Tamilnadu Petroproducts returns to profit mode

Sells non-core assets, shuts down loss-making unit

Tamilnadu Petroproducts Ltd. (TPL) has wiped out its accumulated losses and started focusing on two core areas of linear alkyl benzene (LAB) and chlor alkali business, according to Ashwin C. Muthiah, vice-chairman.

“We turned the company [around] by shutting down the loss-making ECH (epichlorohydrin) unit and selling non-core assets to meet operational requirements,” he said.

“With this, the company was able to repay its long-term debts and reduce financing costs,” he added.

Having posted losses continuously from 2013-14 to 2016-17, the company made a profit of ₹46.71 crore in 2017-18. It declared a dividend for 2017-18, and secured investment grade rating from a credit rating agency.

TPL had a rough ride from the turn of the millennium due to stiff competition and adverse market conditions. This was coupled with continuous cash losses for years attributable to technical issues, low productivity, rising costs and under investment besides servicing cost of debt, he said.

New strategy

“We will now focus on LAB and heavy chemicals division (HCD) and commence propylene oxide (PO) plant in our ECH facility,” he said.

According to Mr. Muthiah, TPL would make further investments across both LAB and HCD facilities to improve production and productivity over the next couple of years.

“The modernisation will also allow TPL to cut back on raw material costs. This is expected to help the firm in optimising capacity utilisation by bringing down the downtime and improving process efficiency,” he said. “This will also specifically address debottlenecking critical areas of production, and improving the efficiency of the system,” he added

Mr. Muthiah said about ₹45 crore is being invested over the last two years in the ECH PO plant that would annually produce 12,000 tonnes of propylene oxide.

On the new plant, he said “This provides an opportunity to put to use an otherwise defunct facility and as the second benefit, opens up opportunity to increase HCD production through a better avenue for chlorine utilisation and value addition.”