Transcript Slide 1

Mangalore SEZ Ltd.
Building & Powering Industry Cluster for Petrochemical/
chemical Industry at Mangalore SEZ
ASSOCHAM Conference,
New Delhi
16th Feb ‘15
Building & Powering an Industry Cluster at Mangalore SEZ
• Strategic Context
• Industry Outlook, growth drivers and issues
• Significance of cluster based development
• Why Mangalore - Karnataka as an investment destination
• MSEZ proposition
• Opportunities for Petrochemical/ Chemical & Allied industries at MSEZ
• Current Status of Industrial Projects in the Catchment
Strategic context: Industry outlook, growth
drivers and key issues
Strategic Context for Petrochemical/ Chemical industry
Sector wise break up of Indian Chemical
Industry In USD Bln
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Indian chemical industry :
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Sixth largest by output globally, at USD 118 Bln.
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accounts for 3% of the global market
Indian market:
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is the world’s third largest consumer of polymers
and third largest producer of agro-chemicals
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accounts for 16% of the world production of
dyestuff and dye intermediates.
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Highly diversified with above 70,000 products
The production of chemicals at 19.5 Mln Tons lags
consumption of 25 Mln tons
Strategic Context for Petrochemical/ Chemical industry … 2
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Exports have grown at a CAGR of 18% to
reach Rs 1,78,000 cr over the last 6 years.
178000 234258 •
But India is net importer of Chemicals with
current net imports of Rs 56,300 cr
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Net imports have grown at 21% vis-à-vis
output at 4% over the same period.
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Major imports: PVC, PTA, MEG, HDPE, LDPE,
LLDPE, Methanol , Acetic Acid etc.
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Major Exports- PFY, PET, Benzene, Dyes,
Agro chemicals , Pigments etc.
Chemical Exports & Import TrendsIndia (in Rs Cr.)
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
74000
65681
2007-08
0
50000 100000 150000 200000 250000
Imports
Exports
Strategic context - Industry Growth Drivers
• Robust GDP growth projections over next decade – one of the highest in the world
• Large head room for growth :
• Low per capita consumption of Petrochemicals at 7kgs against 109 kgs in USA;
32 kgs in Brazil and 29 kgs in China
• Growing disposable incomes and increased urbanisation
• High demographic dividend
• Rapid growth in domestic market for end products
• “Make in India” campaign seeking to enhance the share of manufacturing in GDP
• Setting up of PCPIR’s ( & SEZ’s), with cluster approach
Strategic context - Industry Growth Drivers … 2
• Vibrant downstream industry base in Drugs & Pharma; Dyes and Agrochemicals etc.
• Excellent scope for increasing exports for specialty chemicals
• Large Infrastructure investment of almost USD 1 Trillion envisaged over the 12th Plan
(2012 – 17) , giving impetus to construction chemicals
• 20% to 30% Lower Capital cost compared to developed countries
• Abundant technical manpower and low cost manufacturing capability
• World class Engineering and strong R&D Capabilities
• Diversified manufacturing base
Strategic context - Growth Outlook
In another decade, India expected to double its share in the Global Chemical Market
FY 13
Global : USD 3.4 Tln
India : USD 118 Bln
FY 23
Global : USD 5 Tln
India : USD 300 Bln
Potential Growth
8-12% pa.
Source: Data Monitor, Industry reports and In -house analysis
Key Issues impacting Growth in Petrochemicals/ Chemicals
• Inadequate basic infrastructure
• Pricing/ availability issues with feedstock
• Highly fragmented downstream industry with low technology/R&D
• Sub-optimal plant sizes in the global context
• High cost of environmental compliance
• Relatively higher Logistics costs
• Unfavorable FTA Regime
• Complexities in tax structure
• Need for compliance with REACH Regulations
Strategic Context : significance of cluster based development
for Petrochemical/ chemical industry
Strategic context – Cluster based development
• Thriving clusters can drive broad based economic development
• Industrial sectors best developed in clusters for:
• Cost competitiveness at a global scale thru’:
• Functional/ co-location synergies enhanced by proximity to Port
• Proximity to feedstock/ raw materials & potential markets
• Forging Partnerships and collaborations
• Common shared infrastructure:
• Optimized Capital investments by leveraging scale
• Reduced area requirement
• Improved environment management
Cluster benefits
Location
Feedstock/
Supply chain
linkages
Infrastructure
development
Documented reduction in
capex by ~15% - 20% and
opex by ~10% - 30%
Mangalore
International Port
Feedstock
Epicentre
Soft skills
Why is Mangalore - Karnataka suited as an
investment destination?
Mangalore – An emerging Industrial Capital of Karnataka
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Rated 13th best city for investment in India (based on factors such as human capital, energy,
water, transport, housing, healthcare, climate, office space availability and city culture )
based on survey by GIREM and DTZ
Evergreen coastal city.
Substantial multi-cultural social infrastructure.
Vast land resources suitable for industrial activities with relatively low PAP.
Adequate fresh water resource with an average of 4000 mm rainfall per annum.
Rich in Human resource:
• Over 90% literacy in South Kanara District. • Highly skilled technical manpower base.
