New Delhi, April 20: Kanoria Chemicals has decided to set up its 10,000-tonne-a-year methanol-based chemical plant in Visakhapatnam instead of Nayachar, the proposed petroleum-cum-petrochemical hub in Bengal, for which the state government is seeking clearances.

In Visakhapatnam, the Rs 200-crore plant will be located 30 km from the port. The distance from the port is a disadvantage as the company will have to install pipelines or hire containers to transport the imported methanol, which is volatile and inflammable.

The cost of production would have been much lower in Nayachar, which is very close to the sea. The Kanoria group was initially keen to set up the plant at Nayachar as the company’s registered office is in Calcutta, though its headquarter has shifted to New Delhi.

However, with the hub getting delayed, the group decided to move to Visakhapatnam — the next best location on the east coast. The Kanorias want to start buying equipment from June and set up the plant within 2009.

They are eager to tap the booming market for chemicals, which accounts for 18 per cent of the country’s manufacturing output and is expected to grow 10 per cent over the next three years.

The proposed plant will have annual capacity to produce 10,000 tonnes of pentaerythritol, 1 lakh tonnes of formaldehyde, 10,000 tonnes of caetaldehyde, 6,000 tonnes of hexamine, 3,000 tonnes of ethyl acetate and 6,000 tonnes of acetic acid. Kanoria Chemicals had reported a net revenue of Rs 110.88 crore and a net profit of Rs 6.27 crore in the third quarter of 2007-08.

The hurdles

On Nayachar, top officials in the ministry of chemicals and fertilisers said various departments had sent their queries to the Bengal government. After the state answers them satisfactorily, the clearances will be processed.

The proposal will have to be vetted by the ministries of environment, railways, transport, industry, finance and home. Bengal had initially identified Nandigram for the hub but had to shift it to the largely uninhabitated island of Nayachar after opposition from the residents of Nandigram.

The Nayachar hub will be spread over 164 square km, of which 99.5 sq km will be a processing region where factories could be set up. Indian Oil will be the anchor investor at the hub, which will be set up by Indonesia’s Salim Group along with the West Bengal Industrial Development Corporation (WBIDC). The Salim Group and the WBIDC and some other entities have formed PCR Chemicals Pvt Ltd, the anchor developer of Nayachar.