1981 to
1990
The
large quantity of associated hydrocarbon gas available from
the Mumbai High off shore fields in the seventies threw open new
vistas for the hydrocarbon processing industries. This
necessitated the need for planning for optimal utilization of the
available hydrocarbon resources to meet the growing demand of
various hydrocarbon derivatives, to reduce dependence on external
sources and conserve foreign exchange. Presence of economically
exploitable content of ethane and propane in the gas led the
Government to permit industries based on ethane/propane
components after extraction from the associated gas at Uran.
Ministry of Petroleum of Government of India constituted a task
force under the Oil Industry Development Board (OIDB). The task
force entirely comprised personnel drawn from IPCL and began
functioning from the last quarter of 1981. The task assigned to
this task force was to plan for optimal utilization of these
gaseous resources and to work out pre-project activities. Initial
studies by different agencies indicated the possibility of
300,000 TPA to 400,000 TPA ethylene plant based on this feed
stock from Uran. The task force in turn appointed Engineers India
Limited (EIL) as its Engineering Consultant for the pre-project
activities for the proposed petrochemicals complex, which
eventually came to be known as Nagothane Complex a division of
IPCL.
Based on various techno economic feasibility reports prepared by
OIDB with assistance from Engineers India Limited, Government of
India approved the setting up of a petrochemicals complex at
Nagothane, (Maharashtra), based on associated gas from Bombay
High Fields as a feed stock on August 17, 1984, at an
estimated cost of INR 11.67 Billion during the Sixth Five Year
Plan.
IPCL,
with its proven expertise and track record in the petrochemicals
field and experience in constructing and managing the large
integrated complex at Vadodara, was entrusted with the job of
executing the country's first grass root gas based petrochemicals
project.
The State Government's choice for the establishment of the
project fell on Nagothane in Konkan region, since this region had
remained industrially backward even after four decades of
independence. Nagothane, near Roha, in district Raigad,
Maharashtra, about 130 kilometers from Mumbai, on the Mumbai- Goa
Road. Sources of feed stocks, viz. 450,000 TPA of ethane propane
supplied by the ONGC, Uran, and 54,000 TPA of propane/propylene
by Bharat Petroleum Corporation Limited, Mumbai were at
manageable distance. IPCL also requires lean gas from ONGC, Uran,
as fuel for power and steam generation. The site of the complex,
938 hectares of land, was acquired by the Maharashtra Industrial
Development Corporation (MIDC) and handed over to IPCL, in March
1985. The site grading work began immediately thereafter.
The foundation stone of this complex was laid by Mr. N. D.
Tiwari, the then Minister of Industry, Government of India on
January 8, 1986. Detailed engineering and project management for
Nagothane Complex was entrusted to EIL, which involved setting up
of a Gas Cracker plant of 300,000 TPA of ethylene, 80,000 TPA of
ldPE, 50,000 TPA of MEG, 5000 TPA of EO, two units of 80,000 TPA
each of hdPE/lldPE, one unit of 15,000 TPA of Butene-1, one unit of
12,000 TPA of Wire & Cable and supporting off-site utilities
and storage.
Being an industrially backward region, the Nagothane Complex site presented several difficulties. In 1985, Infrastructure such as road, communication, power, water, land development etc., was relatively undeveloped. Community living facilities, such as water, housing, medical services etc., were non-existant. Access to market was also a limiting factor. In such an environment the building of the petrochemical complex at Nagothane necessitated detailed planning and special efforts through out the project period. IPCL successfully negotiated all the difficulties.
The site
preparation work involved several thousand cubic meters of rock
blasting, cutting and site filling. Even as the work started, the
progress was hindered due to intense monsoon rains in the area.
