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    KarnatakaChemical and Petrochemical Sector Profile

    Global Investors Meet - 2012

    Lead Organiser

    Event PartnerKnowledge Partner

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    Global Scenario

    India Scenario

    Transactions and Foreign Direct Investments in the sector

    Karnataka: sector overview and value proposition for investors

    Available raw material sources

    Government policies and efforts

    Key Players

    Investor guidance support

    Investment Opportunities

    Shelf of Projects

    Key contacts

    Karnataka: Chemical and Petrochemicals Sector Prole

    I N D E X

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    Global Scenario

    > Global chemical production is growing, and most of the growth is

    contributed by the chemical industry of developing countries.

    > Growth in demand for chemicals in developing countries is leading to

    substantial cross-border investment in the chemical sector.

    > The size of the global chemical industry is estimated to be around US$ 3

    trillion (INR 144 trillion)

    > Western Europe is the largest chemical producing region followed by North

    America and Asia

    > Chemical and Petrochemical Industry segments

    Basic inorganic & organic chemical industry (Soda ash, caustic soda,

    liquid chlorine, calcium carbonate)

    Drugs & Pharmaceuticals

    Pesticides & Agrochemicals

    Petrochemicals (Ethylene, Propylene, Polypropylene, Benzene, Xylene, etc)

    Dyes & pigments (80% utilised by textile industry)

    Fine & specialty chemicals

    Fertilizers

    > Some of the emerging trends of the global chemical industry are:

    Increasing globalization and discovery of new markets in Asia and Middle East

    Increasing investments in R&D (especially in the specialty and knowledge segments)

    Karnataka: Chemical and Petrochemicals Sector Prole

    45.4

    31

    23.6

    Share of total industryrevenue in 2010 (in %)

    Asia Pacific Americas Europe

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    India: contributing significantly to global

    chemical and petrochemical industries

    Source: Annual report 2010-11, Department of Chemicals and

    Petrochemicals, GoI

    > The chemical and petrochemical sector in India

    presently constitutes 14% of the domestic industrial activity.

    > The Indian chemical Industry was the 6th largest in the

    world and 3rd largest in Asia in terms of value added.

    > In 2010, the size of the Indian Chemical Industry was

    US$ 108.4 Billion (INR 5203.2 billion).

    > India also produces a large number of ne and specialty

    chemicals.

    > Dyestuff sector in India accounts for ~7% of the world

    production

    > India is also a major producer of agrochemicals.

    > Key export destination for Indian agro-chemicals are USA,

    U.K., France, Netherlands, Belgium, Spain, South Africa,

    Bangladesh, Malaysia and Singapore

    > There are three naphtha based and an equal number of

    gas based cracker complexes in the country with a

    combined annual ethylene capacity of 2.9 million MT

    > Also, there are four aromatic complexes also with a

    combined Xylene capacity of 2.9 million MT

    > Polymers account for more than 60% of the total production

    of major petrochemicals

    Production of selected major chemicals& petrochemicals (In 000' MT)

    Products 2010-11% growth over

    previous year

    Alkali Chemicals 5981 6.77

    Inorganic Chemicals 572 10.42

    Organic Chemicals 1342 4.84

    Pesticides (Tech) 82 0

    Dyes & Dyestuffs 47 11.9

    Synthetic Fibers 2791 7.3

    Polymers 5292 10.46

    Elastomers 95 -10.38

    Synth. Detergent

    Intermediates638 3.24

    Performance Plastics 191 11.05

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Transactions an d Foreign Direct Investments

    in Sector

    M &A data of India (2011) - Chemicals & Petrochemicals

    Target Name Target Acquirer Stake(%)