Large number of Engineering / Technical Institutions and centers of excellence.
A huge resource base to support multiple growth opportunities
Mangalore – as an emergent cluster/ Petrochemical hub
• Strategically located on west coast with “all weather”, 15 Mtrs. deep draft Major Port
• Excellent global and domestic connectivity
• Proximity to large South India Market
• Access to multiple feedstock options- Presence of refinery, Aromatic Complex, LPG
Terminal , SEZ & Chemical companies
• Lowest logistics cost in India for imports from Gulf – a Petrochemical rich region
• Excellent Business and Social environment and abundant soft skills
• LNG terminal in future in the offing
Mangalore - an emerging hub of chemical industries
Leading Petrochemical/Chemical companies in Mangalore – the changing landscape
JBF Industries Ltd.
MSEZ - proposition
SPECIAL ECONOMIC
ZONE
An Emergent Industry Cluster
Seeks to enable solutions to the emergent issues, as a destination for catering to
new opportunities…
MSEZL – Company profile & structure
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MSEZL : SPV incorporated in Feb ’06, with the objective of developing a multi-product SEZ.
Reputed Promoters :
• Oil and Natural Gas Corporation (ONGC)
- 26%
• Karnataka Industrial Area Development Board (KIADB)
- 23%
• Infrastructure Leasing and Financial Services (IL & FS)
- 50%
• Kanara Chamber of Commerce & Industry (KCCI) & others
- 1%
Non – Government company structure :
• Unique combination of Central, State Govt. entities with fin. institution & industry body.
Environment Clearance : in place for Phase – I (~1800 acres) for Petrochemical, Chemical &
Allied industries
MSEZ Project - snapshot
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~1620 acres being developed in Phase – I with an investment of ~ USD 300 Mln
Strategic Location - Multi-modal connectivity, proximity to excellent social infrastructure
– health care, education & residential; abundant soft skills & proximity to port , LPG
Terminal as well as existing chemical industry hub including refinery.
“Self – contained”, integrated cluster with vibrant infrastructure developed as an
innovative “plug & play model - Water, Pipeline Corridor, Power distribution, CETP and
other “Last Mile” micro infrastructure
Environmental clearance in place
Comprehensive R & R - Building PAP Colonies, Training, employment…
Access to multiple feedstock options for Petrochemical downstream industries
Now notified as “Multi product SEZ” – offering flexibility across sectors
MSEZ VIDEO
Current Project Status - MSEZL
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Project functionally operational
Quick start , “Ready to use” graded plots available in flexible sizes
75% of the processing area leased with committed investment of USD 1.6 Bln
Comprehensive water infrastructure developed
• from River source: through ~40 km long pipeline conveyance system - operational
• from STP source: 5 MGD capacity state of the art TTP commissioned for treating
secondary treated sewage water ex- Mangalore City Corporation.
Port connectivity between Port & units established over ~11.45 km. Overall corridor
development work in advanced stage.
~12.2 km long treated effluent disposal pipeline incl. 1.2 km into the sea - operational.
“Last mile” infrastructure development in progress
Environment
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Environmental clearance received from Central Government for the Zone
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Typically State level environmental clearance required for units, with shorter
gestation timelines (estimated gestation period: 4 to 6 months).
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MoA signed with Mangalore City Corporation (MCC) to maintain the STP’s and re-use
secondary Treated effluent, thereby minimizing environmental load.
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Developing 33% area as Green belt
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Marine disposal line put up 1.2 kms into the sea
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CETP tender floated , likely to be operational by mid ’16
Social infrastructure
Enjoy Living & Working in
in
Cosmopolitan
Mangalore
Emerging as State Industrial
‘Capital’
Availability of Talent pool
Urban
Beautiful
Beach City
International
Airport
Well endowed Social
Infrastructure
Social Infrastructure … 2
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Human resource:
• Skilled Technical manpower base
• Over 90% literacy
• Large number of Engineering /Technical Institutions
• Ready access to Excellent Social infrastructure:
• Healthcare facilities
Advantage…
• Residential accommodation
Ease of relocation
• Recreational facilities
Attract best talent
Export Advantage
• Excellent Global Connectivity to Europe & SE Asia through Mangalore Port
• International Airport in close proximity
• One of the lowest logistics costs from India to Gulf - key source of feedstock
• Free Trade Warehousing zone/ Logistics Park facilitating international trade
• Duty free regime & tax benefits for export income
• Streamlined systems & procedures Export and import
• Flexible labour Laws
Domestic Market Advantage
A large, fast growing consumption market for
Petroleum, Petrochemical & Specialty Chemicals.
Area in 600 km radius of MSEZ accounts for 20% of India’s GDP.
Yet this area accounts for only 5% of Petrochemical production !
While Exports is the focus for units located in SEZ, they have the flexibility of catering to the
Domestic markets as well – as long as the Net Foreign Exchange (NFE) criteria
is met over 5 years.
