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| India Infoline Sector Reports | Wed, 18-Feb-2004 16:21:20 IST (GMT+5:30) | |
| Polymers | ||
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Evolution of Indian petrochemical industry Till the 1980s, Indian petrochemical industry was reigned in by the license raj. Government did not allow any new big capacities to come up. Most of the plants set up were alcohol based ethylene plants with small capacities. Nocil was the first and only private company in the 60’s, allowed to set up an integrated naphtha based petrochemical plant. In those years it was felt that investment in petrochemical sector was not worthwhile, as most of the conventional materials were adequately available and petrochemicals would prove to be an expensive option. Consumption of petrochemicals was also discouraged by way of exorbitant import duty rates at 100-200%. In 70’s, state owned IPCL commissioned the first large scale fully integrated plant in Vadodra (Gujarat). Gradually, IPCL kept on expanding its capacities and upgrading its infrastructure. Till the early 90’s, petrochemical industry was state controlled and dominated by state owned IPCL. The only other integrated player, that too in the private sector, was Nocil with a very small capacity. Most of the other players had small, uneconomic size plants which were operated on molasses and alcohol. With the liberalization process in the 90’s, gates of the petrochemical sector were opened out to private enterprises for building up new capacities. In the private sector, Reliance Industries was quick enough to take advantage. It started expanding and building up existing and new capacities in a mega way. In the post-liberalization era, Reliance Industries and IPCL have started building up world size fully integrated plants. There has also been a gradual fall in import duties. As a occurrence of these events, companies with uneconomic and unintegrated plants have suffered heavily. The significance of these companies in the industry has become nil. Two more companies are entering the sector. One of the plants promoted by GAIL has recently initiated its operations. The other one Haldia Petrochemical Complex (HPC) is being jointly promoted by three parties- West Bengal Govt., Tata Group, and Soros Chatterjee Group (USA). Even the existing companies, Reliance Industries and IPCL, are under the process of implementing their expansion programs. Other small companies in the industry are Supreme Petrochemicals, Oswal Agro, Finolex, Bindal Agro, Bombay Dyeing, and Polychem.
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