    Standard Prol AS Turkey Ruia Group 100

    Liberty Chemicals(Pvt)Ltd Sri Lanka Control Print Ltd 100

    Sipcam Isagro Brasil S/A Brazil Uniphos Enterprises Ltd 50

    Reaxa Ltd United Kingdom S. Amit & Co 100

    Columbian Chemicals Acquisi-tion LLC

    United States Aditya Birla Mgmt Corp Pvt 100

    Ammonia-Urea Fertilizer Manu-facturing Complex

    Gabon Tata Chemicals Ltd 25.1

    DVA Agro do Brasil Ltda Brazil Uniphos Enterprises Ltd 51

    Manchester Organics Ltd United Kingdom Navin Fluorine 51

    Kanoria Chemicals & IndustriesLtd-Chloro Chemicals Division

    IndiaAditya Birla Chemicals(India)

    Ltd100

    Sabero Organics Gujarat Ltd India Coromandel International Ltd 42.22

    Foreign Direct Investment (FDI)

    Cumulative FDI inflows (Period: April 2000 to January 2012)

    Sector INR crore US$ million

    Chemicals (Other Than Fertilizers) 14,703 3063

    Fertilizers 1,197 249

    Dye-stuffs 85 18

    Total 15,985 3330

    Source: Fact Sheet On Foreign Direct Investment (FDI), Department of Industrial Policy and Promotion website, www.dipp.nic.in,

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Karnataka: sector overview and value

    proposition for investors

    > Mangalore Refnery and Petrochemicals Limited (MRPL) is

    the states leading player, and public sector renery

    Manufacturing Facilities:

    MRPL has capacity to process 11.82 million

    metric tonnes per annum

    Only Renery in India to have 2 Hydrocrack

    ers producing Premium Diesel (High Cetane)

    Only Renery in India to have 2 Continuous Catalytic

    Regeneration (CCRs) producing Unleaded Petrol of

    High Octane

    Pipelines: 6 lines from renery to coastal terminal

    at New Mangalore Port, with 362-km Petronet

    pipeline between Man galore and Bangalore

    transporting 76,806 kls of Naphtha, Petrol, Kerosene,

    ATF, Diesel

    > Presence of a dedicated Petrochemical Special Eco nomic

    Zone (SEZ) in Mangalore

    Developed in 1,800 acres of land at Mangalore,

    Dakshin Kannada

    1,453 acres dedicated to petroleum and

    petrochemicals industry development

    Over 100 factories

    20-99 factories

    1-19 factories

    500+ factories drive the chemical industry in the State

    > Mangalore SEZ: driving investments into the State

    Aromatics complex by ONGC Mangalore Petrochemicals Ltd (OMPL) producing para-xylene and benzene

    Strategic crude oil storage facility by Indian Strategic Petroleum Reserves Ltd (ISPRL) at a cost of US$208 million

    (INR 9984 million)

    Downstream petrochemical industries: methanol, propylene, benzene based; plastics, specialty chemicals

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Raw materials sources: enabling investment in

    downstream processing industry

    Products from MRPL Production Vol. ( MMTPA)

    POLYPROPYLENE 0.44

    PETCOKE 0.9

    SULPHUR 0.2

    MIXED XYLENE 0.08

    BITUMEN 0.25

    LPG 0.3

    KEROSENE 0.34

    NAPTHA 0.89

    ATF 1.09

    MOTOR SPIRIT 1.19

    FUEL OIL 2.27

    DIESEL 5.28

    Products from OMPL Production Vol.( MMTPA)

    PARA XYLENE 0.9

    BENZENE 0.27

    Dabhol Bangalore Gas Pipeline

    > 1,370 km Dabhol Bangalore Natural Gas Pipeline

    > Main trunk line, which will extend from Dabhol to

    Bidadi

    > Planned transmission capacity of 16 MMcm/d

    > Construction to be completed by Dec 2012

    > Potential for development of Gas based projects along

    the Pipeline

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Government policies and efforts to

    promote healthy investment environment

    Central Policy & Regulatory framework

    The National Policy on Petrochemicals 2007, aims at increasing investments in the sector (both upstream and downstream);

    ensuring availability of raw materials at internationally competitive prices, creating quality infrastructure and increasing exports, etc.