The site preparation work, therefore, got extended through the
better part of 1986. The foundation work was also equally
hampered by the heavy rains in the area. The mechanical erection
work could be started only in the later part of 1987. However,
meticulous planning for procurement activities helped in
receiving equipment and materials at site to maintain the desired
progress of construction. Various utilities plants were completed
and commissioned in time through 1989. Construction of the gas
cracker and downstream units was progressing well in line with
the schedule for mechanical completion in August, 1989. The
record heavy rainfall followed by devastating floods in the
Raigad district on July 23, 1989 resulted in almost complete
evacuation of the Nagothane area which brought the construction
work to a halt. It took more than 8 weeks for the construction to
restart and the schedule for mechanical completion got extended
to October, 1989.
The construction of the pipelines for supply of the feed stock
and the fuel gas from Uran and the supplementary feed stock of
propylene rich stream from the BPCL had already faced a handicap
of almost two years by the time IPCL could take over these
projects for implementation. The problems relating to the right
of use (ROU) of the land along the routes of the pipelines and
the unexpected delay in receiving the pipes from the supplier in
Argentina led to a critical situation when the completion of the
pipelines in time looked almost impossible. Special efforts were
made to make up for the delay and this helped in the completion
of the pipelines in a phased manner to meet the requirements of
the commissioning activities.
The pre-commissioning activities of the mother plant, the
cracker, were completed in December 1989. And since the feed
stock (ethane/propane) fractionation plant was not ready in Uran,
a trial start up of the complex with an alternative feed stock,
namely LPG, was completed by December 1989. The ethane/propane
feed stock was made available in the following months. However,
before the gas cracker could be stabilized, an explosion took
place on November 5, 1990 in the feed stock chilling and storage
section of the gas cracker plant, resulting in a major setback to
the commissioning of the complex.
Rebuilding the damaged plant was taken up on a top priority. A
lot of equipment and materials had to be ordered in India and
from abroad for reconstruction. Therefore, as an alternative, an
early start up scheme with interim facilities was prepared, which
was implemented for re-commissioning of the cracker unit in the
third quarter of 1991. After a few teething problems, the
cracker, along with the low density polyethylene, monoethylene
glycol and polypropylene plants, were stabilized in the first
quarter of 1992. Subsequently, the butene-1 plant and one stream
of lldPE/hdPE swing plant were commissioned.
This complex is built with most contemporary designs of those
times and has sophisticated modern Distributed Digital Control
System. The technologies for this complex were selected through
world-wide competitive bidding and techno economic
considerations. Due care was taken to select the processes
adhering to the environmental requirements and with high energy
efficiency.
Major difference in setting up this complex was that the entire
project having capital cost of INR 16.23 Billion was financed
without any budgetary support from the Government. The company
mobilized funds for this project through IPCL's internal
resources, the World Bank loan and other borrowings. IPCL raised
money from public first with a domestic bond issue on October 24,
1986. The proceeding from this bonds issue was used to part
finance the Nagothane complex.
The
concept of economy of scale with built in flexibility for future
expansion during mid eighties required a cracker having capacity
of 300,000 MTA ethylene. Flexibility was incorporated in the
design itself to expand the capacity to 400,000 MTA ethylene by
addition of one heater. This design flexibility has been fully
exploited as additional feed stock is now available for cracking.
The cracker capacity now stands expanded to 400,000 MTA of
ethylene, since the second quarter of 1998.
The company has created a storage terminal for receiving propane
at Pirpau jetty near Mumbai and the same has been connected to
Nagothane Complex by pipe line for augmenting feed stock. This
facility was commissioned in 1997. The special feature of this
complex was that the production of Linear Low Density Polyethylene was undertaken
for the first time in the country in this complex. With
technological innovation, this plant has now been retrofitted and
expanded
to 220,000 MTA. Possibility still exists for further
expansion in ethylene and downstream capacity by opting for
recent innovations in technology and adding balancing equipment.
The company is examining the possibility of expanding the
ethylene capacity to 550,000 MTA with expansion of lldPE/hdPE and
an alpha Olefins plant of 50,000 MTA.
1991
Onwards
While in the process of implementing Nagothane Complex, IPCL
clinched the opportunity of setting up third petrochemical
complex based on gas from the l/gas fields at Gandhar in
Gujarat.
