InvestorQ : Why is IOCL investing to expand its petchem capacity in these markets?
Deepa Salunkhe made post

Why is IOCL investing to expand its petchem capacity in these markets?

Arya Nanda answered.
8 months ago

In fact, IOCL will be investing close to Rs.17,825 crore or roughly $2.50 billion for petrochemical and lube integration at its refinery in Gujarat. You would recollect that IOCL has petchem capacity of 3.2 million tons per year and is expanding the capacity by 70%.

Currently, IOCL is already the second largest petrochemicals player in India by installed capacity after Reliance Industries Limited. IOCL is expanding petchem capacity betting on a rapid increase in per capita consumption of petrochemicals in India driving demand.

It is a known fact that India has one of the lowest per capita consumption of petrochemicals among the Asian nations and even a marginal increase could give a big boost to demand. IOCL plans to invest Rs.26,233 crore overall this fiscal to expand its petrochemicals portfolio.

The larger plan for IOCL is to integrate backwards to leverage pet coke and polymers for deployment in fuel cells. Its focus is largely on green and bio-fuels in the years ahead. IOCL realizes that the future of the fossil fuel industry lies in going green.

On a related topic, RIL has already taken two steps ahead. It has already hived off its O2C business or oil-to-chemicals business into a separate profit centre and will look to position this business as a futuristic green fuels business. IOCL is thinking along similar lines.