The project is being funded on the basis of a debt-equity mix of 70:30. TPL intends to keep at least 51% of the $75-m equity.
Chennai, Feb. 1
TAMILNADU Petroproducts Ltd (TPL) is working on establishing a linear alkyl benzene (LAB) manufacturing unit in Singapore.
The financial closure for the $250-million project is expected to happen by June.
TPL had initially looked at Vietnam for a base in South-East Asia, but decided in favour of Singapore because of the friendlier investment climate in the island country.
The company is also trying to put up another plant in Saudi Arabia, but it is expected that the Singapore unit will get off the mark earlier.
The Singapore project consists of 1,00,000 tonnes of N-paraffin and 80,000 tonnes of LAB. For feedstock kerosene TPL has tied up with a refinery in the Jurong island. The project is being funded on the basis of a debt-equity mix of 70:30. TPL intends to keep at least 51 per cent of the $75-million equity. The company is confident of being able to raise the necessary resources for that.
Meanwhile, the Saudi LAB project of the company has suffered a delay on account of negotiations over feedstock pricing. Earlier, the TPL-Al Zamil joint venture had intended to buy kerosene from the state-owned Saudi Aramco, but the deal fell through over pricing issues. Now, the company is in talks with Shell.
When these two projects come up, TPL expects to be a large player in the international LAB market. "Our vision is to capture 10 per cent of the world market," said Mr RM Muthukaruppan, Managing Director and Chief Operating Officer of the company. Debt swap helps save Rs 3.5 crore: In the third quarter of the current year, TPL reported a net loss of Rs 12.41 crore against a net profit of Rs 8.15 crore in the same quarter last year, despite a significant saving in interest costs.
The high costs of raw material benzene and kerosene, which are both crude-oil-based were the cause of the loss. Benzene prices increased to $1,200 a tonne during the quarter, from about $450 a tonne at the beginning of the year. Kerosene prices rose to Rs 22,000 per kilolitre, from Rs 12,000 a kl.
Interest cost declined to Rs 6.36 crore from Rs 8.89 crore, because the company swapped Rs 125 crore of high cost debt with lower cost debt. In a full financial year, the benefit of this would be close to Rs 3.5 crore, Mr V. Ramani, Director and Chief Financial Officer, told Business Line. Turnover for the quarter was at Rs 218.86 cr from Rs 193.40 cr.
Mr Muthukaruppan said that since the prices of both benzene and kerosene had eased in the recent week, Q4 could be expected to be better.