Kvaerner Building $44 Million Isopropyl Alcohol Plant for India's Deepak

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). Kvaerner Powergas (Mumbai, India) has won the contract to build an Isopropyl Alcohol (IPA) plant for the Indian company, Deepak Fertilizers and Petrochemicals Corporation (DFPCL)(Pune, India) at the company's existing chemical complex (Plant 1062561) at Taloja, 40 kilometers inland from Bombay. The project, which will take an investment of around $44 million, will result in the output of 70,000 tons of IPA per annum.

Current consumption of IPA in India is around 62 thousand tons per annum and consumption is growing at a brisk 6% to 7% a year. Demand has so far been met with 100% imported product. With the new plant's construction fast-tracked for completion in 22 months with mechanical completion scheduled for the last quarter of 2005.

DFPCL will be targeting some of the market's fastest growing, competitive and profitable sectors. IPA is a versatile, value added solvent largely used in the pharmaceutical, agrochemical, organic chemical, imaging chemicals (printing and inks), healthcare, and paint sectors.

DFPCL have secured a long term and exclusive agreement with Bharat Petroleum for the supply of propylene from its Chembur-Mumbai refinery. This is crucial for the success of the Taloja project as propylene is a major feedstock in the production of IPA and has been in short supply.

Through Aker Kvaerner USA DFPCL have been able to make a break through for the technology rights for state-of-the-art and environmentally friendly IPA production. These rights have been closely guarded by Equistar-Lyondell (EL) (NYSE:LYO) (Houston, Texas) who have working relationships with AK on projects worldwide. EL (PEC 75000057) is a $12.7 billion corporation that sells technology and process across the chemical sector and has a tally of around 150 licenses running in plants across 35 countries.

DFPCL has a well-established marketing and sales network in India for its range of products including methanol and various grades of nitric acid. It will be able to exploit the network in a synergistic way, as existing customers for methanol are also likely to be large customers for IPA.

DFPCL which is active in industrial chemicals, ammonium nitrate, agri-inputs marketing and crop sciences has port storage facilities for export and import and has its own gas pipeline from Bombay to Tajola which ensures an uninterrupted natural gas supply. It has new projects on the drawing board in its strategy to make deeper inroads into the value-added chemicals market, agro-inputs and related services. Planned chemical storage and drumming facilities at JNPT port near Bombay and the Mahadhan Agricultural Research Center will root growth in targeted sectors.

The Indian Chemical industry, including pharma and fertilizers, is estimated at $28 billion. It contributes 7% to the national GDP, 10% of exports, 13% to total manufacturing output and 15% to the total value added in the manufacturing sector. In terms of volume the industry ranks 12th in the world and has grown twice as fast as the rest of the Asian chemical sector in the last five years and at over 5 times the world growth rate.

The industry still has to overcome some structural problems as it is highly fragmented with more than 6,000 firms covering petrochemicals, organic chemicals, inorganic chemicals, fine and specialty chemicals, bulk drugs, agro chemicals, paints and dyes. Western India accounts for almost half the country's chemical industry.