Chemicals & Petrochemicals

Sector Profile
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Gujarat: Economic Snapshot

Gujarat An Enduring Strong Economy
Gross State Domestic Product : USD 45.3 Billion Industrial Growth Rate : 12.5% (2002 2007) Exports Per Capita Income : 19.2% of India : USD 722 Inflation Urbanisation : 9.3% : 37.36%

Composition of GSDP as per Economic Activity

Well Balanced Growth across sectors

18.22% 44%

Tertiary

15.99%

P r im a ry S e c t o r S e c o n d a ry S e c t o r T e r t ia r y S e c t o r
GSDP: Gross State Domestic Product

Secondary

17.95%

37.78%

Primary

11.36%

Source: Socio Economic Review 2007-08

Gujarat has exhibited a 12.5% high industrial growth rate from 2002 -2007. In Indias 10th Five Year Plan and has achieved a GDP growth of 10.2% as per the set target, which was the highest amongst all States in India.

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Source: Socio Economic Review 2007-08

Robust Infrastructure
First State to privatize ports
Ports
42 ports along 1600 km coastline, including 1 major port at Kandla and 41 minor ports Cost efficient transportation of natural gas, crude oil and petroleum products from Middle East and Europe Landmark projects such as LNG port terminal at Hazira developed by Shell India Limited, Green field port at

Mundra developed by Gujarat Adani Port Limited, LNG terminal at Dahej developed by Petronet LNG Ltd. and Pipapav port developed by Gujarat Pipapav Port Ltd.

Gujarat is well connected to major cities in the USA, EU, Asia and other Indian metropolitan cities
13 airports under the operational jurisdiction of Airports Authority of India (AAI), at Vadodara, Surat, Jamnagar, Rajkot, Bhavnagar, Porbandar, Bhuj, Diu, Mandvi, Mundra, Kandla and Palanpur, including one international airport at Ahmedabad

Airports

Rail & Road

71% of the road in the State is surfaced

State-of-the-art road infrastructure such as Indias first National Expressway from Ahmedabad to Baroda. Total road length is 74, 111 Km Total length of railways in Gujarat is 5,188 km (8.25% of India)

Robust Infrastructure
Power

Electricity Generation Capacity 9,561 MW (2007) and estimated to rise to 14,031 MW (2012)
Per capita power consumption is 1,354 units whereas Indias average is 665 units Rich availability of natural gas (34 MMCD) and Lignite (1,072 MMT) 24-hour power supply to 98% of the villages

Total length of the existing GSPL pipeline is 14,53,163.33 m supplying to 18 districts

The pipelines of Gujarat State Petronet Limited (GSPL) supply gas to 13 districts, 5 more districts are proposed to be connected by the pipeline Total length of Integrated Gas Grid supplying gas to all districts is 2,200 km, of which 1,200 km is complete and 800 km is under construction

Gas

Water

Only State to carry out interlinking of rivers

An extensive water grid network across the State The water grid is a network of 75,000 km for water distribution for irrigation 75% population proposed to be covered by the grid by 2010

Invest in Gujarat : A world- class Business Destination

To Delhi
Banaskantha

Bio-Tech Cluster
Patan Kutch Mehsana Himmatnagar

Soda Ash & Salt Based Industries, Cement & Steel Pipes 202 Industrial Estates across Gujarat Petroleum & Brass parts Engineering and Ceramics Soda Ash and Salt Based 18 Captive Ports along 1600 km coastline across Gujarat

Gandhinagar
Ahmedabad Surendranagar Anand Jamnagar Rajkot Porbandar Amreli Bhavnagar Surat Vadodara Bharuch Junagadh Narmada Kheda Panchmahal Dahod

Gujarat International Finance Tec City Knowledge Corridor Industrial Corridor (DMIC) Savli Biotech Park Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) Chemicals, Petrochem. Pharma, Textiles & Engineering 51 Special Economic Zone (SEZs) across Gujarat

Navsari

Special Investment Region (SIR)

Valsad

To Bombay

Gujarat: A Thriving Industrial State

Contributing to Indias economy across all major sectors
Population Geographical Area Employees Factorories Net Value Value of Output Fixed Capital Investment Exports Longest Coastline Stock market capitalisation
Soda Ash Production Salt Processing Diamond Processing Plastic Industry Petrochemicals Chemicals Groundnut Cotton Pharmaceuticals Sea Cargo Textiles 18% 25% 28% 35% 50% 42.30% 65% 58% 85% 80%

