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Mr. B. Chattopadhyay
CEO Dhunseri Petrochem & Tea Ltd.
Please brief us on this Egypt project? How should this expansion add to company’s positioning?
Dhunseri Petrochem and Tea Ltd. (DPTL) will set up a joint venture Greenfield world scale bottle grade Polyethylene Terephthalate (PET) plant in Ain Sokhna, 115 kms, east of Cairo, the capital of Egypt. The Indo-Egyptian joint venture company, Egyptian-Indian Polyester Company, SAE (EIPET) will have an annual nameplate capacity of 420,000 tons and will be set up at a cost of US $200 million.
Dhunseri Petrochem will own 70 percent stake, while the joint venture partners - Egyptian Petrochemical Holding Company (ECHEM) and Engineering for Petroleum & Process Industries (ENPPI), will own 23 percent and 7 percent stake, respectively. Both, ECHEM & ENPPI are front organization of Ministry of Petroleum - Govt of Egypt to promote petroleum industry in the country.
EIPET will supply the PET Resin to Egyptian and other North African markets including Israel. It will also supply products to Europe and US. The energy and manpower cost in Egypt is extremely competitive. Hence, EIPET will also be able to sell its product in the international market too.
Well, there is stiff competition from the Middle East region in this segment. What has been the strategy to counter such competition?
In spite of heavy competition in the domestic market, DPTL has grown from strength to strength owing to its management strength, capacity utilization, low production cost, product quality, etc. The world PET Resin market is growing at the rate of 4-5% and there is scope for the competition to co-exist on the basis of “Survival of the Fittest”. In Egypt, we shall be in advantageous position vis-à-vis our competitors with regard to logistics, energy and market.
Crude oil is the basic feedstock for PET Resin and prices have been appreciated 56% y-o-y from July ‘10 to July ‘11 (according to track record prices in our Market Watch Report). How does this affect the business margins?
The Crude Oil price does have an impact on the PET price. However, there are many other factors that drive PET price movement. Demand & supply, seasonality, market trend of other polyester applications are few important factors which have influence on PET price.
What other challenges does the Petrochemicals Supply Chain involve? When it comes to singling out partners on this front, what aspects are to be considered?
There are huge challenges existing in the Supply Chain of the Petrochem Industries. Although DPTL, as a company, has weathered supply chain disturbances in the past and has the confidence to get success in future too. Availability of raw material and logistics are the two main concerns in supply chain management. For a sustained relationship between the two partners, we have had a sense of satisfaction on the contractual association with our raw material suppliers.
And lastly; at Dhunseri, what are the developments ensuring a better planet Earth?
At Dhunseri, our efforts to make this earth green, are continuous. We abide by the norms laid down by the State Pollution Control Board. We have received “Environment Excellence Award 2007” from the West Bengal Cleaner Production Centre, a joint collaboration of Indian Chamber of Commerce and West Bengal Pollution Board.
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