    > 100% FDI is permissible in this sector. Also, manufacture of most chemical products inter-alia covering organic/ inorganic,

    dyestuffs and pesticides has been de-licensed by the Government.

    > The entrepreneurs need to submit only IEM with the Department of Industrial Policy and Promotion.

    > Only the following items are covered in the compulsory licensing list because of their hazardous nature:

    Hydrocyanic acid &its derivatives

    Phosgene &its derivatives

    Isocynates & di-isocynates of hydrocarbons.

    > Anchor unit subsidy & Investment promotion subsidy to MSMEs

    > Exemption from stamp duty and concessional registration charges

    > Refund of conversion ne and Special incentives for enterprises coming up in low HDI districts

    > Exemption from entry tax & Incentives for export oriented units

    > Subsidy for setting up of ETPs

    > Interest free loan on VAT for large & mega projects

    > Exemption from electricity duty

    State Industrial

    Policy, 2009-14

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Government policies and efforts to

    promote healthy investment environment

    > Duty free import/domestic procurement of goods for development,

    operation and maintenance of SEZ units

    > 100% Income Tax exemption on export income for SEZ units under

    Section 10AA of the Income Tax Act for rst 5 years, 50% for next 5

    years thereafter and 50% of the ploughed back export prot for next

    5 years.

    > Exemption from minimum alternate tax under section 115JB of the

    Income Tax Act.

    > External commercial borrowing by SEZ units upto US $ 500 million

    in a year without any maturity restriction through recognized banking

    channels.

    > Exemption from Central Sales Tax.

    > Exemption from Service Tax.

    > Single window clearance for Central and State level approvals.

    > Exemption from State sales tax and other levies as extended by the

    respective State Governments

    > Single Point Clearance by Unit Approval Committee headed by the Devel

    opment Commissioner, SEZ

    > All industrial units and other establishments in the SEZs will be declared

    Public Utility Service under the provisions of the Industrial Dispute Act,

    1947

    > 50% Exemption of Stamp Duty and Registration fees

    > Exemption of Electricity Duty or Taxes

    > Exemption of 1% Labour Welfare Cess on construction cost

    > Exemption from any other State taxes, cess, duties or levies as may be

    notified by the State Government.

    Central policy and

    incentives for units in

    Special Economic Zones

    (SEZs)

    Karnataka State Policy

    for Special Economic

    Zones Act, 2009

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Chemical and petrochemical industry:

    a growing investment focus for state

    International Case Study - BASF

    > BASF is a leading Global Chemical Manufacturing company.

    > In India, it manufactures polymers, tanning agents, leather chemicals and auxiliaries, crop protection chemicals, textile

    chemicals, dispersions and specialty chemicals, performance plastics, automotive and coil coatings, construction chemicals,

    polystyrene and polyurethane systems

    > BASF rst came to Karnataka in 1995-96 and set up a dye manufacturing unit. Today, it plant in Mangalore is the largest

    BASF site in South Asia

    > Also, the BASF Mangalore site is among the 153 BASF global production sites certied in accordance with ISO 14001.

    Other key Players Industry Focus

    Mangalore Renery &

    Petrochemicals Ltd

    Oil and gas rening facilities with annual rening capacity of 11.82-million MT;Manufacturing facilities of MRPL include Crude and Vacuum Distillation Units , Hydroc-

    racker Units , Soaker Visbreakers, Continuous Catalytic Regeneration Platforming Unit ,

    LPG Merox, Hydrogen

    Plant , Bitumen plant

    Mangalore Chemicals &

    Fertilizers Ltd.Urea, Di-ammonium phosphate, Muriate of potash, Granulated fertilizers, Soil conditioners

    and Specialty fertilizers

    Somu Group Speciality ne chemicals, Pharma intermediates, Agrochemical intermediates, Speciality

    solvents, Standard herbal extracts, Cosmetic intermediates, Nutraceutical products

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Chemical and petrochemical industry:

    a growing investment focus for state

    Major investments received during GIM 2010 (in million)

