IFC, the private sector arm of the World Bank Group, will invest up to $20 million in Kanoria Chemicals and Industries Limited, to help the company expand the capacity of its caustic soda plant in Uttar Pradesh in India . The expansion of the Renukoot plant’s capacity from 90,000 to 130,000 tons per year by March 2008 will be based on more efficient, environmentally-friendly membrane cell technology, which consumes less energy per ton of output.
Kanoria will also expand the capacity of its downstream chlorine derivative production units, which will help improve the company’s margins. By providing long-term funding to Kanoria, IFC is addressing a midsize player’s critical need among 31 chlor-alkali producers in India . The loan will equip the company to grow dynamically and acquire economies of scale in a competitive and cyclical capital-intensive industry.
The Indian chemical industry, valued at about $30 billion in 2005, is projected to grow to about $60 billion by 2010. The industry accounts for nearly 13 percent of India ’s exports. With 6000 players in agrochemicals, chlor-alkali, fertilizers, man-made fibers, paints, and petrochemicals, today, the highly-fragmented industry is attracting global players and creating new challenges. “With IFC’s support, we hope to improve our efficiency and competitiveness,” explained R.V. Kanoria, Chairman and Managing Director of Kanoria Chemicals. “Associating with IFC will also enable us to leverage its global knowledge and expertise, and continue to adopt environmentally-friendly technologies and processes,” he added.
Lance Crist, Manager of IFC’s Chemicals Division, said, “Working with Indian companies to restructure and expand their businesses to become globally competitive is a key component of IFC’s strategy in the region. With this investment, IFC will help expand the capacity of caustic soda in an environmentally-friendly manner in Uttar Pradesh, one of the poorest regions of the country.”