Targeting the domestic market for imported propylene glycol, Manali Petrochemicals Ltd. has decided to more than triple its production capacity to 70,000 tonne per annum (tpa) at an outlay of Rs 150 crore, said a top group official.
In the first phase the Rs 685 crore revenue by Manali Petrochemicals, part of the AM International Group, will increase the propylene glycol capacity from 22,000 tpa to 46,000 tpa at an outlay of Rs 60 crore. Later, the second phase expansion will be to 70,000 tpa at Rs 90 crore.
"We see good growth opportunity in the propylene glycol business. There is substantial amount of imports which the company would be targeting to replace," Ashwin C Muthiah, Chairman, AM International, told reporters.
Muthiah said the product finds use in the food and pharmaceutical industries where we see the demand will increase.
"We are the only manufacturers of propylene glycol in the country with a demand for nearly 1,00,000 tpa. Nearly 75,000 tpa of the product are imported from various countries, including China," said Muthukrishnan Ravi, Managing Director and Group CEO Petrochemicals.
On the rationale for funding the expansion project from internal accruals than to have some part as bank debt, Muthiah said the company was generating funds and decided to use them as the customers were unsure about how the market would be. In this scenario, it was decided to use internal accruals.
Propylene glycol is used in food, flavours, pharmaceutical sectors and also for industrial applications.
Though the market was growing at five per cent per annum, Manali Petrochemicals is more than doubling its propylene glycol capacity in the first phase to increase its market share, replacing imports.
According to Ravi, the environment impact assessment (EIA) studies were going on and the first phase expansion will be completed in 18-21 months from the date of regulatory approvals.
The expansion will happen at the company's existing facility in Chennai.
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