Plants: Balrampur Chini pumps US$240 mn in PLA plant in India; Orbia halts PVC plant plans due to lower sales

Indian integrated sugar mill company Balrampur Chini Mills Limited (BCML) recently announced a US$240 million forward integration project to build a polylactic acid plant.

"The new project aims to propel India towards net zero emissions by 2070," Balrampur Chini Executive Director Avantika Saraogi said, adding that it will be built in phases over 30 months.

The Kolkata-based company adds that the new venture will mark the establishment of the first-ever industrial bioplastic plant in India, with a capacity at a global scale of 75,000 tonnes/year.

Despite not yet being finalised, the project will be located on a "greenfield site", beside an existing sugar plant. There are about ten sugar mills owned by the company, all of which are in Uttar Pradesh.

Officials said, a significant proportion of the local infrastructure already exists at the sugar mill locations and it will help efficient usage of sugar as a raw material, to produce PLA.

The new venture is also facilitated by BCML's minority stake acquisition in Konkan Speciality Polyproducts Private Limited (Konspec), a notable player in the sphere of specialty polymers & biopolymers, intermediaries, and chemicals, the statement said.

"We see the utilisation of sugar as a raw material in PLA production as pivotal for a sustainable future. Through the PLA project, our goal is to not only drive financial growth but also redefine standards in India's sustainable economic landscape," Saraogi said.

Meanwhile in other news, Mexico's Orbia has decided to put a pause on the expansion plans for its polyvinyl chloride (PVC) production capacity due to challenging market situations that have adversely impacted its profits in 2023.

The company's polymer division, which includes PVC, faced a substantial setback in the fourth quarter of the previous year, reporting a 54% year-on-year decline in earnings before interest, taxes, depreciation, and amortization (EBITDA), amounting to US$47 million. Additionally, sales within this division experienced a 21% year-on-year decrease, reaching US$577 million.

The overall decline in total revenue for the October-December 2023 period was primarily attributed to reduced sales volumes and prices for both specialty PVC and caustic soda. This downturn was a consequence of weak demand and oversupply prevailing in the market. Notably, PVC production also witnessed a decline due to planned repairs and associated delays at the ethylene joint venture during this timeframe.

In 2022, Orbia's CEO, Samir Bharadwaj, had previously indicated the company's contemplation of expanding PVC production. The expansion project was expected to be completed either in 2027 or 2028, following the conclusion of the design phase at the end of 2023. However, the unfavourable market conditions and the significant drop in earnings from the polymers division, constituting approximately a third of Orbia's total sales, prompted a re-evaluation of these expansion plans.

The challenges faced by the Polymers division, especially the decline in PVC production and earnings, had a cascading effect on Orbia's overall financial performance in the last year. The company's consolidated net loss in the fourth quarter widened to US$71 million, marking a substantial increase. Furthermore, the net profit for the entire year witnessed an 89% decrease, reflecting the broader impact of the challenging market dynamics on Orbia's financial health.

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