Tamil Nadu Petro Products to set up Rs 9 bn LAB plant. - Views on News from Equitymaster

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  • Apr 3, 2000 - Tamil Nadu Petro Products to set up Rs 9 bn LAB plant.

Tamil Nadu Petro Products to set up Rs 9 bn LAB plant.

Apr 3, 2000

According to the Economic Times, Tamil Nadu Petro Products Ltd (TPL) is setting up a second Linear Alkyle Benzene (LAB) plant with a capacity of 0.125 m tonnes near Haldia at a cost of Rs. 9 bn and also plans to set up a paraffin unit. TPL is jointly promoted by SPIC and Tamil Nadu Industrial Development Corporation and is engaged in the manufacture of petrochemicals and related products.

TPL plans to go operational with its new project in the next two years before the import duty is brought down to five per cent under World Trade Organisation norms. This is so that it can start production until then and achieve price competitiveness to match international competition.

The LAB market globally is growing at the rate of 8 to 9 per cent a year and prices are also showing an uptrend.

TPL which already has a presence in Tamil Nadu with a 85,000 tonnes per annum plant in Chennai is seeking to establish itself in the east, as the investment climate has improved considerably and will give it reach to the markets of South East Asia and the Far East.

TPL will source benzene for production from Haldia Petrochemicals and kerosene through imports.

The other competitors in the market are Reliance with a 1 lakh tonnes per annum capacity and Nirma with a 75,000 tonnes per annum capacity.

With the expansion in capacities, TPL can hope to achieve economies of scale with regard to cost of production, which will enable it to effectively compete with the other two rivals and thereby increase itís market share domestically and also increase itís presence internationally.

TPL proposed to raise funds through a combination of internal accruals, private placement of equity and borrowings.

The expansion will result in a growth in turnover and also increase net profits.

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