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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
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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
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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
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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
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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
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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