Media Coverage

Petrochemicals will be a sector to reckon with by 2025: Experts

At the E-conference on "India's Petrochemical Industry Outlook 2021" hosted by Indian Chemical News (ICN), there was a consensus among industry leaders that the future survival of the oil refining industry will depend on petrochemical products. The virtual event moderated by Pravin Prashant, Editor, ICN brought to fore the key growth drivers such as government incentives, shift towards biofuels and electric vehicles, better profit margins and even climate change.

In the longer run, demand for petrochemical might go up, says K. K. Jain, Executive Director, Center For High Technology who feels refining is facing the biggest brunt while there is a big opportunity for petrochemical products, particularly packaging industry that flourished during the pandemic.

Jain is highly pragmatic about the success of biofuels which he says will make the oil and gas industry players shift their priorities. He explains, "There are 12 bio-refineries under a scheme PM Jeewan Yojna. Out of that one is being built by HPCL, two by BPCL and one bamboo-based biofuel refinery by NRL in North East India. Another 8 refineries are yet to come as PSUs are giving priority to biofuels and 2021 onwards, we expect much more aggressive inputs and applications which will come from the transport sector."

Petrochemicals and plastics had a very bad press in the last year, says Chandan Sengupta, Senior Vice President, Haldia Petrochemicals, who wonders what would have happened to the whole packaging industry that made contactless delivery possible. Yet he agrees that sustainability is a responsibility.

"Petrochemical sector is a huge employment enabler and thus the government needs to relax the stringent regulatory bottlenecks and unrealistic tax regime. He also cautions against the lack of enough groundwork to meet the set targets. "The crude to chemicals or C2C is going to be a buzzword. The lesser of fuel oil and more of chemicals," comments Sengupta.

Calling for the integration of refineries with petrochemicals, P. V. Ravitej, Executive Director - Refineries, BPCL talks about the need for tapping product imports worth Rs. 95,000 crore. "Since the priority of Indian PSUs was to ensure the fuel to common man, it ensured that we stay in refining than petrochemicals. However, now after meeting our fuel requirements, we need to rise to the occasion to meet the demand. With decrease in growth of gasoline and diesel by 2020, the focus will be more on petrochemicals. We are expecting the petrochemical will reach 15% from 5% by 2030, resulting in a decrease in import dependency. Going forward, we need to develop new polymers through R&D."

Petrochemicals have outgrown the other basic chemicals, mentions Prasad Panicker, Director & Head of Refinery, Nayara Energy who feels that it has not got the attention due to complexities of the fuel market.

"The refineries are looking back at petrochemicals, the key driver being profitability. Yet despite the fact polypropylene and ethylene offer more profits than fuels and lakh crore of imports trigger huge demand, Indian refineries have to be extra careful in terms of investing as prices of crude oil is a key factor. There should be clarity in terms identifying relevant petrochemicals whether niche or bulk, depending on growth in next 10-20 years," added Panicker.

Panicker agrees with other experts on the integration of refining and petrochemicals to get a feed advantage but points out the need for consciousness about competition.

"It is a globally competitive market and that will decide the future. For blending of oil up to 15% by 2030 and beyond that, we have to develop new technologies. In the next 10 to 20 years, support from the government, correction in custom duties and huge infra projects will pip the growth. With irrigation projects worth Rs. 180 million, PVC pipes are in high demand. Climate change too will play a huge role in growth," adds Panicker.  

Ethanol has huge savings in terms of energy, says Milind S. Patke, Executive Director – Biofuels, BPCL, "While the government was aiming 20% blending by 2030, it has advanced this target to 2025. From the current 325 crore liter capacity in ethanol, there will be a demand for 925 million liters, resulting in a gap of 600 million liters. Traditionally ethanol is produced from sugarcane molasses route but with the government fixing remuneration for different sources including food grains as enablers. There is quite an exciting opportunity for entrepreneurs to expand the market in the next 3 to 4 years. There is huge export potential and we need revamping of existing distilleries for boosting the production. Oil companies are themselves looking at setting up refining plants. IOCL, HPCL and BPCL are looking at producing 150 million litres of Ethanol in Chhattisgarh, Telangana and Orissa with 500-kilo litre per day capacity by 2025."

