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1981 to 1990　　　　　　　　　　　　　　　　　　　　　　　　　　　

The large quantity of associated hydrocarbon gas available from the Mumbai High off shore fields in the seventies threw open new vistas for the hydrocarbon processing industries. This necessitated the need for planning for optimal utilization of the available hydrocarbon resources to meet the growing demand of various hydrocarbon derivatives, to reduce dependence on external sources and conserve foreign exchange. Presence of economically exploitable content of ethane and propane in the gas led the Government to permit industries based on ethane/propane components after extraction from the associated gas at Uran.

Ministry of Petroleum of Government of India constituted a task force under the Oil Industry Development Board (OIDB). The task force entirely comprised personnel drawn from IPCL and began functioning from the last quarter of 1981. The task assigned to this task force was to plan for optimal utilization of these gaseous resources and to work out pre-project activities. Initial studies by different agencies indicated the possibility of 300,000 TPA to 400,000 TPA ethylene plant based on this feed stock from Uran. The task force in turn appointed Engineers India Limited (EIL) as its Engineering Consultant for the pre-project activities for the proposed petrochemicals complex, which eventually came to be known as Nagothane Complex a division of IPCL.

Based on various techno economic feasibility reports prepared by OIDB with assistance from Engineers India Limited, Government of India approved the setting up of a petrochemicals complex at Nagothane, (Maharashtra), based on associated gas from Bombay High Fields as a feed stock on August 17, 1984, at an estimated cost of INR 11.67 Billion during the Sixth Five Year Plan.

IPCL, with its proven expertise and track record in the petrochemicals field and experience in constructing and managing the large integrated complex at Vadodara, was entrusted with the job of executing the country's first grass root gas based petrochemicals project.

The State Government's choice for the establishment of the project fell on Nagothane in Konkan region, since this region had remained industrially backward even after four decades of independence. Nagothane, near Roha, in district Raigad, Maharashtra, about 130 kilometers from Mumbai, on the Mumbai- Goa Road. Sources of feed stocks, viz. 450,000 TPA of ethane propane supplied by the ONGC, Uran, and 54,000 TPA of propane/propylene by Bharat Petroleum Corporation Limited, Mumbai were at manageable distance. IPCL also requires lean gas from ONGC, Uran, as fuel for power and steam generation. The site of the complex, 938 hectares of land, was acquired by the Maharashtra Industrial Development Corporation (MIDC) and handed over to IPCL, in March 1985. The site grading work began immediately thereafter.

The foundation stone of this complex was laid by Mr. N. D. Tiwari, the then Minister of Industry, Government of India on January 8, 1986. Detailed engineering and project management for Nagothane Complex was entrusted to EIL, which involved setting up of a Gas Cracker plant of 300,000 TPA of ethylene, 80,000 TPA of ldPE, 50,000 TPA of MEG, 5000 TPA of EO, two units of 80,000 TPA each of hdPE/lldPE, one unit of 15,000 TPA of Butene-1, one unit of 12,000 TPA of Wire & Cable and supporting off-site utilities and storage.

Being an industrially backward region, the Nagothane Complex site presented several difficulties. In 1985, Infrastructure such as road, communication, power, water, land development etc., was relatively undeveloped. Community living facilities, such as water, housing, medical services etc., were non-existant. Access to market was also a limiting factor. In such an environment the building of the petrochemical complex at Nagothane necessitated detailed planning and special efforts through out the project period. IPCL successfully negotiated all the difficulties.

The site preparation work involved several thousand cubic meters of rock blasting, cutting and site filling. Even as the work started, the progress was hindered due to intense monsoon rains in the area. The site preparation work, therefore, got extended through the better part of 1986. The foundation work was also equally hampered by the heavy rains in the area. The mechanical erection work could be started only in the later part of 1987. However, meticulous planning for procurement activities helped in receiving equipment and materials at site to maintain the desired progress of construction. Various utilities plants were completed and commissioned in time through 1989. Construction of the gas cracker and downstream units was progressing well in line with the schedule for mechanical completion in August, 1989. The record heavy rainfall followed by devastating floods in the Raigad district on July 23, 1989 resulted in almost complete evacuation of the Nagothane area which brought the construction work to a halt. It took more than 8 weeks for the construction to restart and the schedule for mechanical completion got extended to October, 1989.

The construction of the pipelines for supply of the feed stock and the fuel gas from Uran and the supplementary feed stock of propylene rich stream from the BPCL had already faced a handicap of almost two years by the time IPCL could take over these projects for implementation. The problems relating to the right of use (ROU) of the land along the routes of the pipelines and the unexpected delay in receiving the pipes from the supplier in Argentina led to a critical situation when the completion of the pipelines in time looked almost impossible. Special efforts were made to make up for the delay and this helped in the completion of the pipelines in a phased manner to meet the requirements of the commissioning activities.