Presence Across Industry Sectors

Petroleum products Chemical & Pharma Engineering Food processing Textiles & Apparels Mineral based industries Others

5% 6% 9.50% 9.90% 14% 15.60% 17% 19.20% 22% 30%

98%

34% 23% 17.6% 10.3% 6.3% 2.50% 6.30%

Worlds largest producer of processed diamonds and wall clocks Worlds largest gas based single location sponge iron plant Worlds largest producer of castor and cumin Worlds 3rd largest producer of denim Asias largest grass root petroleum refinery at Jamnagar Indias largest producer of cotton Indias first LNG Chemical Port Terminal at Hazira

Significant share in key industry sectors & products

With 5% of population and 6% of Geographical Area contributes 16% of output

Source: Socio Economic Review 2007-08

The Indian Chemicals & Petrochemicals Industry

India ranks twelfth in the world for production of chemicals and petrochemicals by volume. India has a robust base of chemicals and petrochemicals-driven businesses. Though the industry has undergone drastic changes, Indian chemicals and petrochemicals share has been continuously increasing on a constant basis. The size of Indian Chemical industry is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India's GDP.The total investment in Indian Chemical Sector is approx. US$ 60 billion generating an employment of 1 million. Further, the industry is widely expected to continue its growth performance with a CAGR of 9.2% in the period of 2004-09, as against the global projected CAGR of 3.4% for the same period Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Over the last decade, the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry
Source: Global Chemicals and Petrochemicals Industry Report, April 2006, Data monitor
2,200 2,100 2,000 1,900 1,800 1,700 1,600 2004 2005 2006 2007 2008 2009

Global Chemicals and Petrochemicals Industry

All figures in USD billion

Indian chemical and petrochemicals industry to grow to USD 50 billion by 2009

Gujarat: Chemicals and Petrochemicals Hub of India

Gujarats chemicals and petrochemicals industry is one of the fastest growing sectors in the States economy and is the leader in the production of chemical and allied products in India. The industry offers a wide spectrum of opportunities for the investors both from India and abroad. The well diversified chemical industry has complete portfolio of chemical products including petrochemicals and downstream, pharmaceuticals, dyes and intermediates.
Fragmented Cost Advantages Cost Reduction Low export focus Increased use of IT High Domestic Demand Potential R&D Globalization

Gujarat Chemical Industry

Low levels of R&D Consolidation

While the State chemicals industry exhibits several similarities to the global chemical industry, there are several characteristics specific to the Gujarat across sub-segments. At the industry level, Gujarat chemical industry is characterised by: High domestic demand potential, as the Indian markets develop and per capita consumption levels increase High degree of fragmentation and small scale operations Limited emphasis on exports due to domestic market focus and smaller scale of operation Low cost competitiveness as compared to the other countries

industry

Focus on core business

Source: E&Y Analysis

Source: Industries Commissionerate / iNDEXTb, Government of Gujarat, 2007

Gujarats Strengths
The chemical industry in Gujarat is a significant component of the States economy, contributing to more than 51% of Indian production of major chemicals with revenues at approximately more than INR 12,000 crore. Petrochemical Industry in Gujarat produces 13,048 (000 Tonnes) of petrochemical products and also contributes around 62% to the total production of the country. Gujarat contributes 15% of the total national chemical exports Over 770 large and medium scale units and about 310,000 small scale units are present in the State with fixed capital investment of USD 13.51 billion and USD 320 million respectively Bulk of exports in this sector go to markets such as USA, Europe and other developed nations a clear sign of the global competitiveness Gujarat has been the ideal destination for several leading MNCs including BASF, Bayer, DuPont, GE Plastics, Cairn Energy, Solvay, Shell, British Gas, Perstrop, Huber, Heubach Colours and Cheminova.
Gujarat Maharashtra West Bengal Other States 15% 61% 11%

State Wise Share In Production Of Selected Major Chemicals (2006-07)

23%

4% 6% 8% 8% Gujarat Tamil Nadu Maharashtra Punjab

51%

Uttar Pradesh Other States

State wise Production Of Petrochemicals (2006-07)