"Government is working towards creating self-reliance and transformation towards a circular economy," says Samir Somaiya, CMD, Godavari Biorefineries who highlights the growing focus on hydrogen fuels. "To reach the target of 15% Ethanol blending from 8.5%, the government is encouraging the industry to produce additional 5-6 million tonnes of sugarcane to produce 6,000 liters of ethanol per day. Ethanol production from sugar beet, molasses, maize, sorghum and even damaged rice will lead to 12 billion liters from current 5 billion litres."

When you grow crops, you are reducing the CO2. We are not only intercropping but also working with farmers for low carbon farming and work towards a circular economy, adds Somaiya.

Outlining the future strategy, Sudeep Maheshwari, Senior Principal, Kearney stresses the need for one cracker plant each year to keep pace with demand be it polypropylene or polyethylene, the nature of certain derivatives may increase and others may decrease and market factors will play a decisive role in this."

Maheshwari who bats for partnerships and push marketing also points out the need for more efficient feedstock sharing rather than just incentives and duties.

"With western markets saturating fast, India has a big opportunity to tap the potential but global players are a bit reluctant as they fear inconsistency in partners and uncertainties in rules here. Therefore, we must start doing things differently and increase their confidence," added Maheshwari.

Source: Indian Chemical News

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Biorefineries and alternate fuel

Contributory article by Mr. Samir Somaiya in Chemical Industry Outlook 2021 published by Indian Chemical News on Page 84 & 85 

Source: https://www.indianchemicalnews.com/assets/compendium_assets/ICN-Chemical-Outlook-Compendium.pdf

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A Story Sweetened Over The Years

Godavari is a story sweetened over 77 years and stands on the pillars of three generations. From sugar production to over 20 different products from sugar cane, the company has come a long way.

Almost eight decades back, a young man, looking for work, met a few Marwari traders. They asked him if he could help them trade sugar in Maharashtra. He said “yes” and started trading. Slowly and eventually, he entered into the manufacturing of sugar and in 1939, Godavari Sugar Mills was established. Today, Godavari is a story sweetened over 77 years and stands on the pillars of three generations. Since its inception, Godavari Sugar Mills donned upon numerous avatars- from sugar production and sugarcane farming to ethanol distillation in the 1960s and later it entered into the manufacturing of ethanol based chemicals by the early 70s.

More recently, the company reinvented itself as Godavari Bio-Refineries and added value to agriculture feedstock by not just making sugar, but also, bio fuel, renewable electricity and a range of commodity and specialty chemicals.

Milestone of change

Staying ahead of times, Godavari, in its very early phase decided to think beyond the borders and work towards international trade. Change in government policies in 1992 created a challenging environment for the company. Godavari decided to confront the challenge and reinvent itself.

“During the time of liberalisation, the government lowered the import duties into India. They also removed the controlled price of molasses, which was the raw material for us. Taken together, the government regulations changed as far the local molasses market was concerned and with the lowering of duties on chemicals, we were exposed to international competition,” said Samir Somaiya, chairman & managing director, Godavari Biorefineries Ltd.

“These were the two significant changes in the external environment which made us think that as we prepare ourselves for the future, we want to grow in a way so that we can compete with the global competition. This meant that our products need to be of exportable quality and we need to be knowledge driven,” continued the third generation entrepreneur of the company.

And thus, Godavari steered its organisational direction towards strengthening its research knowhow. “In those days, the 90s, research and development was just a quality control measure. We however decided to start developing our own knowhow and become a company that would be at the cutting edge of research,” said Somaiya.

Today, Godavari Biorefineries boasts of its deep rooted research and development practices for enabling the company to become one of the largest sugar producers in India in single location and one of the leading manufacturer of ethanol, ethanol based organic chemicals, renewable power & bio fertilizers.

