The proposed 2.5 lakh-tpa paraxylene project was meant to be a backward integration unit to the Rs 1600-crore purified terephthalic acid plant.
The plant was supposed to be located in Andhra Pradesh.
According to sources, the company feels it is a better option to source the paraxylene from outside rather than manufacture it within the company. Indo Rama had earlier held talks with Indian Oil Corporation (IOC) for a joint venture partnership in the proposed paraxylene project. IOC is a major producer of naphtha, which is a basic requirement in paraxylene manufacture.
A senior Indo Rama executive had earlier told Business Standard that if IOC takes too long to commit itself, the company would scout for another partner, since the paraxylene project would be on-stream by next year.
The dropping of the paraxylene plant would involve a substantial reduction in the overall investment of the company, estimated at Rs 2000 crore earlier.
The company now intends to go for the PTA plant only. O P Lohia, president, Indo Rama Synthetics, could not be contacted as he is on an overseas tour.
The company, sources said, has recently formed a new division for petrochemicals to supervise the up-coming PTA project. Though no formal announcements have yet been made regarding the technological partner in the project, it is known that talks with Technimont, the US-based petrochem major, have not materialised into any deal.
Indo Rama has been negotiating with several global petrochemical giants for a tie-up for the PTA project. These include Mitsui-Mitsubishi of Japan, Technimont and Amoco of USA. However, nothing has been finalised till now . Most of these companies are interested in a majority stake in the venture, besides providing the required technology, sources disclosed.
This is not acceptable to the company and hence, deals have fallen through.
Though the recent dampening of international prices had dissuaded many in the industry from making fresh investments in PTA, Indo Rama is all set to go ahead with its project. According to sources close to the company, depressed international prices might not affect the new PTA project as the company has huge in-house requirements in India and Indonesia.
Indo Rama's existing plant, producing partially oriented yarn (POY) and polyester staple fibre (PSF), requires PTA in huge quantities.
With the company's plan to expand POY and PSF capacities in the near future, the in-house demand for PTA is expected to increase even more.
Indo Rama is planning to increase its existing POY and PSF capacities from 67,000 tpa to 2,35,000 tpa in two phases. Out of the total capacity, production of PSF is likely to be 1,30,000 tpa, and that of POY 1,05,000 tpa.
