Chemplast PVC plant begins trial production

K. T. Jagannathan

Tamil Nadu Deputy Chief Minister M.K.Stalin with Industries Secretary M.F. Farooqui - Photo: D.Gopalakrishnan

The Rs.600-crore Greenfield PVC (poly vinyl chloride) project of Chemplast Sanmar Ltd., the flagship company of the Sanmar Group, at SIPCOT Phase II in Semmankuppuam here has commenced trial production.

The 170,000-tonne capacity PVC project, which will be formally inaugurated by M.K. Stalin, Deputy Chief Minister of Tamil Nadu, on Monday, is set to go commercial anytime now.

The project has come up on a 69.5-acre land. The main raw material for the project is vinyl chloride monomer (VCM). Chemplast Sanmar will rely on imports for the meeting the VCM needs of its brand new PVC plant.

The Cuddalore project will see the total PVC capacity of the company going up to 235,000 tonnes a year. The company has already a 65,000-tonne PVC plant at Mettur, which also uses VCM as the raw material.

The company has constructed a marine terminal facility on the sea front near Chitrapettai village for facilitating the import of VCM. Conducing a tour of media persons to the project site and the marine terminal facility, V. Ramesh, Director of the company, said the marine terminal was connected to the VCM storage facility in the plant area via a sophisticated `pipe-in-pipe' pipeline, running a distance of 3.5 km. The objective was to maximise the safety features in the transportation of imported VCM from the ship to the plant site, he added. The company, he said, had gone in for a technology tie-up with Ineos Vinyls of the U.K. According to Mr. Ramesh, the imported VCM would be brought and stored at below atmospheric temperature at atmospheric pressure.

M.N. Ravikumar, Vice-President (Projects) and Mr. Ramesh explained the salient features of the project to the visiting presspersons. The project comprises a Rs.20-crore seawater desalination plant and a Rs.15-crore reverse osmosis plant to treat process effluents. Asserting that the plant ``is designed on the basis of zero liquid discharge' concept, the officials said that residual solid waste would be sent to a common discharge facility in Chennai as mandated by the pollution control authorities. The effluent treatment plant would entail a recurring cost of Rs.1 crore a year, they said. Mr. Ramesh said it would cost the company an additional Rs.40 per cubic meter for conversion of sea water. The objective was to eliminate drawl of ground water for the plant use, he pointed out. The water needs for the plant is estimated to be in the vicinity of 3,500 kilo litre a day.

Addressing a press conference here on Saturday, P.S. Jayaraman, Chairman of Chemplast Sanmar Ltd., said the "Cuddalore project means a lot to us.'' The company had been in PVC business for the last 42 years, he said. He asserted that it was time for Chemplast to play the volume game. At full capacity, the Cuddalore project could add up another Rs.800 crore to Rs.1,000 crore to the company's turnover which currently hovered around Rs.800 crore, he said. Mr. Jayaraman said that the demand for PVC had seen an abnormal 30 per cent growth in the last few months. With a supply of one million tonnes, the country still faced PVC shortage of around four lakh tonnes. This gap would persist, he felt. A combination of factors ranging from stepped use of PVC as profiles (door and window frames et al), increasing focus on housing and the like would keep the demand for PVC up, he said. Other than Chemplast, DCW was the lone PVC player in the South, he pointed out. Hence, he was very upbeat about the prospects.

Mr. Jayaraman said Chemplast had an agreement with TCI Sanmar in Egypt for uninterrupted supply of VCM to its Cuddalore project. Currently, the Cuddalore plant would be importing VCM from the Middle East and Japan. Once the TCI plant went on stream, Chemplast could get its VCM feed from its joint venture in Egypt, he added.

Fielding a range of questions, Mr. Jayaraman admitted that the project had to encounter a time over-run of close to one year due to extraneous factors. Consequently, the cost, too, had escalated from Rs.550 crore to Rs.600 crore. While the debt component of the project remained at Rs. 300 crore, the equity portion had risen to Rs. 180 crore from Rs. 150 crore (raised through a rights issue). The balance was funded through internal accruals. At 4:1, the current debt-equity ratio was not a healthy one, he said. ``We are very keen to come back to a proper gearing level very soon,'' he added.