The discovery of large reserves of oil and gas in the Gandhar
region has given the region a fillip through a large scale
industrial development. Availability of raw materials like salt
and access to a sea, besides hydrocarbon feed stock and good
water sources in river Narmada offered favorable environment for
growth of industries in the region. Bringing back the glory of a
bygone era.
A survey had estimated Oil and Gas reserve in the Gandhar basin
at around 190 million tonnes out of which 73 million tonnes was
said to be recoverable. This important discovery and abundance of
salt in nearby places formed the basis for IPCL's venture to set
up an integrated gas cracker and a chlor-alkali complex near
Jageshwar village in Vagra taluka of Bharuch district of Gujarat.
New Projects Planning Group of IPCL manned with a handful of
selected talented and multi-skilled officers, developed a product
slate and pre investment feasibility report, just in three days,
which formed the basis for getting a final clearance from
Government to set up a petrochemical complex at Dahej based on
gas supply from Gandhar. Distinguishable feature of this
approval, unlike the hobson’s choice at the
time of inception, was that along with IPCL nearly half a dozen
corporate entities were strongly pursuing entry into this sector.
Choice of Government fell on IPCL after considering all the
aspects meriting this approval.
Gandhar task force was constituted in 1989. Mr. Rajiv Gandhi, Prime Minister of India, laid the foundation stone for the complex on October 6, 1989. The final investment clearance was granted on March, 26, 1992. The winds of liberalization had started blowing by this time. The government decided to disinvest from IPCL, and the first divestment by Government of India was done in February 1992.
The
Government sold 20% of its holding to financial institutions and the first
set of shares were transferred to Unit Trust of India and other
Indian Financial Institutions on March 23, 1992, exactly 23 years
after the company was incorporated.
There after, the government allowed the company to expand equity
to part finance the investment in the Gandhar complex.The first
domestic public issue for 20 million equity shares of face value
of INR 10 with a premium of INR 150 opened on November 16, 1992
and closed on November 19, 1992, the earliest closing date. The
issue was oversubscribed by four times. This was followed by
domestic rights issue. The company was the first Indian Public
Sector to issue GDS for US $ 85 million. The GDS issue opened on
December, 8, 1994. The issue was priced at US 13.875 per GDS,
with each GDS to be converted into three equity share. The
proceeds from this issue were used to part finance the Gandhar
project.
The project was implemented in two phases. Total estimated cost
of the project is INR 35.05 billion. The first phase consists of
170,000 MTA VCM plant, 150,000 MTA PVC Plant, Chlor-alkali Plant
with 115,000 MTA of chlorine and 130,000 MTA caustic soda (which will
produce 40,000 tones of 50 per cent lye, 45,000 tones flakes and
45,000 tones of prills) and 65 MW power plant. These plants
have all been commissioned in fourth quarter of 1996.
The company offered FCCB’s worth US $ 175
million on February 25, 1997 for financing Gandhar project as
well as Nagothane expansions. The issue was priced at US $ 13.00
per GDS, with three underlying shares. All these issues got
overwhelming response from investors both within and outside the
country. In fact, IPCL was the first Indian public sector
undertaking to go to the investors with a public issue in India
and even to the overseas market with global share (GDS). The
Government of India's equity as on September 28, 1998 was 59.47
per cent from 100 per cent in 1992. The Government of India’s equity holding will further dilute to
marginally over 51% if all FCCB holders opt for conversion of the
same to equity shares.
IPCL is the first corporate in Asia to have pierced the sovereign
ceiling in any form of external borrowing. The Company's EURO
Convertible Offering worth US $ 175 million was a watershed as it
helped the Company to overcome sovereign ceiling. The bond issue
considerably improved company's image in the international
market. This enabled the Corporation to tap a wide range of US
based investors, who normally restrict themselves to buying
top-rated paper.
