The Telegraph
Wednesday , August 6 , 2014
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Haldia Petro shutdown spells doom for Bengal plastic units

Calcutta, Aug. 5: The plastic processing industry in Bengal is bearing the brunt of Haldia Petrochemicals’ sudden shutdown with at least 150 units closing down, rendering thousands jobless.

Plastic industry veterans said more units might shut down or cut back production because of the acute shortage of different grades of polymer that HPL feeds the eastern region.

Haldia Petro went for an emergency shutdown on July 6 following a snag in the naphtha cracker unit. Neither the management nor the promoters — the Bengal government and The Chatterjee Group — have so far clarified when the plant would re-open, sparking speculation that the closure was necessary because of a severe cash crunch in the company.

“We have tried to contact the HPL management but failed to get any response. We have also written to industries minister Amit Mitra. Plastic processors want to know when they will resume operations. The industry is in doldrums,” Pradip Nayyar, president of the Indian Plastic Federation, said.

The plastic industry in eastern India employs more that 50,000 workers in 2,500 units. HPL’s closure has created a polymer shortfall of 10,000-12,000 tonnes a month in eastern India.

Makers of injection syringes, crates, bottles and buckets have been the worst hit so far as HPL has a near monopoly in the polymer grades that go into making these products.

HPL, which has been operating at half of its installed capacity, was supplying 36,000 tonnes of polymer a month across India. Of this, eastern India was absorbing 17,000 tonnes, including 11,500 tonnes by units in Bengal.

The other big Indian polymer makers such as Reliance Industries, Indian Oil Corporation and GAIL are unable to fill up the void created by HPL as they have contracts in place to supply to other players.

“All the players are selling more than usual to the eastern region. But there is still a gap. Those who were dependent on HPL exclusively are the worst hit. Our first obligation is, obviously, to supply to those who have been our old customers. We can’t supply to others,” an official from Indian Oil said.

Import of polymer, especially from China, is also an option but it is beyond the reach of small players. Moreover, there is a time lag of a month between placement of order and delivery.

“Many small plants were buying 5-10 tonnes from HPL. But to import, the minimum quantity should be three containers or 150 tonnes,” Ashok Jajodia, secretary of the IPF, said.

Industry players fear that finished goods from other states will infiltrate Bengal in this situation. This will translate into revenue loss for the state.

HPL had in the past started a practice of taking advance from processors to meet its working capital requirement. The company had then raised Rs 60-70 crore. K K Seksaria, former president of the IPF, said the industry was ready to implement this if HPL came up with the proposal again. “I think they can raise Rs 100 crore by this,” he said.

HPL’s market share in the east has shrunk from 60 per cent to 30 per cent as the plant is operating at half the capacity due to paucity of funds. HPL needs Rs 60-70 crore to restart the plant.