GAIL (India) acquired 1.25 MMTPA PTA plant of JBF Petrochemical Ltd.
Renamed as GAIL Mangalore Petrochemicals Ltd., a wholly-owned subsidiary of GAIL
GAIL (India) Successfully Acquires JBF Petrochemical Ltd.
JBF Petrochemicals, a subsidiary of polyester manufacturer JBF Industries, was established in September 2008 to operate a 1.25 million metric tonnes per year purified terephthalic acid (PTA) plant in Mangalore, Karnataka. This plant, which was part of JBF Industries’ plan to integrate its polyester production, was nearing completion in 2017 but had to shut down due to JBFPL’s loan default.
On February 1, 2022, lenders of JBF Petrochemicals, led by IDBI Bank, initiated insolvency proceedings against JBFPL. Consequently, JBFPL was admitted into the Corporate Insolvency and Resolution Process (CIRP) following an order issued by the National Company Law Tribunal (NCLT).
GAIL (India) participated in the CIRP and submitted a Resolution Plan in September ’22. After receiving approval from lenders, NCLT granted its consent to GAIL’s Resolution Plan for acquiring JBFPL in March ’23.
GAIL Completes CIRP in 15 Months
As part of the Resolution Plan’s execution, GAIL invested ₹2,101 crores in JBFPL on June 1, 2023. Thus establishing JBF as a wholly-owned subsidiary of GAIL as GAIL Mangalore Petrochemicals Ltd . Notably, GAIL and JBFPL operate in two distinct petrochemical sectors, Polyethylene (PE) and Purified Terephthalic Acid (PTA), respectively. These sectors differ in terms of molecular structures, feedstock, product characteristics, and target consumer markets. The addition of the PTA business complements GAIL’s existing PE portfolio. The facility of JBF Petrochemical Limited is located at No. 4/214, Ip No. 9 in MSEZ,Bajpe, Mangalore – 574142.
It’s worth mentioning that GAIL (India) outperformed Indian Oil Corporation (IOC) and ONGC in the acquisition process.
Diversifying GAIL’s Product Portfolio
The acquisition of JBFPL opens new avenues for GAIL by introducing Purified Terephthalic Acid (PTA) to its existing petrochemical portfolio. GAIL’s entry into this emerging sector will significantly bolster domestic manufacturing in textiles and PET chips. Thus reducing import dependencies.
Applications of Purified Terephthalic Acid (PTA)
PTA and its derivatives find applications across various industries. PTA serves as a fundamental raw material in the manufacturing of polyester chips, which find applications in textiles, packaging, furnishings, consumer goods, resins, and coatings. Over 60% of PTA’s end usage is in the textile industry, where polyester yarn is versatile, fitting into all 12 classes of technical textiles.
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Positive Industry Demand Outlook for PTA
The demand for PTA is expected to surge, driven by the growth of technical textiles, the packaging industry, and the paint industry.
According to the Ministry of Textiles, the global technical textiles market is estimated to reach $325 billion by 2025-26, with India’s market size expected to grow from $22 billion to $40-50 billion in the next five years.The Indian packaging market is also set to expand, projected to reach US$ 204.81 billion by 2025, with a CAGR of 26.7%, as per the Ministry of Commerce and Trade, Government of India.The Indian paint industry will touch Rs 1 lakh crores in the next five years, according to the Akzo Nobel report.
GAIL Mangalore Petrochemicals Ltd. is well-positioned to meet the growing domestic demand for PTA from these expanding industries, which is expected to contribute significantly to the company’s revenue in the coming years. GAIL Plans to commission the Plant by March ’25.
The acquisition of the ailing JBL Petrochemicals PTA-making plant by GAIL is a strategic move. With little investment of over Rs. 2101 Crores, GAIL got a readymade plant that is capable of producing 1.25 million tonnes of PTA per annum. This is a clever move as far as the investment is concerned. Furthermore, India is positioning itself to achieve self-sufficiency in PTA supply. And as demand continues to grow in the future, the plant can expand to meet the increasing demand.
The operation of the PTA factory in MSEZ, Mangaluru, will draw various downstream industries like paints, textiles, coatings, and packaging to the region.
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