DSCL to double chlor-alkali plant capacity

June 6th, 2008 - 5:08 pm ICT by IANS  

By P.S. Anantharaman
Ahmedabad, June 6 (IANS) The Rs.27 billion DCM Shriram Consolidated Limited (DSCL) is more than doubling its chlor-alkali production capacity at its Bharuch plant in Gujarat with an investment of Rs.3.2 billion. The third largest chlor-alkali manufacturer in India after Gujarat Alkalis Ltd and the Aditya Birla group, the Delhi-based DSCL plans to enhance its Gujarat plant capacity from 200 tonnes per day to 435 tonnes.

It has sought a corporate loan from the Washington-based Internal Finance Corporation (IFC).

According to information on the IFC website, DSCL has made a proposal for a “corporate loan plus loan equivalent exposure to convert DSCL’s existing and proposed IFC loans into Indian rupees to hedge the company’s US dollar exposure.”

S.K. Aggarwal, executive director and head of DSCL chemicals business, declined to divulge the quantum of loan sought. “We will draw on internal accruals and may garner resources from Indian banks and financial institutions” once IFC decided on the company’s proposal, he said.

The corporate loan is proposed to be used primarily for the proposed capacity expansion at Bharuch, as well DSCL’s modernisation projects at its Kota, Rajasthan facility and refinancing an existing loan.

IFC will participate in the project as a strategic investor picking up a 25 percent equity. It already has an existing investment in DSCL, made in 2005.

DSCL is also putting up a 50 MW captive power plant along with the expansion to retain its position as a low-cost producer of caustic soda and chlorine. Chlor-alkali production is extremely power intensive.

Originally, the company intended to expand the capacity to 360 tonnes a day but it has now opted to produce more to retain its market share as other players are either adding or intending to augment their current capacities.

The most recent announcement was that of Meghmani Organics Limited, another Gujarat-based company, which is setting up a new plant with a capacity to manufacture 110,000 tonnes caustic soda annually.

DSCL is a diversified company with four main businesses - caustic soda/chlorine, polyvinyl chloride (PVC), urea and sugar. DSCL’s chemicals facilities include a large integrated unit in Kota and a chlor-alkali plant in Bharuch.

Primarily serving the northern and western Indian markets, where it also has a freight cost advantage relative to other domestic players and imports, DSCL’s strengths are its low cost integrated production facilities and close proximity to raw material.

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