Calcutta, Oct. 1: Haldia Petrochemicals Ltd (HPL) is planning a second unit that will more than double its capacity.
The company has drawn up a concept note that was presented before the board when it met in Delhi last week. The second unit will have a one-million-tonne capacity — the standard size across the world now — and will involve an investment of Rs 4,000-5,000 crore.
The development comes at a time when the promoters — The Chatterjee Group and the Bengal government — are fighting over the control of HPL in the Company Law Board.
But the Bengal government said the court battle would not affect the company’s future. “No one doubts the growth potential of HPL,” Sabyasachi Sen, commerce and industries secretary and a board member, said.
The board would formally discuss the project at its next meeting, Sen added.
HPL started its commercial operations in August 2001 and plunged headlong into losses as a result of the high debt burden. It was pulled out of the red after a thorough debt restructuring in 2004-05. In the last fiscal, it clocked a gross turnover of Rs 6,930 crore.
The company now has a capacity of 0.5 million tonnes, considered tiny by global standards. “For HPL to remain competitive, it must double the capacity,” Sen said.
It is in the middle of a small expansion and is spending Rs 700 crore, funded through internal accrual, to increase the capacity of the first unit to just over 0.7 million tonnes.
However, a new unit will call for fresh borrowing as well as equity and it is to be seen how the two promoters agree on the mode of financing.
Not much land will be required for the project, which will take three years to complete. Starting such a project from scratch would have cost nowhere less than Rs 7,000 crore but since this is an expansion, the cost is considerably lower. Like the first unit, the second one too will be naphtha-based.
The expansion plans come when Bengal has decided to develop Haldia as a chemical hub. Last week, it signed an agreement with Indian Oil, making the company an anchor investor. HPL’s products — polymers and chemicals — are basic ingredients in many chemical industries.
HPL commands 23 per cent share of the domestic market, which is dominated by Reliance and IPCL. With the expanded capacity, the five-year-old company is eyeing the Southeast Asian and Chinese markets. Sales should not be a problem, experts say, in view of the high growth of the petrochemical industry in the country.