Rain Commodities to hike capacity by 25%

Rain Commodities to hike capacity by 25%

Hyderabad: The world’s largest calcined petroleum coke (CPC) producer, Rain Commodities Ltd (RCL), has lined up a $150 million, or Rs739.5 crore, expansion plan that would raise the company’s existing capacity by 25%, a top official said.

CPC is used to make anodes for the aluminium, steel and titanium smelting industries.

“We are adding 4 lakh tonnes capacity in India involving an investment of $100 million to our existing capacity of 4.8 lakh tonnes a year at Visakhapatnam," said RCL’s vice-president, finance, T. Srinivasa Rao.

The Hyderabad-based company would also set up a 200,000-tonne CPC facility in China, involving an investment of $50 million.

The new facility in India would come up in a special economic zone (SEZ) at Achutapuram, near Visakhapatnam. However, as against the initial plan of setting up the new capacity in one go, the company has now decided to adopt a modular model.

“The latest plan is to have 1 lakh tonnes of CPC capacity in the Achutapuram SEZ in the first phase by mid of 2010, and keep adding capacities of up to 4 lakh tones depending on the demand position in the market," said Rao.

He said since the company is opting for modular expansion, it is confident of meeting investment requirements through internal accruals without depending on institutional borrowing.

Rao said the company had initially planned its China facility to take off by mid-2010, but the global economic slowdown has forced the company to go slow on the project.

“We are currently evaluating the market conditions in the backdrop of global economic slowdown and accordingly, the project implementation of the Chinese facility will be slightly delayed," he said.

RCL, which earned a net profit of Rs375.31 crore on revenue of Rs3,201.67 crore for the nine months ended September, currently has eight CPC plants with a total annual production of 2.5 million tonnes (mt) a year with 49MW power generation capacity, and three cement plants with a combined capacity of 3.2mt a year.

While the Indian CPC facility would also have a power generation plant of 30MW through the waste heat recovery route, the Chinese project would have a 20MW power plant, Rao said.

RCL currently supplies CPC to global firms including Alcoa Inc., Alcan Inc., BHP Billiton Ltd, Dubai Aluminium Co. Ltd and Dupont Co., and domestic players such as National Aluminium Co. Ltd, Vizag Steel and Kerala Minerals and Metals Ltd.

The company also has an 11.5% stake in Kuwait-based calcining firm Petroleum Coke Industries Co., which is setting up a 350,000 tonnes a year CPC plant in Kuwait.

In July last year, RCL acquired the US-based CII Carbon Llc. for around $619 million. With CII Carbon’s seven plants in North America producing a total of 1.9mt a year, RCL has emerged as the world’s largest CPC producer.

The US acquisition also brought synergy to RCL operations, said Rao. Earlier, CII was supplying CPC to West Asian markets, while RCL was focusing on South American market. Following the acquisition, the two have been able swap markets and clients, which has resulted in significant decrease in logistical costs, he said.