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“Scaling Up will Give us the Competitive Edge”
Cetex Petrochemicals has the privilege of being the only manufacturer of Methyl Ethyl Ketone (MEK) and Secondary Butyl Alcohol (SBA) in the Indian market. Its Chairman & Managing Director, S Ilanahi, talks to Mittravinda Ranjan about the ambitious ` 300 crore investment by the company on brown-field expansion of production unit in Manali which will catapult the growth of the company manifolds and increase the turnover from the current ` 150 crore to ` 1000 crore by 2015.

How has the market developed for MEK and SBA in India over the last 10 years? What is the current demand and supply situation in the country for these speciality chemicals?
Phenomenally, I must say. We have witnessed double digit growth for both Methyl Ethyl Ketone (MEK) and Secondary Butyl Alcohol (SBA) over the last decade.

The growth has been driven by a strong demand from paints and coatings, aroma chemicals, printing inks, adhesives coatings, specialty intermediates in pharmaceutical industry and lube additives.

We enjoy the privilege of being the only manufacturers of MEK and SBA in India and in entire South East Asia. We are confident about the positive growth pattern for both these products in the future.

How big is Indian market for MEK?
Current demand for MEK in the Indian market hovers around 30,000 tonnes per year, and our entire production of MEK is currently targeted for the Indian market. The demand deficit of rest 10,000 tonnes is presently being met through imports from countries such as Taiwan, Japan and China in South East Asia, and the USA.

Despite having the monopoly in Indian market, why has Cetex taken so much time to decide on expanding? Was there any technology or funding issue involved?
No. We have developed our own technology to produce MEK, and there were no issues regarding the same. We were waiting for the nod from Ministry of Environment and Forests (MoEF), Government of India, which has actually caused some delay.

As far as funding is concerned, Cetex is funding the project through equity along with the loan from State Bank of India (SBI). Now that everything is in place, we are hopeful of commissioning of the project as planned.

In line with our growth plans, we are also actively engaged in setting up a Methyl Iso Butyl Ketone (MIBK) unit with a capacity of 30000 MT per annum. This unit will have the facility to co-produce Methyl Iso Butyl Carbinol (MIBC).

Will you please tell us about the total Rs 300 crore investment plans earmarked for expansions by Cetex, and the targeted market for the production?
We have undertaken brown-field expansion of our existing SBA -MEK plant in Manali, Chennai, Tamil Nadu, and have targeted reaching production capacity of 20,000 tonnes by the first quarter of 2014-15.

We plan to add another 10,000 tonne capacity of MEK by the end of 2015 which will further consolidate our market position in MEK. As I have already mentioned, we are targeting to capture the entire Indian market for MEK, but we will continue exporting SBA.

The MIBK unit will be in operational by end of 2015 and will cater to Indian Market as well as Overseas Markets. While MIBK is used in rubber chemicals, as a solvent in industrial applications, in metal extraction and dewaxing of mineral oil etc, MIBC is used in the ore beneficiation process and lube oil additive manufacturing etc.

May we have your comments on the increase in annual turnover and market positioning after commissioning of project?
Although, we are ramping up the production capacity, the market demand is also going to increase in the years to come. Demand-supply gap will continue to prevail, thus creating room for other players. But, we are very confident about this project as we are the only manufacturer of these products in the Indian market, and we have been in this market for the last 25 years.

Scaling up will certainly provide us an edge amongst the other players by enabling us to become further cost competitive.

We envisage commissioning of SBA/MEK facility by Q-1 of 2014-15 and expect the current turnover of ` 150 Crore to go to ` 300 Crore by 2014. We are confident of touching ` 1000 crore mark by 2015 after the completion of second MEK facility in 2015 and the MIBK project.