    Company name In US$ In INR Area

    Mangalore Renery &

    Petrochemicals Ltd3291.25 1,57,980 Oil renery (Dakshin Kannada)

    Zuari Fertilizers & Chemicals 951 45,650 Urea (Belgaum)

    Akzon Nobel India Ltd 52.71 2,530 Paints and varnishes (Mysore)

    Investment Guidance

    > Karnataka Udyog Mitra (KUM):First contact point for all investors in Karnataka and nodal agency to facilitate investments.KUM executes initiatives to enable smooth transition from investment proposal stage to implementation stage

    > State High Level Clearance Committee(SHLCC):Chaired by Honorable Chief Minister of State of Karnataka to approve projects

    with investments above US$ 10.42 million (INR 500 million)

    > State Level Single Window Clearance Committee(SLSWCC):Chaired by Honorable Minister for Large and Medium Industries

    meets every month to approve projects with investments between US$ 0.63 million (INR 30 million) and US$ 10.42

    million (INR 500 million)

    > District Level Single Window Clearance Committee (DLSWCC):Chaired by Deputy Commissioner of the District , for approval of

    projects with investments up to US$ 0.63 million (INR 30 million)

    > Combined Application Form:Available on KUM website for obtaining required statutory approvals

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Investment Opportunities

    Infrastructure

    InvestmentOpportunities

    Education, R & D Manufacturing

    Eco-friendly technologies and products

    Research and development centers

    Dedicated courses, ITIs and colleges

    to support the industry through skill

    development

    Para Xylene based industries

    Benzene based

    C3 Chain

    C4 Chain

    Methanol based

    Indicative investment areas in intermediate and downstream industries

    based on available raw material

    > Intermediate petrochemical units

    Propylene-based: Acrylonitrile, Oxo-Alcohol

    P-Xylene-based: Puried Terepthalic Acid, PolyethyleneTerephthalate, Polyester Staple Fibre, Polyester

    Filament Yarn/ Partially Oriented

    O-Xylene-based: Phthalic Acid

    Benzene-based: Nylon Filament Yarn/ Nylon Industrial

    Yarn, Cyclohexane, Caprolactum, Adipic Acid, Polyamide,

    Linear Alkyl Benzene, Aniline

    Propylene and Benzene-based: Cumene, Phenol and

    Acetone, Bis Phenol A, Acrylonitrile Butadiene Styrene,

    Styrene-Acrylonitrile, Poly Methyl Methacrylate,

    Polycarbonate

    Syn Gas I: Methanol, Acetic Acid

    Methanol-based formaldehyde

    > Downstream petrochemical units:

    Synthetic & technical textiles, garments and apparels

    Speciality chemicals, coatings, adhesives, sealants,rubber chemicals, Pesticides, Dyes

    Plastics and plastic products

    Bulk drugs and API

    Agro-chemicals and organic chemicals

    Karnataka: Chemical and Petrochemicals Sector Prole

    Special Economic Zones

    Transport Hubs

    Petrochemical Industrial Parks

    Logistics Parks

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    Shelf of Projects

    ProjectDistrict/

    LocationDistrict

    Sub-

    sector

    Investment

    potential (US$

    million)

    P- Xylene, Benzene, and C3 Chain based

    intermediate industriesDakshin Kannada Dakshin Kannada

    Intermediate

    Industries4166.67

    Synthetic and Technical Textiles, SpecialityChemicals, Coating, Adhesives, Agrochemicals, Dyes

    and Plastics, and Organic Chemicals

    Mangalore SEZ Dakshin Kannada DownstreamIndustries

    2083.33

    Chemical and Petrochemicals Park Hassan Hassan Infrastructure 104.17

    Mangalore SEZ Mangalore Dakshin Kannada Infrastructure 104.17

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Source:

    > Department of Commerce & Industries, Government of Karnataka; website: http://www.karnatakaindustry.gov.in/

    > Karnataka Udyog Mitra (KUM), Government of Karnataka; website: http://www.kumbangalore.com/

    > Economic Survey of Karnataka 2010-11, Planning Programme Monitoring & Statistics Department, Government of Karnataka,

    February 2011, http://www.planning.kar.nic.in/sites/planning.kar.nic.in/les/ES_Final_Printing_English_13-3-11_5.30.pdf,

    accessed on 31 October 2011.

