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Meghmani Finechem chalks out Rs 275-cr capex, to produce import-substitute epichlorohydrin

On Thursday, September 30, 2021 at 01:02 IST

Meghmani Finechem Ltd (MFL), one of India’s leading specialty chemicals manufacturers, is planning to set up a 50,000 tonnes per annum of epichlorohydrin (ECH) production facility at its existing factory location at Dahej in Gujarat.

With an estimated 64,000 tonnes of annual consumption, India is fully reliant on ECH import from Thailand, Indonesia, Germany, Korea and China. On successful commencement of this project, MFL will be the first company to produce ECH in India.

ECH is an essential feedstock for production of epoxy resins, which is used in various applications including corrosion protection coatings in industrial, automotive, packaging sectors. Beside protective coatings, epoxy resin is used in composites which has major applications in aerospace, wind mill and automotive industries. It is also used in adhesive, elastomers, paper and textile industry as sizing agents, in addition to other specific purposes.

“There is an immense opportunity available in the ECH segment as its demand has been growing consistently on account of a recovery in India’s industrial production. Entry of new players is restricted due to high capital expenditure on setting up a greenfield factory. With the government is promoting ‘Atmanirbhar Bharat’ to make India self-reliant in every segment, sky is the limit for us. By the time, our new project comes on stream, the demand of ECH would go up further,” said Maulik Patel, Chairman and Managing Director, Meghmani Finechem Ltd to Polymerupdate.

MFL has set aside a capital expenditure of Rs 275 crore for the ECH project. On successful commencement of the ECH project, MFL expects a total revenue of approximately Rs 460 crore per annum from this segment at optimum capacity utilization rate.

“Despite challenges, we have been able to complete around 70 per cent of our work on this plant. We are on track to commence commercial production on this plant as per schedule in Q1FY23. ECH is an imported chemical in India as of now. We are taking the first step towards making India ‘Aatmanirbhar’ i.e. self-reliant with production of an import substitute,” Patel added.

India’s ECH consumption was estimated at 75,000 tonnes for the financial year 2020. But, for the financial year 2021, India’s ECH consumption was reported to have declined by 15 per cent to around 64,000 tonnes due to coronavirus (Covid) – related lockdown across manufacturing and services sectors. ECH supply got disrupted from major manufacturing countries in Asia including Thailand, Indonesia, Korea and China. Supply disruptions proved a blessing in disguise for domestic user industries as manufacturing units underwent a periodical shutdown on account of a sharp decline in the demand of end products.

MFL has decided to set up ECH project based on TechnipFMC’s Epicerol technology. Epicerol technology uses glycerine as a feedstock which is obtained 100 per cent renewable resources. This is a proven technology for downstream users who are concerned about a cost-efficient production route while taking advantage of an abundant renewable feedstock to reduce their carbon footprint.

“Entering into ECH production is a strategic move towards integration and value addition. We are stepping towards increasing share of value added products in our turnover. Once ECH plant begins commercial production, the share of value added products in our turnover would surpass 50 per cent. However, looking at the current scenario, the share of value added products in our total turnover might increase even 54 per cent in FY2024, the forecast we had made about one-and-a-half years ago,” said Patel.

Apart from ECH, MFL is setting up a chlorinated polyvinyl chloride (CPVC) facility with an estimated annual production capacity of 30,000 tonnes at an investment of Rs 190 crore.

“Currently, we are supplying around 90 per cent of our output to domestic consumers. But, this might change once both ECH and CPCV plants become operational and value proposition favours exports,” Patel explained.

MFL has already moved forward in growth oriented directions for the last five years and have already set up plants of caustic potash, chloromethane and hydrogen peroxide. The company aims to achieve Rs 2000 crore as its topline by the financial year 2024 from the current level of Rs 831 crore for the financial year 2021.


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