The
special feature of this complex is that it has a fully integrated
production of PVC starting from captive Chlorine and Ethylene
with power drawn from a captive power plant. IPCL’s entry as a producer of Caustic Soda, in synergy with
fully integrated PVC plant, has provided an edge in the Caustic
Soda and PVC business.
Infrastructure development was taken up in tandem with the
development of the manufacturing facilities. Exploitation of
water front for strategic advantage is a unique proposition for
any commodity business that has large volumes to handle.
A captive jet to handle liquid hydrocarbons inclusive of those at cryogenic temperatures has been set up and commissioned in the estuary of Narmda at Jageshwar near Gandhar Complex. The jetty is about a quarter km long and the water channel is seven to eight meters deep. This facilitates berthing of ships upto 8,000 DWT. The jetty was commissioned on December, 2, 1996, when the first ship carrying vinyl chloride arrived.
IPCL has
also networked its manufacturing facilities at Dahej and Vadodara
through three product pipe lines. This has provided the
opportunity to optimize capacity utilization at Vadodara and
Gandhar and source feed stocks and other raw materials at
competitive price from international sources. The major handicap
of land locked locations has been overcome to a great extent in
this way.
IPCL has progressively added more products and production
capacities to its portfolio. IPCL emphasized development of small
scale industries and adopted uniform pricing policy throughout
the country to support the concept of balanced regional growth.
It opened up several regional offices and wide distribution
network so as to be closer to customers within 200 kilometers of
radius, any where in the country. Today, IPCL has eight regional
offices, supported by ten sales offices. There are over 70
consignment stockiest with over 120 warehouses throughout the
length and the breadth of the country. With such a customer
friendly marketing strategy and large distribution network, IPCL
succeeded in enlarging the market size from a nascent stage. By
1980 the market size increased to 0.3 million MTA. Periodic
capacity additions and intensive market development efforts by
IPCL ensured growth of the market from a small base of 0.3
million MTA in 1980, to 0.9 million MTA in 1990. This generated
adequate driving force and motivation in the otherwise unwilling
private sector. Today, private sector has entered in a big way
and shared the responsibility of maintaining supply and
contributing to the growth of national economy.
The corporation had exported its products for product balancing
even as early as 1973-74, when orthoxylene was exported.
Acrylonitrile was also exported primarily for product balancing
as also to avail of the international exposure. However, a
structured approach to export was undertaken in the early 1990’s with exports worth INR 100 Million.
Today, IPCL is one of the leading exporters of petrochemicals of
this country with products having markets in Europe, Middle East
and Africa. IPCL has exported various polymers and chemicals to
more than 35 countries. IPCL has successfully sold products to
leading customers like Unilever, Procter & Gamble, Henkel,
Lion group of South Asia, etc. Our product quality has found wide
acceptance at international level and some of them are in regular
demand. The company is certified as "Export Trading
House" by Government of India. With the opening up of our
economy, exports have become an essential part of overall
corporate strategy. This is to avail of market opportunities to
the optimum utilization of the assets and to secure a steady
stream of export earnings, besides maintaining a positive thrust
on Quality Management of IPCL.
IPCL was declared as one of the Navaratna companies by theGovernment
of India on February 28, 1997. This means the company belongs to
the select group of blue chip PSUs that are given additonal
autonomy in matters related to adminstration and finance. The
government recosntituted the IPCL Board by nominating four
part-time directors on November 23,1998 so that the additional
freedom granted under the Navaratna package becomes operative.
The Government decided to retain only 26 per cent of its holdings
by disinvesting part of its equity shares to a strategic partner
on December 16, 1998. The process gained momentum when Government
of India invited bids through a press advertisement on January
22, 1999 (Vasant Panchami) from Merchant Bankers to facilitate
disinvestment of 25% equity shares of IPCL to a strategic
partner. Eleven merchant bankers of high repute responded to the
advertisement . Two of them indicated that they will represent
potential strategic partner, nine indicated their desire to
represent Government of of India. The Government of India had
detailed discussions with the merchant bankers on March 11 &
12, 1999. Warburg Dillion Read have been appointed as merchant
banker on April 15, 1999.
