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M. Ramesh

CHENNAI, May 6

TAMILNADU Petroproducts Ltd will invest Rs 120 crore in expansion as the outlook has brightened for all the three of its businesses — LAB, ECH and caustic soda.

The expansion project, expected to be completed in about a year, will increase its n-paraffin capacity from 64,000 tonnes to 94,000 tonnes and its LAB capacity from 95,000 tonnes to 120,000 tonnes.

The 20 MW captive power plant will be commissioned in about a month. Once on stream, the plant will save TPL about Rs 15 crore a year, even after taking into account the additional interest and depreciation costs. In 2001-02, TPL spent Rs 104.57 crore on power and fuel.

The power plant will turnaround the heavy chemicals division — the caustic soda/chlorine unit that TPL acquired from SPIC last year. This will enable the division to produce caustic soda and chlorine cheaper. Chlorine is an input for the epichlorohydrin (ECH) division. TPL would have the flexibility to sell chlorine directly or put it into the manufacture of ECH, depending upon the market prices for the two chemicals,

"The heavy chemicals division will turnaround this year, and the ECH division next year," TPL's Managing Director, Mr D. Arunachalam, told Business Line today.

The prices of both caustic soda and chlorine are showing signs of firming up now.

Vantico, the new partner in the joint venture, Petro Araldite, is expected to increase its offtake. Last year, the erstwhile co-promoter Ciba Geigy sold its 76 per cent stake in the venture to Vantico (and paid TPL Rs 63 crore as ``compensation''!).

TPL expects to sell 7,000 tonnes of ECH this year, thanks to the projected rise in Petro Araldite's buying.

Furthermore, TPL has applied for a `safeguard duty' on imported ECH. If that happens, ECH sales would be brisk.

Mr Arunachalam said that even last year (2001-02) would have been better, but for the lack of water. "Water played the spoilsport," he said, adding that the company was striving to achieve self-sufficiency in water.

Finally, the outlook for LAB is also expected to be good (hence the expansion).

One of the reasons for this is the efforts to develop both domestic and export markets bearing fruit.

"Earlier, we used to be off and on in the export markets," Mr Arunachalam said. But from last year, there has been a clear focus on exports. In fact, exports sustained the company's sales last year.

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