Deepak Nitrite plans capex of ₹200 crore in next nine months

Betting big on growth opportunities emanating from the US-China trade tensions, chemicals major Deepak Nitrite Ltd has lined up fresh investments for additional products.

The company plans to invest approx ₹200 crore in the next three-nine months for setting up a facility to a solvent - isopropyl alcohol (IPA) at its existing complex at Dahej in south Gujarat.

"In the coming months we are seeing more opportunities opening up in the downstream segments. By February or March, we will come up with one more downstream product, one more solvent - IPA. Also, we are coming up with a power plant. The investment for the two projects will be about couple of hundred crores and these will be commissioned in the next nine months," said Deepak Mehta, chairman, Deepak Nitrite on the sidelines of the FICCI Gujarat State Council's annual day programme here on Thursday.

Referring to the opportunities emerging from the existing trade tensions between the two largest economies, Mehta stated that the situation is favourable not just for the company but for India as well. "We are finding more and more US and European companies that are looking forward to make India as a large outsourcing base. I am quite bullish for the chemical industry. The way infrastructure is growing in India, the demand for Phenol-aceton will only continue to grow in India," said Mehta.

India is currently dependent on imports to meet its phenol requirements with about 2-2.5 lakh tonnes of annual imports.

Deepak Nitrite has set up country's largest phenol-acetone plant at Dahej PCPIR with capacity of about 200,000 tonnes per annum. The capacity for co-product acetone is 120,000 tonnes per annum. This is expected to reduce the import dependence. Mehta stated that last month the company operated its plants at more than 100 per cent capacity.

He further added that making "our own additional steam and power would increase our competitiveness in phenol and acetone." A petrochemical- phenol is primarily used in household products and as intermediates for industrial synthesis, including plywood, laminates and disinfectants, while acetone is co-product of phenol and used primarily by solvent industry for supply to pharma industry, agrochemicals or coating industry.

Considering the future prospects and its plans to venture into more downstream products, Deepak Nitrite has also acquired about 125 acres of land for future expansions.

Giving an outlook about India's chemical and petrochemicals industry, Mehta stated that there is bright prospects with the business is expected to cross USD 300 billion by 2025, as against $170-180 billion now.