Gujarat State Fertiliser Corporation to build fertiliser and petrochemicals complex
20 December 2011Gujarat State Fertiliser Corporation is investing Rs70bn ($1.29bn) to build an integrated fertiliser and petrochemicals complex in Dahej, Gujarat, India, according to a report.
The new plant will have a capacity to produce one million tons of urea, 100,000t of caprolactum and 40,000t of melamine each year.
Caprolactum is used to manufacture tyre cord and nylon yarn, and melamine is used to manufacture laminates and plywood.
Gujarat State Fertiliser Corporation's 2009-10 production report listed production figures of caprolactum and melamine supplies at 61,800t and 13,300t respectively.
The company currently holds a 60% market share in caprolactum and 40% in melamine, and has an operating margin in the range of 27%. Coromandel International and Tata Chemicals have margins of 15%.
Fitch Ratings director Salil Garg said that Gujarat State Fertiliser Corporation's advantage is that it has an integrated complex, which helps it to manufacture the chemicals at highly cost-effective prices.
"With yet another integrated facility coming up, Gujarat State Fertiliser Corporation's leadership in these two chemicals will be unchallenged," Garg said.
Equitorials managing partner Sageraj Bariya said that Gujarat State Fertiliser Corporation has lined up a huge capex over the next few years and is expanding presence in all segments of fertilisers and chemicals.
"But the only overhang on the stock is a pending legislation from the Gujarat Government, which had proposed keeping aside a massive part of profit before tax towards corporate social responsibility," Bariya said.
Gujarat State Fertiliser Corporation is also planning to expand production of several chemicals, and is expected to set up projects worth Rs85bn ($1.56bn), including the Dahej plant.
