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The ministry of chemicals and petrochemicals has taken up restructuring of public sector undertaking Hindustan Organic Chemicals Ltd. (HOCL) on top priority.
According to official sources, a proposal is being prepared to revive the plants of Kochi and Rasayani and re-start its operations. The objective is to make HOCL a bulk supplier of basic chemical and feedstock unit for downstream chemical companies.
According to sources, a sum of Rs 400-500 crore has been sought from the government for restructuring operations. They added that the chemicals to be procured from the HOCL Kochi plant will be acetone and phenol. The Rasayani plant could start the manufacturing of aniline, hydrogen peroxide, nitric acid and nitrogen oxide.
The restructuring is part of the national chemical policy prepared by the ministry. Major objectives of the policy include, increasing investments in the sector through facilitating capacity additions and ensuring the availability of necessary feedstock and quality infrastructure. Other objectives include increasing the domestic demand, adoption of cluster approach and encouraging development of ancillary industries around them, along with facilitating access to the latest technologies, assisting in up-gradation of the existing technologies and substitution of the outdated technologies.
HOCL has two manufacturing units, namely, phenol complex at Cochin and an integrated Nitro Aromatic Complex at Rasayani. Sources said, that this PSU post restructuring, could also be proposed for divestment. However no plans are yet firmed up.
Meanwhile, the ministry of chemicals in its national chemical policy had proposed a chemical upgradation and innovation cess at the rate of 0.5% ad valorem on chemical industries. The aim is to collect funds for establishing a Technology Upgradation and Innovation Fund, which might be taken up in the ensuing budget.
The cess was in line with that imposed by the ministry of new and renewable energy to set up a clean energy fund or as with the case of the telecom fund of the department of telecommunications; in fact, DoT imposes a 5% cess on an operator’s gross revenue.
However, the chemical industry has been opposing the idea till date, stating its profitability is already badly hit from both lower exports and a glut at home.
Officials explained that the cess will help create the technological upgradation fund which the industry could avail to increase research and development (R&D) spending, from the existing 1-2% of their total expenditure to 5-6%.
The R&D spending could focus on aligning technology, demand, standards and regulations after examining emerging technologies and trends, they said. Another focus area could be creation of intellectual property rights (IPR) through synergy between academic centres, manufacturers, R&D centres, etc.
“The idea is to strengthen links in the complete value chain from research to IPR generation, product design, development and commercialisation, so as to become internationally competitive,” they said.
