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Chemplast PVC project goes to AP

By M. Ramesh
The Hindu Business Line
www.thehindubusinessline.com

CHENNAI
Jan. 7, 2005

CHEMPLAST Sanmar Ltd today signed a memorandum of understanding with the Andhra Pradesh Government to explore the possibility of putting up a greenfield PVC project near Krishnapatnam.

The MoU was signed by the officials of Chemplast Sanmar and the Government in the presence of the Chief Minister, Mr N. Chandrababu Naidu.

The project was originally supposed to come up at Cuddalore in Tamil Nadu, but the company had to look for an alternative site, because approval from the Tamil Nadu Pollution Control Board (TNPCB) was not forthcoming.

Incidentally, Krishnapatnam was one of the sites the company initially looked at, but had chosen Cuddalore, because the Sanmar group was moored in Tamil Nadu and was comfortable working in the State.

However, Krishnapatnam is closer to PVC consumers. Consequent to the (possible) change in the location, the size of the project is upscaled from 170,000 tonnes to 200,000 tonnes.

Chemplast Sanmar's Managing Director, Mr P.S. Jayaraman, told Business Line that the higher cost of the project, due to the scale-up, would be offset by the lower cost of the jetty the company would put up, to bring in the imported feedstock. At Cuddalore, the jetty would have cost more.

The investment on the project, therefore, stands around Rs 500 crore. Two international financial institutions, IFC, Washington, and DEG of Germany are bringing in equity funds to the project, company officials said. (This would then imply that the project would come under a separate company.)

It is estimated that the change in the location would put the clock back by one year, as studies (such as for pollution and water) would have to be made afresh.

"Now we have to go to the financial institutions and inform them of the changed location", Mr Jayaraman said, adding that the institutions would be easy to convince, because Krishnapatnam is closer to PVC consumers.

Chemplast Sanmar has, at present, a capacity to produce 60,000 tonnes of PVC resin at its plant at Mettur, Tamil Nadu. (The company also produces caustic soda, and chlorine.)

Once the 200,000-tonne plant comes up, the Mettur plant would be dedicated to producing speciality PVC resin, used for special applications such as PVC cloth and upholstery. The new plant would cater to the pipes segment, which is growing at eight per cent per year.

Mr Jayaraman said that Chemplast itself might put up another plant for the manufacture of PVC pipes from PVC resin.

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