Vikas WSP to invest Rs 375 crore

Company setting up plant in Vadodara to produce guar gum derivatives.

Haryana-based Vikas WSP, manufacturer of guar gum, is planning to invest Rs 375 crore for setting up a new plant at Savli near Vadodara.

The company plans to produce guar gum derivatives, hydroxypropyl guar (HPG) and carboxymethylhydroxypropyl guar (CMHPG), at the new plant.

For oil and gas companies, hydraulic fracturing, a process designed to enhance the productivity of oil and gas wells, is of utmost importance and the water soluble polymers like HPG and CMHPG used in the activity are sourced from the US. But this is set to change with the plant.

The new plant will start operations from 2010-2011. At present, the company produces 82 varieties of guar gum derivatives. The production of HPG and CMHPG is being done at very small scale. The new plant will produce 12,600 tonnes of guar gum derivatives, which the company is likely to export.

"We will be the first company in India to get into the manufacturing of HPG and CMHPG which is an essential product for any company wanting to explore oil and gas wells below the depth of 3,000 metres at a temperature of over 150 degrees celsius," said BD Agarwal, managing director of Vikas WSP.

He added the demand for such specialised products was quite high considering the booming oil and gas sector but the market size would be difficult to predict.

For the Vadodara plant and expansion at its existing unit in Siwani at Haryana, the company would raise Rs 735 crore.

Of this, Agarwal said the promoters would pitch in with Rs 190 crore while a further Rs 525 crore would be raised through foreign institutional investors (FIIs) and internal accruals. For this, the company will offload around 30 per cent stake to investor companies in the US, UK and the Netherlands.

After a gap of six years, the company will be able to again trade its scrip on the Bombay Stock Exchange (BSE) after it was suspended due to certain allegations in October 2001.