Industrial Organics lines up Rs 65 cr for expansion

Industrial Organics Ltd, one of the leading players in the pharmaceutical bulk drugs and industrial chemical sectors in the north, is planning to invest Rs 65 crore for expansion of operations at Barnala in Sangrur district.

The company will raise Rs 30 crore from the capital market and Rs 32 crore through term loans. The remaining Rs 3 crore will be funded through internal accruals.

Industrial Organics Limited is a listed company and is launching its follow-on public issue by April-end. This will dilute promoters' share in the company from 62 per cent to 40 per cent. The PSIDC (Punjab State Industrial Development Corporation) holds 12 per cent equity in the company.

The product range of the company includes industrial chemicals (acetic acid, ethyl acetate, acetic hydride) and pharmaceutical API (Ibuprofen IP/BP/USP).

Talking to the media in Chandigarh, Industrial Organics Limited Chairman and Managing Director Varinder Gupta said the company's products are mainly supplied to the agriculture, textiles, pharmaceutical and packaging industries. All these sectors have been on high growth trajectory for the past few months. The increase in demand for export as well as the domestic market necessitated the present capacity additions, Gupta said.

Under the proposed capacity expansion, the company will increase the capacity of acetic acid production from 30,000 TPA to 50,000 TPA, ethyl acetate from 18,000 TPA to 33,000 TPA, acetic anhydride from 7,500 TPA to 12,000 TPA and Ibuprofen from 720 TPA to 1500 TPA.

According to Gupta, the company registered a turnover of Rs 156 crore in 2005-06 and is expected to touch a turnover of Rs 300 crore in 2008.

He said currently, the company was exporting about 20 per cent of its total output and after the expansion, the export figure would increase to 30 per cent. The company exports to China, Belgium, Bangladesh, Singapore, Thailand, Iran, Egypt, the UAE and Syria.

Speaking about the company's products, he said alcohol and chlorine were the main ingredients. He said India has a natural advantage as a large sugar producing country and the largest producer of alcohol after Brazil. He added that as Industrial Organics Limited did not depend on imports for raw materials, its products have a competitive edge in the global market.

Under the present expansion plan, the company envisages putting up a 4 Mw co-generation power plant for captive consumption. An investment of Rs 17 crore has been earmarked for the power project.

Gupta apprised that the present expansion would increase the workforce from 300 to 400 persons at the company's Barnala plant.

The company received the Energy Conservation Award from the ministry of power in 2005.