India’s largest manufacturer of industrial and medical gases, INOX Air Products (INOXAP) plans to invest Rs 2,000 crore to build 8 new air separation units across the country. This will be India’s largest greenfield investment plan in the industrial gases sector. This follows a manifold increase in demand for medical oxygen because of the Covid-19 pandemic though the company says it is looking ahead at the government's push for the manufacturing and infrastructure sector.
With a combined capacity to make more than 1500 tonne a day (TPD) of liquid gases, the expansion will take INOXAP’s total liquid gases production to 4800 TPD by 2024. The investment would be funded by a mix of debt and internal cash accruals. "The debt portion is yet to be worked out but it could be 40 per cent of the investment," Siddharth Jain, director - INOX Air Products, told Business Standard.
INOXAP’s new plants will be strategically located in proximity of high demand growth areas in Gujarat, Maharashtra, Tamil Nadu, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and West Bengal. The plants will produce liquid oxygen, liquid nitrogen and liquid argon and will be commissioned during the course of FY22-24. The bulk availability of industrial and medical gases will ensure constant supplies for the electronic manufacturing, pharmaceutical sector, besides helping iron, steel and automobile industries to ramp up their production capacities. The projects will generate more than 1000 direct and indirect employment opportunities in their respective regions.
"The 8 plants would be set up on a sequential basis over the next 12 to 36 months. There is a demand for the gases both as feedstock and raw material," said Jain.
Complementing the critical boost provided in Budget 2021 to the healthcare sector, INOXAP’s expansion would also augment its liquid medical oxygen production capacity by 50 per cent, said the company. “With an objective of rejuvenating the country’s economic landscape, Budget 2021 pronounced major investments and initiatives around manufacturing, infrastructure and healthcare. As we welcome the enhanced capex in these critical areas, we want to be prepared to service the country’s future-oriented and accelerated growth drive by ensuring capacity creation of industrial and medical gases across the growth corridors of the country. The expanded capacity will enable us to serve the core sectors," said Jain.
INOX AP currently manufactures 3300 TPD of liquid gases across 44 locations in the country. During COVID, INOXAP has been catering to more than 60 per cent of the total medical oxygen demand in the country. All INOXAP units have been running 24x7 to ensure a continuous production and supply of medical oxygen to more than 800 hospitals nationwide through a dedicated fleet of 550 transport tanks.
Jain said the medical oxygen demand had peaked to 4X of pre-COVID level in September 2020 but in February 2021 is down to 2X. It may come down further but the demand for oxygen will grow since different ways of taking it have come up. Demand for industrial gases, on the other hand, is back to the pre-COVID level after it had fallen to 10-15 per cent of the normal in April 2020.
INOX Air Products is the largest manufacturer of Industrial & Medical Gases in India. The company offers a portfolio of gases, equipment and services and has a vastly diverse client ecosystem including more than 1800 small, medium and large manufacturing organizations.
Established in 1963 by the Jain Family as Industrial Oxygen Company Ltd in Pune, the company aimed to augment and capitalize upon the rapid industrialization taking place in the country. In 1999, Air Products & Chemicals Inc., US acquired a 50 per cent stake in the company, after which it was called INOX Air Products.
Jain said one of the major challenges for the industrial gas sector remained the cost of electricity. “Sixty per cent of our cost is power since we are in the business of separation of air. We hope with the Budget announcement of deregulation of distribution sector, consumers will have the option of purchasing power from multiple sources.” Broadly, air comprises 78 per cent nitrogen, 21 per cent oxygen and remaining other gases. Through the air separation process, different gases can be separately produced.