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| India Infoline Sector Reports | Mon, 16-Feb-2004 10:46:43 IST (GMT+5:30) | |
| Caustic soda | ||
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Cost Structure Power is the most important input in the production of caustic soda. It accounts for about 65% of the total cost of production. Major disadvantage to the local players is the high cost of power in the country. Average cost of power in India has increased from Rs2.82/ kwh in 1996 to Rs3.51/ kwh in 1997. For co-generation power plant the cost comes to around Rs.1.75/ kwh. The producers with the co-generation plant therefore benefit from low variable cost. However the initial capital cost for setting up these power plants is very high. Caustic soda can be manufactured in any of the following types of cells - mercury cell, membrane cell and diaphragm cell. Power consumption by membrane cell is the least of all the three cells. Energy requirement ( for 1 ton of caustic) by Electrolytic processes
The industry leaders use membrane cells. The membranes need to be replaced every three years. Several other players still operate on mercury cells. Cost of setting up a green field plant based on membrane cell comes to around Rs1bn for 100 tpd plant whereas that of converting the mercury cell to membrane cell comes to around Rs0.8bn for 100 tpd plant. Caustic soda is generated in lye form, which is 48% caustic soda and remaining water, whereas flakes are 99.5% caustic soda. Flakes are obtained by evaporation of water. Therefore manufacturing cost of flakes is higher. Recent budget has reduced the import duty on membrane cell and also on the machinery required for conversion of mercury cell to membrane cell from 25% to 10%. This would help phasing out mercury cell technology. Salt is another key input in the manufacturing of caustic soda. Continuous supply of good quality salt is necessary for caustic soda production. Salt being a low value commodity cost of transportation becomes critical. This compels caustic soda plants to be located near salt works. Typically large capacities are located on western and northern coasts due to two reasons proximity to salt and proximity to user industries.
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