    > Indian Chemical Industry: A Sector Study, Export-Import Bank of India, March 2007, http://www.eximbankindia.com/op/

    OP%20117%20Chemical%20Industry%20[Full%20Report].pdf, accessed on 29 November 2011.

    > Chemicals: November 2010, India Brand Equity Foundation, November 2010, www.ibef.org, accessed on 28 November, 2011.

    > Factsheet on Foreign Direct Investment (FDI): From April 2000 to September 2011, Department of Industrial Policy and

    Promotion, September 2011, http://dipp.nic.in/English/Publications/FDI_Statistics/2011/india_FDI_September2011.pdf,

    accessed on 28 November 2011.

    > Annual Report 2010-11, Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers, Government

    of India, http://chemicals.nic.in/English.pdf, accessed on 28 November 2011.

    > Annual Report of Industries & Commerce Dept. for 2010-11, Department of Industries & Commerce, Government of

    Karnataka, http://karnatakaindustry.gov.in/documents/AnnualReport2010-2011Eng.pdf, accessed on 28 November 2011.

    > Economic Survey of Karnataka 2010-11, Planning Programme Monitoring & Statistics Department, Government of Karnataka,

    February 2011, http://www.planning.kar.nic.in/sites/planning.kar.nic.in/les/ES_Final_Printing_English_13-3-11_5.30.pdf,

    accessed on 31 October 2011.

    > Karnataka: November 2010, India Brand Equity Foundation, November 2010, http://www.ibef.org/download/

    Karnataka_190111.pdf, accessed on 28 November 2011.

    > Basic Statistics on Indian Petroleum & Natural Gas, 2009-10, Ministry of Petroleum and Natural Gas, Government of India,

    October 2010, http://petroleum.nic.in/petstat.pdf, accessed on 8 December 2011.

    > Number of Registered Factories and Number of Workers Classied According to its Manufacturing Processes, Dept. of

    Factories, Boilers, Industrial Safety & Health, Government of Karnataka, 31 March 2011, http://labour.kar.nic.in/

    fandb/f_static.htm, accessed on 29 November 2011.

    > Mangalore SEZ Ltd website, http://www.mangaloresez.com/, accessed on 29 November 2011.

    > Mangalore Renery and Petrochemicals Limited (MRPL); website: http://www.mrpl.co.in/

    Karnataka: Chemical and Petrochemicals Sector Prole

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    Contacts

    Principal Secretary to Government of Karnataka

    Commerce & Industries Department# 106, 1st Floor, Vikasa Soudha, Dr. Ambedkar Vedhi, Bangalore - 560 001, India. Ph.: +91-80-22252443 / 22034340 Fax: +91-80-22259870 Email: [email protected]

    Commissioner for Industrial Development andDirector of Industries & Commerce2nd Floor, Khanija Bhavan, No.49, Race Course Road, Bangalore - 560 001, India. Ph.: +91-80-22386796 Fax: +91-80-22389909 Email: [email protected] Visit us at: www.karnataka.industry.gov.in

    Managing Director, Karnataka Udyog Mitra3rd Floor, Khanija Bhavan (East Wing), No.49, Race Course Road, Bangalore - 560 001, India.

    Ph.: +91-80-2228 2392, 2228 5659, 2238 1232, 2228 6632 Fax: +91-80-2226 6063 Email: [email protected] Visit us at: www.kumbangalore.com

    Mangalore SEZ Ltd.

    Managing Director & CEO

    (KAPPEC)No. 16, Pravana Park, 3rd Floor, Infantry Road, Bangalore - 560 001, India.Ph.: +91-80-2286 7552, 22867553Fax: +91-80-22867551


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