“As a fresh chemical engineering graduate, the first assignment that my father gave to me was to develop a department for research that can make products to face international competition and a department that will try to strengthen company’s exports. My skills were put to test immediately and the team that I built then is still there today,” recalled Somaiya.

The company currently has a team of over 30 persistent scientists working towards making new products and innovation.

Manufacturing Excellence

The company has two large manufacturing locations in Maharashtra and Karnataka. Sugarcane as a feedstock is converted to sugar, ethanol and electricity. Ethanol is then converted to a range of commodity solvents and specialty chemicals. The company currently manufacturers about 20 products from sugarcane and is now working on making products from Bagasse other than electricity.

The company also manufactures natural waxes and compost and has also recently entered the branded segment with sugar, salt and turmeric under the brand name Jivana. “Our chemical products go into a wide variety of fields such as printing inks, intermediates of pharmaceutical, paints, cosmetics, frothers, etc. This all comes from a knowledge driven approach to business,” said Somiaya.

Solutions for the industry

• Flavours and Fragrances
• Mining: Replacing MIBC as a frother due to its carcinogenic property
• Plasticizers: Working on replacing carcinogenic phthalates
• Cosmetics: Making natural skin-friendly emollients
• Renewable Power: Using sugarcane as feedstock to make renewable energy via Bagasse.
• Inks & Coatings: Using Green and renewable solvents

Quality Measures

An organisation’s credibility comes from its quality. Godavari Biorefineries has ingrained quality in its DNA. “Quality is not just one thing but needs to be looked at as a whole in terms of product quality, process quality, the quality of the facility and the quality of the relationship that the organisation has with the people it works within the company and outside in the community,” said Somaiya.

Apart from a combination of certifications, the company believes in improving quality and productivity from the base level. “We continuously work with our farmers to see how their yield can be improved, ensure their soil is healthier and employ sustainable practices to get higher and good quality yields while improving the farmer’s productivity,” he added.

Sustainability Quotient

The company has been striving to reach sustainability in every aspect of production and functioning. Their work towards water conservations and management and their recent endeavour to reduce water consumption in the facility by half, got them recognition from ICC and FICCI. In a time where every global organisation is striving to achieve high sustainability in their operations, interestingly at Godavari, more than 65% of the inputs come from renewable resources already. “For more sustainability, we are now focusing on the new products and are trying to make them from renewable resources as well. We are also trying to see how we can make our farmers more sustainable in terms of inputs they use in their farm,” explained Somaiya.With various collaborations with agricultural institutions, research organisations, and experts along with farmer education, awareness and participation, the company has been constantly trying to achieve more productivity with less land, chemicals, water and other natural resources are develop solutions to ensure sustainability of agriculture.

Growing Together

An organisation is built by its employees. Moving ahead with over 1,500 people employed by the organisation, Mr. Somaiya believes in going beyond the ordinary. The motto - Earn with a 100 hands and give back with 1,000, is just one way in which company believes in paying back its debt to the society.

“A combination of various factors culminates into making us a company which constantly works towards productivity enhancement. In this process we also try to do a whole social transformation with us. And we have been doing this way before ‘social responsibility’ became a buzz word,” said Somaiya.

Future outlook

The company recently launched three products in the last two years and has over five to seven products in the pipeline to be commissioned in the next 2 to 3 years. These products also have a stream of expansion plans lined up. “We try to make transformation of biomass and this transformation can be chemical, physical, biological or agricultural. Our focus is on expansion of the existing business and introduction of new product lines,” said Somaiya.

The company has a current turnover of over Rs 1,365 crores where over 35 percent of turnover comes from export. These are numbers that quantify a business.

However, it is not the number that is generated in business but the number of lives that are touched that matters more. And the number of lives that Godavari continues to touch is an endless journey.

THE AUTHOR: DEBARATI DAS

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