The pre-commissioning activities of the mother plant, the cracker, were completed in December 1989. And since the feed stock (ethane/propane) fractionation plant was not ready in Uran, a trial start up of the complex with an alternative feed stock, namely LPG, was completed by December 1989. The ethane/propane feed stock was made available in the following months. However, before the gas cracker could be stabilized, an explosion took place on November 5, 1990 in the feed stock chilling and storage section of the gas cracker plant, resulting in a major setback to the commissioning of the complex.

Rebuilding the damaged plant was taken up on a top priority. A lot of equipment and materials had to be ordered in India and from abroad for reconstruction. Therefore, as an alternative, an early start up scheme with interim facilities was prepared, which was implemented for re-commissioning of the cracker unit in the third quarter of 1991. After a few teething problems, the cracker, along with the low density polyethylene, monoethylene glycol and polypropylene plants, were stabilized in the first quarter of 1992. Subsequently, the butene-1 plant and one stream of lldPE/hdPE swing plant were commissioned.

This complex is built with most contemporary designs of those times and has sophisticated modern Distributed Digital Control System. The technologies for this complex were selected through world-wide competitive bidding and techno economic considerations. Due care was taken to select the processes adhering to the environmental requirements and with high energy efficiency.

Major difference in setting up this complex was that the entire project having capital cost of INR 16.23 Billion was financed without any budgetary support from the Government. The company mobilized funds for this project through IPCL's internal resources, the World Bank loan and other borrowings. IPCL raised money from public first with a domestic bond issue on October 24, 1986. The proceeding from this bonds issue was used to part finance the Nagothane complex.

The concept of economy of scale with built in flexibility for future expansion during mid eighties required a cracker having capacity of 300,000 MTA ethylene. Flexibility was incorporated in the design itself to expand the capacity to 400,000 MTA ethylene by addition of one heater. This design flexibility has been fully exploited as additional feed stock is now available for cracking. The cracker capacity now stands expanded to 400,000 MTA of ethylene, since the second quarter of 1998.

The company has created a storage terminal for receiving propane at Pirpau jetty near Mumbai and the same has been connected to Nagothane Complex by pipe line for augmenting feed stock. This facility was commissioned in 1997. The special feature of this complex was that the production of Linear Low Density Polyethylene was undertaken for the first time in the country in this complex. With technological innovation, this plant has now been retrofitted and expanded to 220,000 MTA. Possibility still exists for further expansion in ethylene and downstream capacity by opting for recent innovations in technology and adding balancing equipment. The company is examining the possibility of expanding the ethylene capacity to 550,000 MTA with expansion of lldPE/hdPE and an alpha Olefins plant of 50,000 MTA.

1991 Onwards

While in the process of implementing Nagothane Complex, IPCL clinched the opportunity of setting up third petrochemical complex based on gas from the l/gas fields at Gandhar in Gujarat.

The discovery of large reserves of oil and gas in the Gandhar region has given the region a fillip through a large scale industrial development. Availability of raw materials like salt and access to a sea, besides hydrocarbon feed stock and good water sources in river Narmada offered favorable environment for growth of industries in the region. Bringing back the glory of a bygone era.

A survey had estimated Oil and Gas reserve in the Gandhar basin at around 190 million tonnes out of which 73 million tonnes was said to be recoverable. This important discovery and abundance of salt in nearby places formed the basis for IPCL's venture to set up an integrated gas cracker and a chlor-alkali complex near Jageshwar village in Vagra taluka of Bharuch district of Gujarat. New Projects Planning Group of IPCL manned with a handful of selected talented and multi-skilled officers, developed a product slate and pre investment feasibility report, just in three days, which formed the basis for getting a final clearance from Government to set up a petrochemical complex at Dahej based on gas supply from Gandhar. Distinguishable feature of this approval, unlike the hobson’s choice at the time of inception, was that along with IPCL nearly half a dozen corporate entities were strongly pursuing entry into this sector. Choice of Government fell on IPCL after considering all the aspects meriting this approval.

Gandhar task force was constituted in 1989. Mr. Rajiv Gandhi, Prime Minister of India, laid the foundation stone for the complex on October 6, 1989. The final investment clearance was granted on March, 26, 1992. The winds of liberalization had started blowing by this time. The government decided to disinvest from IPCL, and the first divestment by Government of India was done in February 1992.

The Government sold 20% of its holding to financial institutions and the first set of shares were transferred to Unit Trust of India and other Indian Financial Institutions on March 23, 1992, exactly 23 years after the company was incorporated.

