Tanfac Shuts Down Bulk Drug Input Division

Tanfac Industries, the joint venture between the Aditya Birla group and the Tamil Nadu Industrial Development Corporation (Tidco), has suspended operations of its new organo-fluorine division following the business becoming unviable.

The division used to make dichloro fluoro acetophenone (DCFA) which is used as an intermediate product to manufacture new generation bulk drugs such as ciprofloxacin and enrofloxacin. It is the second business of the group, after Indian Rayon's sea water magnesia unit, that has been shut down in the last two years due to adverse conditions.

KK Maheshwari, director of Tanfac Industries said, "We have suspended production of DCFA primarily due to a steep fall in price realisation. Besides, China has been dumping DCFA into the Indian market which in turn has made our project unviable. We have re-modified the unit to make other products."

The company has embarked on de-bottlenecking of its other chemical plants to generate additional revenue. Its existing range of products include aluminium fluoride, cryolite, ammonium bifluoride, potassium fluoride, hydrofluoric acid (HF) and some by-products such as sodium silico-fluoride.

The company was originally set up to manufacture aluminium fluoride, a key ingredient for making aluminium. Group company Hindalco holds the chunk of the Birlas' stake in Tanfac.

"Our strategy now is to sharpen our focus on the export market with our other products," Maheshwari said. The fluorine-based chemicals company is also exploring the opportunities of manufacturing other value-added grades.

The company has its plant at Cuddalore in Tamil Nadu and had tied up with Dalian FTZ Luyuan F-Chemical of China for technology.

The Rs 30-crore diversification plan that envisaged manufacturing of fluoro benzene, dichloro fluoro benzene and acetophenone was financed by a Rs 10- crore preferential allotment of equity shares to the promoters at about Rs 20 per share, a Rs 16-crore term loan and Rs 4 crore from internal accruals.

Tidco has a 26 per cent stake and the Aditya Birla group companies together hold another 25 per cent. Besides, UTI has a 15 per cent stake while the balance 34 per cent is with the public. The project for manufacturing DCFA was commissioned in February 1999.