The process of disinvestment by Government of India is
progressing well. Three corporate bodies, Mitsubishi of Japan,
Reliance Industries Ltd of India and Chatterjee Soros - Indian
Oil Corporation have shown their interest. The due diligence
process is over and the negotiation are in crucial stage now to
select a partner and handover management control. Government of
India suspended the process to sort out various issues raised
during due-diligence.
In the phase II, a gas cracker of 300,000 MTA of
ethylene, 160,000 tones hdPE and 100,000 tones of Ethylene
Oxide/Glycol plants were built. The second phase
plants have been commissioned during accounting year 1999-2000.
The last set of plants of the IInd phase; gas cracker and C2/C3
separation unit were commissioned on February 10, 2000 (Vasant
Panchmi). Flexibility to expand the cracker to 400,000 MTA of
ethylene has also been built in during design stage. After
addition of balancing equipment, this can also be raised further,
to 500,000 MTA of ethylene.
The Government of India decided to bifurcate IPCL by selling
Vadodara Complex to Indian Oil Corporation Limited on a nominated
basis on November 18, 2000. Deolite Huskin & Sales were
appointed by IPCL to workout value of assets associated with
Vadodara Complex.The deal could not be completed due to wide
variation in asset valuation by both companies.
Mr. Sukhdev Singh Dhindsa, Hon'ble Minister of Chemicals and
Fertilizers dedicated Indian Petrochemicals Corporation Limited's
Gandhar Complex to the nation at a function at Dahej on January
16, 2001. Mr. Keshubhai Patel, Hon'ble Chief Minister of Gujarat
was Chief Guest and Mr. Satya Brata Mookherjee, Hon'ble Minister
of State for Chemicals and Fertilizers was the Guest of Honour.
The Rs.43 billion Gandhar Gas Cracker of IPCL has been
commissioned in two phases. The first phase comprise of 150,000
TPA PVC plant, 115,000 TPA Chlor-alkaly with chlorine, 130,000
TPA Caustic Soda and a 65 MW power project. The second phase,
commissioned this year consisted of 160,000 TPA hdPE plant,
100,000 TPA ethylene glycol and 300,000 TPA ethylene cracker.
IPCL has also commissioned a captive jetty in estuary of Narmada
at Jageshwar near the complex. It is capable of handling liquid
hydrocarbons at cryogenic temperatures. The quarter kilometer
long jetty with seven to eight meter deep water channel
facilitates berthing of ships upto 8000 DWT. Jetty helps company
to source feedstock and raw material from overseas at competitive
prices.
Government of India decided to divest its entire stake from IPCL
on November 13, 2001. The first phase will involve sale of 26%
equity to a strategic partner, this will be followed by divesting
additional 25% shares within three years with first right of
refusal to strategic partner. The Government also plans to offer
balance shares to employees on Employee Stock Option basis
(ESOP).
Joint
Venture
IPCL
and General Electric Plastics (GEP), BV, Netherlands
have jointly ventured to manufacture advanced engineering
plastics in India. This was the first time a multinational
company joined hands with an Indian Public Sector with equal
equity participation. An agreement was signed between IPCL and
GEP to form a 50:50 JV on June 3, 1991. A joint venture
company, General Electric Plastics India Ltd. (GEPI) was
incorporated on December 9, 1991 and has equal equity holdings of
50% each, by IPCL and GEP. Manufacturing facility has been set up
at Vadodara for alloys, blends and composites of engineering
thermoplastics. A state of art applications development center,
which is first of its kind in this part of the world, has been
set up by IPCL through GE Plastics, Netherlands, at Udyog Vihar,
Gurgaon. A key feature of the joint venture is that it will cover
in its territories of operation, the neighboring countries and
Middle East, which were earlier covered by GE Plastics,
Netherlands. IPCL has decided to pullout from this business.The negotiations
for sale of IPCL's stakes to GE Plastics, BV, Nethelands is in
advance stage and are expected to be completed very soon.