There after, the government allowed the company to expand equity to part finance the investment in the Gandhar complex.The first domestic public issue for 20 million equity shares of face value of INR 10 with a premium of INR 150 opened on November 16, 1992 and closed on November 19, 1992, the earliest closing date. The issue was oversubscribed by four times. This was followed by domestic rights issue. The company was the first Indian Public Sector to issue GDS for US $ 85 million. The GDS issue opened on December, 8, 1994. The issue was priced at US 13.875 per GDS, with each GDS to be converted into three equity share. The proceeds from this issue were used to part finance the Gandhar project.

The project was implemented in two phases. Total estimated cost of the project is INR 35.05 billion. The first phase consists of 170,000 MTA VCM plant, 150,000 MTA PVC Plant, Chlor-alkali Plant with 115,000 MTA of chlorine and 130,000 MTA caustic soda (which will produce 40,000 tones of 50 per cent lye, 45,000 tones flakes and 45,000 tones of prills) and 65 MW power plant. These plants have all been commissioned in fourth quarter of 1996.

The company offered FCCB’s worth US $ 175 million on February 25, 1997 for financing Gandhar project as well as Nagothane expansions. The issue was priced at US $ 13.00 per GDS, with three underlying shares. All these issues got overwhelming response from investors both within and outside the country. In fact, IPCL was the first Indian public sector undertaking to go to the investors with a public issue in India and even to the overseas market with global share (GDS). The Government of India's equity as on September 28, 1998 was 59.47 per cent from 100 per cent in 1992. The Government of India’s equity holding will further dilute to marginally over 51% if all FCCB holders opt for conversion of the same to equity shares.

IPCL is the first corporate in Asia to have pierced the sovereign ceiling in any form of external borrowing. The Company's EURO Convertible Offering worth US $ 175 million was a watershed as it helped the Company to overcome sovereign ceiling. The bond issue considerably improved company's image in the international market. This enabled the Corporation to tap a wide range of US based investors, who normally restrict themselves to buying top-rated paper.

The special feature of this complex is that it has a fully integrated production of PVC starting from captive Chlorine and Ethylene with power drawn from a captive power plant. IPCL’s entry as a producer of Caustic Soda, in synergy with fully integrated PVC plant, has provided an edge in the Caustic Soda and PVC business.

Infrastructure development was taken up in tandem with the development of the manufacturing facilities. Exploitation of water front for strategic advantage is a unique proposition for any commodity business that has large volumes to handle.

A captive jet to handle liquid hydrocarbons inclusive of those at cryogenic temperatures has been set up and commissioned in the estuary of Narmda at Jageshwar near Gandhar Complex. The jetty is about a quarter km long and the water channel is seven to eight meters deep. This facilitates berthing of ships upto 8,000 DWT. The jetty was commissioned on December, 2, 1996, when the first ship carrying vinyl chloride arrived.

IPCL has also networked its manufacturing facilities at Dahej and Vadodara through three product pipe lines. This has provided the opportunity to optimize capacity utilization at Vadodara and Gandhar and source feed stocks and other raw materials at competitive price from international sources. The major handicap of land locked locations has been overcome to a great extent in this way.

IPCL has progressively added more products and production capacities to its portfolio. IPCL emphasized development of small scale industries and adopted uniform pricing policy throughout the country to support the concept of balanced regional growth. It opened up several regional offices and wide distribution network so as to be closer to customers within 200 kilometers of radius, any where in the country. Today, IPCL has eight regional offices, supported by ten sales offices. There are over 70 consignment stockiest with over 120 warehouses throughout the length and the breadth of the country. With such a customer friendly marketing strategy and large distribution network, IPCL succeeded in enlarging the market size from a nascent stage. By 1980 the market size increased to 0.3 million MTA. Periodic capacity additions and intensive market development efforts by IPCL ensured growth of the market from a small base of 0.3 million MTA in 1980, to 0.9 million MTA in 1990. This generated adequate driving force and motivation in the otherwise unwilling private sector. Today, private sector has entered in a big way and shared the responsibility of maintaining supply and contributing to the growth of national economy.

The corporation had exported its products for product balancing even as early as 1973-74, when orthoxylene was exported. Acrylonitrile was also exported primarily for product balancing as also to avail of the international exposure. However, a structured approach to export was undertaken in the early 1990’s with exports worth INR 100 Million. Today, IPCL is one of the leading exporters of petrochemicals of this country with products having markets in Europe, Middle East and Africa. IPCL has exported various polymers and chemicals to more than 35 countries. IPCL has successfully sold products to leading customers like Unilever, Procter & Gamble, Henkel, Lion group of South Asia, etc. Our product quality has found wide acceptance at international level and some of them are in regular demand. The company is certified as "Export Trading House" by Government of India. With the opening up of our economy, exports have become an essential part of overall corporate strategy. This is to avail of market opportunities to the optimum utilization of the assets and to secure a steady stream of export earnings, besides maintaining a positive thrust on Quality Management of IPCL.