13%

*Other states include Andhra Pradesh, Assam, Chhattisgarh, D&NH, * Haryana, HP, Karnataka, Kerala, MP, Orissa, Punjab, Rajasthan, TN, UP and Uttaranchal

Source: Performance Of Chemical & Petrochemical Industry At A Glance (2001-2007), Ministry Of Chemicals & Fertilizers Government Of India, Industries Commissionerate, GoG

Gujarats Strengths
Gujarat : Chemical & Petrochemical Industry
Gujarat Chemical Production All figures in USD billions Chemicals & Petrochemicals Refined Petroleum Products Basic Chemicals Rubber & Plastics Gujarat 23.60 12.20 10.60 0.80 India 75.5 32.1 35.6 7.9 Share of Gujarat 31% 38% 30% 10% Soda -ash Caustic Soda Nitrogenous Fertilizers Phosphatic Fertilizers Salt Dyes & Intermediates 0.80 1.5 50% Ethylene Polymers Agrochemicals 0.25 0.6 40% Methanol Acetic acid Source: Annual Survey of Industries (ASI) Source: CMIE Gujarat Contribution to India Share of Gujarat 100% 41% 20% 38% 85% 50% 56% 37% 50%

Hot Beds for Leading Players

Anchor Industries GSFC: Diversified Fertilizer and Chemical product portfolio. About USD 650 million of investment. India s first joint sector s first joint sector industrial complex Reliance: Refinery at 27 million State of the art Petroleum Jamnagar tonnes with a capacity of per annum (540,000

barrels per day ) ) Other Key Investors: Rallis India, Alembic, IPCL, BASF, Bayer, Novartis ,

Zydus , Ranbaxy , Cadila , IFFCO, etc.

The State has the largest grassroot petrochemical refinery in the world

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Gujarat: Flourishing Chemicals and Petrochemicals Industry

Commodity Chemicals
Gujarat has inherent strengths in the area of commodity chemicals. The high growth in domestic economy is driving demand for a large number of products that are in turn driving the demand for commodity chemicals based products. Global scale plants located in the State offer competitive opportunity for exports. The Figure below illustrates the key dynamics of the commodity chemicals segment.

Dominant Issues Exposure to high and volatile energy, feedstock, and raw material costs, as these costs account (on average) for more than 60% of a commodity chemical producers cost structure Cyclicality; currently moving toward the next peak Low-cost production from Middle East is likely to have a growing impact Global migration of customer base to emerging markets, especially China Stringent environmental regulation

Strategic Impact Improved performance of producers with greater backward integration Global expansion to capitalise on inherently lower-cost and/or higher growth markets

Advantage Gujarat Low-cost manufacturing base Scale and operational efficiency Global reach, either through export activity or in-country production Technological advantage; potential for licensing process technologies

Source: E&Y Analysis

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Gujarat: Flourishing Chemicals and Petrochemicals Industry

Speciality Chemicals
Speciality chemicals is extremely service intensive and demands technical expertise in applications engineering and customer servicing. Growth of oil, paints, textile and rubber sectors have fueled the demand for speciality chemicals in Gujarat. Major players in the speciality segment in the State include Ciba Speciality, Clariant India, Foseco, Hico Products and Balmer Laurie.
Dominant Issues Exposure to high and volatile energy, Strategic Impact Strong emphasis on R&D and new product commercialization Restructurings control efforts Global expansion to capitalize on inherently lower-cost and/or higher growth markets and other costAdvantage Gujarat Fit within existing portfolio Proven R&D effectiveness; intellectual property licensing portfolio and/or that other may offer revenue

feedstock, and raw material costs, as these costs account (on average) for nearly 35% of a specialty chemical producers cost structure Less pronounced cyclicality than commodities, but still impacted by economic trends Commoditization of specialties Global migration of customer base to emerging markets, especially China Stringent environmental regulation

generation capacity Global reach, either through export activity or in-country production

Source: E&Y Analysis

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Gujarat: Flourishing Chemicals and Petrochemicals Industry

