Expansion will not be impacted, says GACL

Gujarat Alkalies and Chemicals (GACL), which has planned a Rs 3,000-crore capital expenditure, said its expansion plans are unlikely to be affected as domestic banks are still willing to lend it money.

State government-owned GACL, India’s largest caustic soda producer, had planned to invest around Rs 2,500 crore in the next three years towards capacity expansion of its product lines, apart from investing in two joint ventures including one with Dow Europe.

“Our balance sheet is very healthy and the company has been making profits in recent years. We are in discussions with multiple Indian banks, which are ready to fund our expansion programmes,” said Guruprasad Mohapatra in a telephonic interaction.

Companies have complained that Indian banks, faced with liquidity crunch in October, had cut back on credit disbursements, apart form hiking the lending rates.

Coupled with the fall in capital markets index values, many firms are announcing postponement of their earlier announced capital expenditure plans as they find it difficult to garner funds.

He said the company was planning to implement the expansions with a debt-equity ratio of 70:30, which may vary depending on the projects.

Besides, it had recently announced a Rs 600-crore joint venture project with Dow Europe to manufacture 200,000 tonnes of chloromethane annually. The equal joint venture, Dow-GACL Solventure, will come up at Dahej and will be operational by 2011.

Mohapatra said the company was also looking at energy production in a big way. It has signed an agreement with Gujarat State Petroleum Corporation (GSPC) to form a joint venture to set up a 115 MW gas-based power plant at Dahej. GACL is likely to pick up about 26 per cent equity in the Rs 300-Rs 400 crore project.