IPCL was declared as one of the Navaratna companies by theGovernment of India on February 28, 1997. This means the company belongs to the select group of blue chip PSUs that are given additonal autonomy in matters related to adminstration and finance. The government recosntituted the IPCL Board by nominating four part-time directors on November 23,1998 so that the additional freedom granted under the Navaratna package becomes operative. The Government decided to retain only 26 per cent of its holdings by disinvesting part of its equity shares to a strategic partner on December 16, 1998. The process gained momentum when Government of India invited bids through a press advertisement on January 22, 1999 (Vasant Panchami) from Merchant Bankers to facilitate disinvestment of 25% equity shares of IPCL to a strategic partner. Eleven merchant bankers of high repute responded to the advertisement . Two of them indicated that they will represent potential strategic partner, nine indicated their desire to represent Government of of India. The Government of India had detailed discussions with the merchant bankers on March 11 & 12, 1999. Warburg Dillion Read have been appointed as merchant banker on April 15, 1999.

The process of disinvestment by Government of India is progressing well. Three corporate bodies, Mitsubishi of Japan, Reliance Industries Ltd of India and Chatterjee Soros - Indian Oil Corporation have shown their interest. The due diligence process is over and the negotiation are in crucial stage now to select a partner and handover management control. Government of India suspended the process to sort out various issues raised during due-diligence.

In the phase II, a gas cracker of 300,000 MTA of ethylene, 160,000 tones hdPE and 100,000 tones of Ethylene Oxide/Glycol plants were built. The second phase plants have been commissioned during accounting year 1999-2000. The last set of plants of the IInd phase; gas cracker and C2/C3 separation unit were commissioned on February 10, 2000 (Vasant Panchmi). Flexibility to expand the cracker to 400,000 MTA of ethylene has also been built in during design stage. After addition of balancing equipment, this can also be raised further, to 500,000 MTA of ethylene.

The Government of India decided to bifurcate IPCL by selling Vadodara Complex to Indian Oil Corporation Limited on a nominated basis on November 18, 2000. Deolite Huskin & Sales were appointed by IPCL to workout value of assets associated with Vadodara Complex.The deal could not be completed due to wide variation in asset valuation by both companies.

Mr. Sukhdev Singh Dhindsa, Hon'ble Minister of Chemicals and Fertilizers dedicated Indian Petrochemicals Corporation Limited's Gandhar Complex to the nation at a function at Dahej on January 16, 2001. Mr. Keshubhai Patel, Hon'ble Chief Minister of Gujarat was Chief Guest and Mr. Satya Brata Mookherjee, Hon'ble Minister of State for Chemicals and Fertilizers was the Guest of Honour.

The Rs.43 billion Gandhar Gas Cracker of IPCL has been commissioned in two phases. The first phase comprise of 150,000 TPA PVC plant, 115,000 TPA Chlor-alkaly with chlorine, 130,000 TPA Caustic Soda and a 65 MW power project. The second phase, commissioned this year consisted of 160,000 TPA hdPE plant, 100,000 TPA ethylene glycol and 300,000 TPA ethylene cracker. IPCL has also commissioned a captive jetty in estuary of Narmada at Jageshwar near the complex. It is capable of handling liquid hydrocarbons at cryogenic temperatures. The quarter kilometer long jetty with seven to eight meter deep water channel facilitates berthing of ships upto 8000 DWT. Jetty helps company to source feedstock and raw material from overseas at competitive prices.

Government of India decided to divest its entire stake from IPCL on November 13, 2001. The first phase will involve sale of 26% equity to a strategic partner, this will be followed by divesting additional 25% shares within three years with first right of refusal to strategic partner. The Government also plans to offer balance shares to employees on Employee Stock Option basis (ESOP).

Joint Venture

IPCL and General Electric Plastics (GEP), BV, Netherlands have jointly ventured to manufacture advanced engineering plastics in India. This was the first time a multinational company joined hands with an Indian Public Sector with equal equity participation. An agreement was signed between IPCL and GEP to form a 50:50 JV on June 3, 1991. A joint venture company, General Electric Plastics India Ltd. (GEPI) was incorporated on December 9, 1991 and has equal equity holdings of 50% each, by IPCL and GEP. Manufacturing facility has been set up at Vadodara for alloys, blends and composites of engineering thermoplastics. A state of art applications development center, which is first of its kind in this part of the world, has been set up by IPCL through GE Plastics, Netherlands, at Udyog Vihar, Gurgaon. A key feature of the joint venture is that it will cover in its territories of operation, the neighboring countries and Middle East, which were earlier covered by GE Plastics, Netherlands. IPCL has decided to pullout from this business.The negotiations for sale of IPCL's stakes to GE Plastics, BV, Nethelands is in advance stage and are expected to be completed very soon.