• PAGE ONE
• INDEX
• HOME

LG Polymers may defer plans for Dahej unit

Amit Mitra

VISAKHAPATNAM, Dec 5

LG Polymers India (LGPI), the wholly-owned subsidiary of the Korean major LG Chemicals, is likely to defer its proposal to set up a polymer unit in Dahej.

The recent acquisition of Dahej-based Pushpa Polymers, with a polystyrene capacity of 60,000 tonnes per annum, by the German major BASF and the general economic slowdown that had thrown the domestic polymer market in a low gear were the reasons behind LG PI's decision to freeze the expansion programme.

``We are watching the market trends closely. We could take up the (Dahej) expansion proposal any time, as everything, including the land, is in place,'' Mr S.K. Bhowmik, LGPI's CEO and Managing Director, told Business Line.

The company, which entered the domestic arena three and half years ago after taking over the UB Group's Vizag unit, had been looking for a stronger presence in the polymer sector. Presently, it accounted for a 30-35 per cent share of the 1.50-lakh tonne domestic market of polystyrene.

LGPI, which had been selling almost 70,000 tpa of polystyrene under the brand name `LGstrene', and 14,000 tpa of expandable polystyrene (EPS) under the brand name `LGexpol' through the Vizag unit, had planned last year to set up a similar unit in Dahej, Gujarat, at an outlay of Rs 140 crore. The new unit was to produce, apart from EPS and PS, a clutch of value-added styrenic products such as ABS (acrylonitrile-butadiene-styrene) and SAN (styrene acrylonitrile).

``The major growth in the domestic polymer market is taking place in the North and we felt it economically prudent to set up a unit in Dahej for commercial and logistical reasons. Even now, we can set up the unit within 18 months from the day we take a d ecision,''Mr Bhowmik said.

However, with the taking over of the nearly-sick unit of Pushpa Polymer by the BASF a month ago, the company wanted to watch the impact of the entry of the new player before further expansion.

Also, LGPI felt that it was not the right time to launch the Dahej unit in the light of the sluggish market conditions. The domestic polymer market had registered a drop of 13 per cent this year. The average annual growth rate of the domestic polymer mar ket was 12-14 per cent.

Also, the international prices of imported styrene monomer, the chief raw material for production of EPS and PS, had been soaring, peaking at almost $950 per tonne about three or four months ago. ``Things are getting slightly better now. In fact, the pr ice of styrene monomer has fallen to $620 per tonne this week. Even this is on the higher side, considering that we have to import nearly 85,000 tonnes of this raw material every year,'' he said.

The company posted a turnover of about Rs 470 crore last year and hoped to maintain an export level of 10 per cent of its production.