Meghmani plans Rs 504 cr complex in Dahej

SGX Main Board-listed Meghmani Organics Ltd (MOL), an Ahmedabad-based manufacturer of pigments and agrochemicals, will set up a Caustic Chlorine Complex (CCP) in Dahej, Bharuch district, under a special purpose vehicle (SPV), Meghmani Finechem Ltd (MFL).

The complex will be set up for an investment of Rs 503.16 crore and the first phase of the project is likely to be completed by December 2008 or January 2009.

The large-scale, integrated complex, after the completion of the first phase, will have capacity to produce 113,000 tonne per annum (TPA) of caustic soda, chlorine gas "" 100,000 TPA, hydrogen gas "" 258,000 NM3, diluted sulphuric acid - 2,600 TPA, hydrochloric acid "" 9,970 TPA and sodium hypo chloride "" 8,300 TPA. MFL plans to set up derivative projects based on caustic and chlorine in the subsequent phases.

The estimated cost of the proposed CCP project is approximately at Rs 503.16 crore through a proposed funding comprising Rs 344.18 crore by debt and Rs 158.98 crore by equity-quasi equity. The equity-quasi equity contribution will be partly made by MOL or promoters and partly by the private equity or strategic investors.

The proposed complex will utilise the latest 4th generation Membrane Cell Technology from Asahi Kasei Chemicals Corporation (AKCC) Japan, leading technology providers for the manufacture of Chlor-alkali chemicals in the world.

Ashish Soparkar, Managing Director, Meghmani, said, "This business development will be a key force driving the future sustainable growth for Meghmani. Caustic Soda and Chlorine Gas are an inseparable part of everyday lives and given their wide-ranging applications in major end-consumer markets, demand for these two basic chemicals is steadily on the rise. We are optimistic that our vertical integration into the production of caustic soda and chlorine gas will yield sound and viable growth opportunities for us in the future."

The caustic-chlorine chemicals are used in a multitude of industries including pigments, pesticides, production of metals and resource materials; pulp and paper; petroleum and natural gas extraction; manufacture of organic chemicals, plastics, industrial solvents, water treatment chemicals and pharmaceuticals. Due to their wide-ranging applications across industries, demand for caustic soda and chlorine gas are increasing.

Meghmani consumes significant quantities of caustic soda, chlorine gas and derivatives of chlorine gas for its pigments and agrochemicals operations.

Soparkar also said, "Given the present level of our pigments and agrochemicals products production, Meghmani¿s captive consumption of direct and indirect chlorine gas will be approximately 25 per cent of what will be produced at MFL."

Deval Soparkar, President, Corporate Communication, MOL, said, "Meghmani acquired the 161-acre site in Dahej in December 2006. Dahej is considered a strategic location for chemical and related industries as it is an approved chemical SEZ with a high concentration of chemicals companies. Dahej possesses a chemical port, which has jetties for handling gaseous, liquid and solid cargoes. The Dahej port will be vital to the import of coal from countries such as South Africa and Indonesia amongst others for Meghmani¿s 40 MW coal based power plant.

Another benefit of Dahej is its easy accessibility to salt, a major raw material for the CCP, and other basic chemicals which are important for chemical manufacturing operations.