The company still faces serious problems on sales of one of its major products epichlorohydrin. While sales of Linear Alkyl Benzyne have eased the company's pressures this quarter, and will probably help it in the next, Tamilnadu Petroproducts is working on a 20 per cent capacity production of epichlorohydrin. According to company sources, the heavy dependence on LAB (which is prone to international fluctuations in price on account of the availability of key raw material N-Paraffin) was not an ideal situation, though the supply-demand cycle at this juncture was proving favourable.

The company had embarked on the epichlorohydrin project in 1995 at a time when the epoxy resin industry was growing at 15 per cent and the raw material epichlorohydrin was very much in demand. With TPL being the sole manufacturer of epichlorohydrin, it was envisaged that the product would skyrocket the company's bottomline. The reality is that the company is still unable to break even on the product.

Despite requesting for a safeguard duty to prevent dumping of epichlorohydrin in the country eight months back, there has been little initiative in this direction. However it is expected that the joint venture project with Ciba-Geigy Petro Araldite Pvt Ltd to manufacture resins will ensure offtake of epichlorohydrin. This is likely to materialise in the next financial year.

According to company sources, if Petro Araldite was not there as an option, there would have been little future for epichlorohydrin. While Korea is the major culprit for dumping epichlorohydrin at $ 1050 per container c&f, Japan was also responsible in part, officials said. ``At this price, we cannot meet our variable costs,'' they said.

Large resin industries like Cibatul were able to source epichlorohydrin was purchased at $ 995 from Dow Chemicals. Other international suppliers targeted the smaller resin manufacturers. The price of epichlorohydrin was ruling at $ 2000 two years back and $ 1350 six months back.

To add to the problem was the dependence of TN Petro on MRL for the supply of polypropylene, a key raw material along with chlorine. The logistics of importing the required amounts on account of polypropylene's hazardous nature, lack of unloading facilities in Chennai proved to another drawback.

However if the Petro Araldite project takes off and if LAB continues to show encouraging trends, then the next financial year would be good one, they said.

Meanwhile, the company had embarked on a cost cutting exercise under its previous managing director, and had managed to add at least 10 per cent savings to the bottom line. In the current year, there is to be a shut down of the LAB plant for a debottlenecking procedure expected to increase capacity from 75,000 tonnes to 100,000 tonnes.