal is estimated at Rs 150 crore as against 126 crore in 2005-06.

Cyclic nature

However, he said the demand for caustic soda and chlorine indicated a cyclic nature. When demand for caustic soda picks up, production swings up with an equivalent increase in production of chlorine. The chlorine so produced will create a surplus availability and hence it will dip the market price. According to Dr Nair, a large build up of capacity is seen in West Asia on account of availability of cheap power and fuel. Major consumption centres are the emerging economies of Asia where industrial and commercial demand is on the rise.

Industry problems

At the same time, the major problems being faced by the industry are low quality and unreliability in power supply from state grids, increase in power tariff and added taxes, increase in cost of petroleum fuels used for captive power generation and flaking, excessive duty imposed on spare parts and components of plant equipment and reduced import duty on caustic soda which encourages imports.

Caustic soda and chlorine, both products of the chlor-alkali industry, are basic building blocks in the chemical processing industry.

Caustic soda is used by industries such as paper and pulp, newsprint, textile, viscose yarn, staple fibres, dyes, drugs and pharmaceuticals. Chlorine finds extensive use in the manufacture of PVC, pulp and paper, refrigerants.

The latest technology in the production of caustic soda is based on Membrane Cell process. Travancore Cochin Chemicals has switched over to this technology and its current production capacity is 175 tonnes per day of caustic soda and other products.