Manali Petrochemical Ltd today said it will invest Rs 100 crore to triple capacity to 150,000 tonnes per annum to meet growing demand for polyols.

The brownfield investment will be phased through 4-5 years, the company said in a statement here.

"In a bid to consolidate its position and meet the aggressive challenge from multinationals, Manali Petrochemicals Ltd plans to increase its capacity to produce polyols from the current 50,000 tonnes per annum to 150,000 tonnes per annum using an innovative technical process to produce additional propylene oxide (PO)," it said.

The first phase of expansion to 75,000 tonnes per annum would be complete by March 2016. "Company has received the necessary approvals for this expansion," the statement said.

The subsequent phases, each with 25,000 tonnes capacity additions, would be commissioned every 12 months. Incremental turnover would be Rs 280-300 crore with every additional phase.

Polyol demand in India is estimated to be roughly 5,00,000 tonnes in a market dominated by transnational petrochemical companies such as Dow, Shell, Bayer, BASF and Huntsman.

This brownfield investment will help Manali Petro to produce cost-effective Propylene Oxide (PO) in manufacturing products like Polyurethane Foams (PU), which is extensively used in the automotive, construction, refrigeration and other industrial products. The key raw material for the production of PU and Propylene Glycol (PG) is PO.

Commenting on the announcement, Ashwin C Muthiah, Chairman Manali Petro said, "It is a reaffirmation of our faith in the India growth story. This move will give Manali Petrochemicals significant scale and ability to further penetrate the market. The latest technology will ensure efficient and global manufacturing best practices."

Over the years MPL has enhanced its production capacity for both PO and Polyols and at present has a combined capacity of 36,000 tonnes per annum of PO and 50,000 tonnes per annum of Polyol of single grade.

Due to technical issues PO capacity cannot be augmented further and hence MPL was depending on imported PO, which is expensive and affects margin.

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