Pending approvals eagerly awaited by year end or SAPL will abandon 70:30 JV with ECHEM

28-Jul-08

Mumbai-based South Asian Petrochemical Ltd (SAPL) has expressed an intention to abandon the proposed 70:30 JV for the PET resins with Egyptian Petrochemicals Holding Company (ECHEM) and Engineering for the Petroleum and Process Industries (ENPPI), if the pending approvals are not received by the end of 2008. The plans included floating a company Egyptian Indian Polyester Company SAE to produce 3.15 lac tons of PET resins based in Damietta, Egypt requiring roughly US$100 mln and a completion period of 21 months. SAPL has received provisional approval from Egypt's Industrial Development Authority (IDA), environment clearance and approvals for gas and electricity connections. But the land lease agreement remains to be signed and the construction could not begin as the clearance from the defence ministry of Egypt was still in the waiting. The global demand for PET resin clocked an average 8% growth last financial year. To combat the rising input costs, SAPL increased its installed capacity from 180,000 tpa to 200,000 tpa through de-bottlenecking initiatives during the year and curtailed the capital costs per ton to Rs 17,436 in 2007-08 from Rs 26,990 in FY05. Also, SAPL has entered into forward contracts with customers to partly offset the rising raw material costs.