Sanmar lines up $550-m investment in Egypt

More domestic projects in the pipeline

Egypt to India

TCI's plant at Port Said will produce 275,000 tonnes of caustic soda, and 235,000 tonnes of chlorine. The chlorine will be used to produce 400,000 tonnes of Vinyl Chloride Monomer, feedstock for PVC that Chemplast produces.

Chennai April 13 The Sanmar group, which completed the acquisition of Trust Chemical Industries (TCI) of Egypt last month for $275 million (Rs 1,200 crore), proposes to invest additionally at least another $275 million on revving up the plant's main operations and downstream products.

The group's only listed company, Chemplast Sanmar Ltd, will also benefit from the acquisition, the group's Chairman, Mr N. Sankar, told a press conference here on Friday.TCI's one-year-old plant at Port Said on the Suez Canal will produce 275,000 tonnes of caustic soda, and 235,000 tonnes of chlorine. The chlorine will be used to produce 400,000 tonnes of Vinyl Chloride Monomer (VCM), a feedstock for PVC that Chemplast produces.

Half the production of VCM is to be brought to Cuddalore, where Chemplast is putting up a Rs 520-crore, 200,000-tonne PVC plant. Chemplast also produces caustic soda. Because power cost in Egypt is very low — 90 paise a unit — TCI will always be a low-cost producer of caustic soda. The caustic soda industry is very cyclical and during a downtrend Chemplast could buy caustic soda from TCI and sell it in India.

Mulling bond issue

The acquisition of TCI was funded by a $300-million bridge loan from ICICI Bank. To repay the loan and for further investments in TCI, the Sanmar group is studying various options, including a bond issue in Europe, Mr Sankar said.

The Rs 1,200-crore investment in Egypt is a part of a Rs 3,950-crore investment programme the Sanmar group has planned for the next three years, the group's Deputy Chairman, Mr Vijay Sankar, said. The investments would fuel the group's topline growth — expected to reach over Rs 5,700 crore from Rs 1,600 crore now by 2009-10.

Other projects

Apart from TCI and the Cuddalore plant, the group intends to put up a 20,000-tonne brownfield steel foundry near its existing foundry at Tiruchi. It also intends to build a plant for 30-tonne polysilicon plant, whose output will be used for producing silicon wafers. Yet another project is a 48.5-MW coal-based power project, which will replace its furnace oil-based power plant at Mettur.

The group also spent Rs 150 crore on acquiring a German foundry, Eisenwerk Erla GmbH. The Rs 460-crore company's foundry is the oldest foundry in the world, set up in 1451 AD. Eisenwerk is a profitable company.

It was said at the press conference that the outlay of the Cuddalore PVC plant was increased by Rs 70 crore for a 30,000-tonne capacity enhancement.