Chlor-Alkali and derivatives maker, Meghmani Finechem Ltd has commissioned its epichlorohydrin (ECH) plant with capacity of 50,000 tonnes per annum at Dahej, Gujarat.

Despite a challenging external environment, the plant is commissioned on time and without any cost overrun, a testimony of the company’s strong project execution skills, it said in a statement. The project cost was estimated at ₹275 crore.

Meghmani Finechem Ltd will become India's first company to indigenously produce ECH, which is currently a fully-imported product.

"This will reduce the dependence of ECH consumer on imports thereby helping the country save its foreign exchange reserves," the company said.

ECH consumption

About 80 per cent consumption of ECH happens in epoxy resin manufacturing, which is used in paint industry, automotive, construction material, windmill, adhesives, electronics. The remaining 20 per cent of the consumption goes to the pharmaceuticals industry, for water treatment and paper chemicals.

The company estimates current ECH demand in India at around 80,000 tonnes per annum. "But considering the increase and new capacities of epoxy resins coming up, we see a significant surge in demand of ECH in next 2 -3 years, plus the normal demand for ECH is expected to grow around 10 per cent in coming five years. Globally, the demand for ECH is expected to grow by 4 per cent to 5 per cent," the release said.

ECH can be manufactured through propylene or glycerin process, which is an environmentally-friendly method. MFL has opted the glycerin process, where key raw material being used is a fully renewable resource. This process reduces the energy and water consumption thereby cutting the company’s carbon footprint, it said.

Maulik Patel, Chairman and Managing Director, MFL said, "I am very happy to announce that we commissioned India’s very first ECH plant based on Glycerol process where major raw material, glycerine, is 100 per cent renewable resource. Owing to this process, there will be lower consumption of energy and water and will be saving on carbon footprint."

"ECH is a high-value product, considering the current prices of ECH, we expect asset-turnover ratio to be above 2.5x, which will improve our absolute EBITDA and will end up providing higher ROCE, ultimately creating value for the shareholders," he said.

This makes company to move in the direction of being a multi-product company with increase in revenue contribution from the derivative segment.