IOC puts polypropylene unit back on track
New Delhi   18-May-2011

Having made its entry last year into the polymer business, IndianOil now plans to invest Rs. 4,500 crore in a polypropylene project at its Paradip refinery. RIL is currently the country’s biggest polypropylene maker.

IOC entered the polymer business last year with a naphtha cracker unit at the Panipat refinery. “The polypropylene unit was put on hold due to stressed finances. However, we now plan to take it to the board for approval, since this unit is not included in the Paradip project cost of Rs. 29,777 crore,” said B N Bankapur, director (refineries).

The company currently has a polypropylene capacity of 600,000 tonnes at Panipat. The Paradip unit would add another 1.2 million tonnes. Its competitor in oil refining and marketing, RIL, is the country’s biggest polypropylene manufacturer, with a capacity of about a million tonnes. IOC has been trying to diversify into petrochemicals from the liquid fuel business, where its margins remain under pressure, as it is required to sell products such as diesel, kerosene and cooking gas at government-determined prices.

Bankapur said it made sense for the company to set up more polypropylene capacity, as the price was market-determined. “At present, there is a surplus situation in polypropylene, which will vanish in the next three to four years. We wish to make our plant operational by then,” he said.

Having identified petrochemicals as the primary driver of future growth, the company last year chose the ‘Propel’ brand for these. IOC is looking at a market share of 20 per cent in the business by the end of 2011-12, from five per cent in 2009-10. It is envisaging an investment of Rs. 30,000 crore in petrochemicals in the next few years.

These projects will utilise product streams from the existing refineries, achieving better exploitation of the hydrocarbon value chain.

Polypropylene finds widespread usage in woven sacks, films for packaging, various consumer items and a wide variety of injection-moulded items such as autoparts, appliances, furniture and houseware.