Industry sources said that the capacity would be increased from 1.5 million tonne annually to 3 million tonne. The company can take the production of PVC to as high as 1.7 million tonne at full capacity. The source added that an engineering and technical study for the capacity increase has been completed and the expansion is expected to be over in 18 to 24 months, once the process starts. The expansion would cost the company Rs 250 crore.
IPCL has also commissioned a study to expand its polyethylene (PE) capacity at Gandhar, from the existing 4 lakh tonne annually to 8 lakh tonne per annum. However, due to the current shortage of liquefied natural gas (LNG) in the domestic market, this plan has been kept on hold for the moment. LNG is the main feedstock for producing PE.
Industry sources added that the company is exploring the possibility of using gas that will be produced from Reliance Industries (RIL) Krishna-Godavari (KG) basin, which is under exploration. The company is also considering importing LNG for the expansion process. The company may also look at LNG imported by Petronet, added sources.
The company is undertaking expansion of its capacities even as polymer products reported a negative consumption last fiscal. Last year, overall consumption of polymers comprising polypropylene (PP) and PBR reported a five per cent decline. PVC reported an eight per cent decline, while PE reported a two per cent decline in growth last year. IPCL increased its PVC capacity utilisation to 109 per cent, while the PE production was increased by eight per cent with capacity utilisation at 100 per cent.
Industry experts said that the domestic producers will be required to increase production and enhance cost competitiveness to retain margins and market shares. They added that the polymer consumption in India is still the lowest in the world at 4 kg per person per year which is much lower compared with other countries. The US has a consumption rate of 115 kg per person per year, while the worlds per capita consumption is 24 kg per person per year. For Asia, the consumption is 13 kg per person per year.