Handsome Cluster benefits
SEZ Benefits
Fiscal Benefits
Exemption (E)/ Development
Refund (R)
Stage
On Capital Goods, Components, Consumables, Raw Materials & Spares
• Customs Duty
• Domestic Procurement - Excise Duty
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- Sales Tax/ VAT
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- Service Tax
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- Purchase Tax
Operation
Stage
E
E
R
E/R
E
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50% E
50% E
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On Other Transactions
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Stamp duty & Registration Fees
Stamp duty on Mortgages
Electricity Duty and Taxes
Domestic Sales –Subject to NFE Conditions
Income Tax (100% for 5 yrs. + 50% for next 5 yrs + 50%
ploughed back export profit from next 5 years )
Manufacturing Opportunities at MSEZ
Multiple options of feedstock available, both within and in close
proximity of the Zone, offering a plethora of manufacturing
opportunities in Petrochemical Building blocks, intermediates
and downstream products
Feedstock Availability
MSEZL units
(OMPL, JBF …)
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Para xylene
Benzene
Heavy Aromatics
Paraffin rich
Rafinates
• Hydrogen
• PTA
• PET
MRPL
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Light Naphtha
Pet Coke
FCC Off gases
FCC LPG
Poly Propylene
Bitumen
Sulphur
Others (TOTAL Gaz;
MFCL …)
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Propane
Butane
Ammonia
Sulfuric Acid
• Plus ease of imports
of feedstock from
Gulf
Manufacturing opportunities at MSEZ – Basic building blocks
• Propylene thru’ propane dehydrogenation(PDH)
• Ethylene from FCC off gases
• Iso Butane / n-Butane from Butane
• Iso Butylene from FCC LPG
• Butadiene from Butane Dehydrogenation
• Syn gas from Pet coke
Under
Advance
Consideration
Manufacturing opportunities at MSEZ – Intermediates
C1 –Syn. Gas
• Methanol
• Acetic Acid
• Formaldehyde
• Formic Acid
• DME
• Ethyl Alcohol
• Others…..
C2- Ethylene
• VCM
• VAM
• EVA
• EO
• PVC
• Ethyl Benzene
• Styrene
C3 – Propylene
Mixed C4
• Acrylic Acid
• Oxo Alcohol
• PO
• IPA
• ACN
• Polyols
• Propylene Glycol
• Iso Butylene
• Butene 1,2
• Butadiene
• Maleic Anhydride
• BDO
• PIB
• TBA
• Alkyl Phenols
• Methacrylic Acid
• Butyl Rubber
C6- Benzene
• Ethyl Benzene
• Cumene
• Phenol/Acetone
• Cylco hexane
• Caprolactum
• Aniline
• Isocynates
Manufacturing opportunities – Downstream products
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Plastics, Synthetic Textiles and Specialty Chemicals
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Dye Intermediates
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API’s /Drug Intermediates and Pharmaceuticals
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Agro Chemicals
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Other Allied Sectors
Planned Infrastructure and Service Opportunities
Concessionaires
Services(ISPs/
Steam, DM water,
Sub-Developers)
Industrial Gases,
Captive Power Plant ,
Logistics Park ,
Central Effluent Treatment
with network
Maintenance Services,
Centralized Testing Lab,
Contract R & D ,
International Trading Hub,
Business advisory services
Current Status of Infrastructure and Industrial
Projects in the MSEZ catchment
Current Status of Industrial Projects - MSEZ
Projects within MSEZ :
• ONGC Aromatic Complex (OMPL) - commissioned
• Epoxy resin plant of Cardolite Specialty Chemicals already – in production.
• PTA (1.2 MMTPA) & PET (0.5 MMTPA) plant by JBF Industries – construction under way
• ISPRL (Indian Strategic Petroleum Reserves Ltd.) , a Govt. of India undertaking, has
completed tunneling for underground oil storage
Neighbourhood Projects :
• Refinery FCC unit (Phase 3 expansion) - commissioned
• MRPL’s Polypropylene Plant of MRPL (0.45 Mln TPA) – commissioning mid –’15
Thank You
Indian Chemical Industry – SWOT Analysis
Strengths
Consumption Driven Growth
Rising Income
Competitive Labor
Manufacturing Base
Vibrant Downstream Industries
Quality Human Resources
Opportunities
Large Domestic Market
Low Per capita Consumption
Increasing investment in Downstream
“Make in India” Campaign
Improved Infrastructure Investment
Weaknesses
High Feedstock Cost
High Energy and Finance Cost
Poor Infrastructure
High incidence of Taxes
Fragmented Industry - Sub optimal
Capacities
Threats
Low Cost producers in Gulf & China
FTA’s with various countries
Price Volatility of Crude Oil
Strong Environmental regulations
REACH Regulations
Reduced Customs duty
MSEZ - location
MANGALORE
A PORT CITY
Current Status of Infrastructure Projects - MSEZ
• Infrastructure for bulk water and power to Zone tenants operational
• Pipeline - cum - road Corridor from SEZ to Port in advanced stage of completion.
Pipelines for OMPL already completed in the corridor.
• Concessionaire appointed for setting a Tank farm
• Tenders floated for setting up CETP by JQ16 ; Marine disposal pipeline installed
• RFP has been floated for setting up centralized Utility facility for steam / DM /Cooling
water on BOO basis.