Adani, TCG gear up for petrochemical foray as RIL eyes expansion in sector

Adani planning PVC plant in Mundra, Gujarat; TCG looking to make polymers, chemicals and PTA at Cuddalore, Tamil Nadu

The Adani group and The Chatterjee Group (TCG) are set to become key competitors of Reliance Industries (RIL) in petrochemicals, as the two players firm up plans to enter the sector. Adani group chairman Gautam Adani said last week in an interview to the Financial Times, that his conglomerate planned to invest over $4 billion in a petrochemical complex in Gujarat over the next few years.

RIL, which has a large petrochemicals unit in Jamnagar, Gujarat, had announced in its annual general meeting in August that it would invest Rs 75,000 crore in the segment to expand capacities in new and existing value chains. This would include investments in areas such as purified terephthalic acid (PTA), polyethylene terephthalate (PET), polyvinyl chloride (PVC) and carbon fibre.

RIL chairman Mukesh Ambani had said the investments were in line with its commitment to maximise oil-to-chemicals (O2C) integration and convert feedstock streams into high-value chemicals. O2C includes refining, petrochemicals and fuel retail.

Adani group sources, meanwhile, indicate that by November 2024, a 1,000-kilo-tons-per-annum (KTPA) or 1 million tonnes per annum PVC plant would be commissioned by the conglomerate in Mundra, Gujarat. This is part of a larger plan to set up a two million-tonnes PVC plant in Mundra in phases, using coal as a feedstock.

Sources in the know say that the PVC plant by Adani would be able to produce goods such as emulsion PVC, suspension PVC, and chlorinated PVC at a time when overall PVC production in the country has been stagnant at about 1.5 million tonnes a year.

India imports 1.8-1.9 million tonnes a year of PVC, according to sector experts, as demand has remained consistently high owing to PVC's wide applications from agriculture and irrigation, to drainage, cable pipes and fittings. The entry of large players such as Adani is expected to bridge the gap in the future, they said.

TCG, on the other hand, plans to make polymers, chemicals and PTA at Cuddalore in Tamil Nadu for which it has acquired the assets of Nagarjuna Oil Corporation (NOCL) in the state from a bankruptcy court. TCG will set up a petrochemical complex in the initial phase, and a crude oil refinery in the second phase, industry sources said.

"RIL is the only player of scale in petrochemicals in India. Given the wide industrial applications of petrochemicals, interest by newer players such as Adani is imminent," says Deven Choksey, managing director at Mumbai-based brokerage KR Choksey.

"O2C is also the largest revenue contributor to Reliance. By enhancing capacity and integrating the value chain further within O2C, the aim is to ensure that gaps are plugged," Choksey said.

In FY22, O2C contributed 57 per cent to RIL's revenue and 40 per cent to its operating profit. Retail and telecom segments together contributed 34 per cent to RIL's revenue and 45 per cent to operating profit for the year.

While enhanced production of PTA and PET will help RIL consolidate its position as a key raw-material supplier to the textile and packaging industries respectively, it is PVC and carbon fibre that are big focus areas for it in the future, industry experts said.

RIL produces 0.7 million tonnes per annum of PVC, and is the largest manufacturer in the country, sources said. With the announcement of another 1.5 million tonnes a year of PVC by 2026, RIL's PVC capacity will expand to about 2.2 million tonnes, giving it an edge over rivals. The capacity addition of 1.5 million tonnes per annum by RIL will also help double India's domestic PVC output to about 3 million tonnes a year, sector experts said.

• Adani's petrochemicals entry will begin with PVC
• The Chatterjee Group is looking at PTA as part of its petrochem venture
• PTA used in textiles, while PVC is used in agriculture, irrigation, drainage, cable pipes
• RIL is a leading player in petrochemicals in India, making PTA, PVC and PET among other chemicals
• RIL is also targeting carbon fibre in a big way in the future