Chloromethane plant to be commissioned in Q4FY18: Meghmani Org

A: Only two raw materials are used in chloromethane. One is methanol and another is chlorine and chlorine is much bigger raw material used in chloromethane. We produce caustic-chlorine and hydrogen at Dahej plant and for us chlorine is available through pipeline, which is the safest mode of transportation. So, chlorine is reasonably and freely available to us so we set up a chloromethane plant and all the products are value-added products and of great demand.

However, when we started Meghmani Finechem Ltd, our debt was around Rs 500 crore but gradually we paid almost everything. Now our debt level has come down to less than Rs 100 crore and in a year or so the company will be debt free. There we are planning to borrow around Rs 100 crore for Rs 140 crore project of chloromethane which we will be producing September 2018 onwards.

Latha: On our debt as of now you have Rs 100 crore and you will borrow another Rs 100 crore for the chloromethane plant, is that right?

A: That is right but the current debt of Rs 100 crore, we will be paying it in next 15 months and that is a schedule. We are very comfortable paying them.

Nigel: You become debt free effectively by FY19?

A: We should be debt free of the old debt in a year’s time and we will be borrowing around Rs 100 crore for the new project.Nigel: You must be having some idea why you are going in for this forward integration? I think currently your chlorine plant has a capacity of around 40,000 approximately. How much of it would be used captively. Would it entirely we used captively and now that you are going into forward integration are the margins better will the revenues be better. Give us some idea on that front?

A: When we manufacture caustic-chlorine and hydrogen, all three products come at one-time. Let us say 80 tonne of caustic will five 71 tonne of chlorine and 2 tonne of hydrogen - that is a composition the products come out. Now chlorine is in little over supply. So if we can consume or sell chlorine it is good for caustic-chlorine plant as well as the end product. Therefore, we thought of setting up chloromethane plant which will consume 44,000 tonne of our chlorine. So, it effectively means 150 tonne of chlorine every day. We produce around 35-40 percent of our chlorine. So, that would be a huge help to our marketing team in marketing chlorine. However, we will be using 35-40 percent of our production internally in the new venture.

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