Russia's Rosneft-backed Nayara Energy on Thursday said it has achieved financial closure for phase-one expansion plans for petrochemical business following the tie-up of Rs 4,016 crore funds from banks.
The company, which operates a 20 million tonnes a year refinery at Vadinar in Gujarat, is setting up a 450 kilo tonnes per annum polypropylene plant at the refinery to mark its foray into petrochemicals business.
"The company signed a financial agreement with a consortium of banks led by State Bank of India for a project term loan of Rs 4,016 crore," the company said in a statement.
For the proposed project, it is already in possession of required land.
In 2019, Nayara Energy had first announced its plans to expand into petrochemicals at the Vibrant Gujarat Summit.
"The loan facility carries a tenor of over 15 years and is amongst the largest private sector project finance deals in recent times," the statement said.
The project is proposed to be funded with a mix of debt and equity, it said without giving details.
Alois Virag, Chief Executive Officer, Nayara Energy said, "The financial closure brings to fruition our growth plans to become one of the largest integrated energy and petrochemicals complexes in the country."
The demand for polypropylene, he said, is expected to grow at around 10 per cent per annum.
"The construction of the first phase of the petrochemicals project is expected to be completed in 2023," he said. "With this foray into petrochemicals, we are committed to make India a world-class petrochemicals hub."
The buoyant response from financial institutions despite tepid market conditions is a vindication of the trust and confidence in the company, its strong parentage and leadership, Anup Vikal, Chief Financial Officer, Nayara Energy added.
"The project will provide a boost to the profitability of the company and improve Nayara Energy's overall financial performance over the next few years in line with the asset development strategy adopted by the shareholders," he said.
In August 2017, Rosneft and an investment consortium comprising global commodity trading firm Trafigura and UCP Investment Group had acquired Essar Oil and renamed it Nayara Energy.The company owns and operates India's second largest single site refinery. It also operates a fuel retail network consisting of over 6,000 petrol pumps across India and is the fastest growing private retailer in the energy sector.