CHENNAI: From its infancy in the late sixties to now, set to achieve half a century of existence, Chemplast Sanmar Ltd., has been a company that has fervently believed in ‘innovation’. Now, the second largest Indian producer of the ubiquitous plastic — PVC — Chemplast had much humbler origins.
“When Chemplast was founded on May 4, 1967, the total PVC capacity in India was around 6,000 tons,” pointed out chairman of the Sanmar Group N Sankar. Chemplast entered the market with 6,000 tons per annum, but now produces over 360,000 tons, commanding a 50 per cent market share. It also boasts $425 million in revenue and an EBITDA margin of around 15 per cent.
But the idea for Chemplast
itself came from an innovative attempt to use byproducts. “The idea was to make PVC from unique materials,” said Sankar. Officials at the Mettur Chemicals and Industrial Corporation’s Plant in Mettur were trying to figure out a way to use chlorine produced as a byproduct and Chemplast’s promoters hit on PVC.
“But for the first time, they began making the ethylene, the other raw material, from molasses— a byproduct of sugar plants, which was going to waste. The method was green, even before the term was coined. It was made from renewable raw materials — sugar and salt (for chlorine),” he recalled. The company’s DNA retained the fervency for innovation — continuing after Sankar’s Sanmar Group took over the company in 1977.
It was Chemplast, pointed out Sankar, that pioneered zero liquid discharge at the 80-year-old Mettur plant. It was also the first to fully import raw material (ethylene dichloride EDC), establishing coastal facilities on both coasts. However, the company has not had a rose-strewn path to success.
“Chemplast went through hell in the first few years. There have been extraordinarily good years and very bad years,” pointed out Sankar, who started in the company as an unpaid apprentice under its first chief — S Ramaswamy. “There were technical difficulties during the first year itself, with the plant remaining shut for three months,” recalled Sankar. The devaluation of the Rupee in 1966, increased the project cost by 60 per cent, and price wars reduced PVC prices by 50 per cent. But Chemplast broke even by 1972, and from 1977, has been expanding under Sankar.
Now, the industry veteran sees huge potential in PVC in India. “There is a big gap between domestic production and demand. Most of this excess consumption is being met by imports. But, there needs to be positive inducement to manufacture here — the costs of setting up here are high,” he pointed out.
Chemplast however, is planning to expand its suspension PVC capacity to 1 million tonnes, is investing `100 crore in a hydrogen peroxide plant and `325 crore in a joint venture with Kem ONe SAS to produce CPVC. The parent $1.5 billion Sanmar Group has also made a major foray in Egypt through TCI Sanmar and its chemical businesses are set to expand after receiving funding from investment firm Fairfax.