With three cracker complexes, Gujarat has a total capacity of 1180 KTA. There is an increase in the capacity build up in the State. Gujarat has the highest share of polymer production in the country. The major driver for the growth of chemical and petrochemicals industry in the State has been the availability of feedstock. Gujarat has a total of over 1230 KTA of ethylene capacity and 1475 KTA of propylene capacity respectively.
Petrochemicals and Chemicals Company GSFC GNFC GACL Aarti Group IPCL Deepak Nitrite Key Products Caprolactum, Methyl Ethyl Ketoxime, Melamine, Anhydrous Ammonia, Nylon-6, Urea, Ammonium Sulphate, Sulphuric acid and Bio-fertilisers Methanol, Toluene Di-isocynate, Aniline, Nitrobenzene,Methyl Formate, Nitiric Acid, Ammounium Nitrate, Calcium Carbonate, Catsol, Urea, Calcium Ammounium Nitrate , Diammounium Phosphate , Single Super Phosphate, Ammounium Sulphate , Ammounium Nitrophosphate Caustic Soda (Lye, Flakes, Prills), Sodium Hypo Chloride, Liquid Chlorine, Compressed Hydrogen Gas, HCL, Caustic Potash (Lye, Flakes), Potassium Carbonate, Poly Aluminum Chloride, Aluminum Chloride Anhydrous etc Nitro Benzene, Alkylated Anilines & Toluidines, Chloro Phenols, Fluoro Compounds, Agrochemicals Benzene, Butadiene, Butyl Acrylate, Methyl Acrylate, Orthoxylene, Caustic Soda, Chlorine and Acrylonitrile Sodium Nitrite and Nitrate, Agro-chemical intermediates, pharmaceuticals intermediates, rubber chemicals intermediates, dyes intermediates and fine and specialty chemicals Company RIL

Petrochemicals: Polymer Industry

Location Jamnagar Hazira Baroda Gandhar Gandhar Baroda Baroda Baroda Panoli Polymer PP PP/PE/PVC/PET PP/PE/PVC PE/PVC GP/PS/HIPS ABS/ SAN Engineering Plastics PA, PMMA PSu Family/ PEEK Capacity (KTA) 1030 1380 295 405 90 92 12 7 2.2

IPCL BASF Lanxess ABS Ltd GE GSFC Gharda Chemicals

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Industry Value Chain

Chemical Industry Value Chain

Storage, Packaging & Distribution

Raw Materials

Intermediate Building Block Synthesis

Functional Chemical Synthesis

Value Addition & Processing

Finished Intermediate By Products

Business Support Services

Source: Ernst & Young Analysis

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Industry Value Chain

Upstream Processing

Petrochemical Industry Value Chain

Exploration & Development Hydrocarbon production Shipping Refining & Blending

Downstream Processing

Storage Distribution Market

Polymers

Fiber Intermediates

Rubber Chemicals

Plastics

Source: Ernst & Young Analysis

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Focus Areas

High Performance Chemicals Engineering Plastics Pigments, Coating Products Refinery Downstream Projects Mineral Resource based Projects Specialty Chemicals Nanotechnology Based Projects Bio Refineries

Source: Ernst & Young Analysis

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Gujarat: An Investment Destination

Infrastructure Longest coastline 1600 km Chemical Port Terminal (3.0 MMT capacity) - only one in India LNG Terminals at Dahej (10 MMT) & Hazira (5 MMT) 42 Ports (including one major port at Kandla) Cargo Handled at Kandla is 41.5 MMT (12% of India) Cargo Handled by other ports is 89.3 MMT (80% of India) Container handling - P&O at Mundra & Maersk at Pipavav Mundra & Pipavav - Important Ports in Private Sector 6 Hazardous Solid Waste Disposal sites: Vatva, Naroda, Nandesari, Ankleshwar*, Surat*, Vapi* (* ISO 14001 Certified) Incinerators for Hazardous industrial waste: Nandesari, Ankleshwar, Surat, Vapi 6 Treated effluent conveyance pipelines: Ahmedabad, Baroda, Dahej, Ankleshwar, Sachin, Sarigam 19 Common Effluent Treatment Plants
8 Chloralkali Plants (810,000 MT) GACL IPCL UPL Shriram Atul Products Indian Rayon Tata Chemicals 5 Soda ash plants (2,930,000 MT) Tata Chemicals Gujarat Heavy Chemicals Nirma Saurashtra Chemicals Dhrangadhra Chemicals Baroda & Dahej Dahej Jhagadia Jhagadia Atul Veraval Mithapur Mithapur Veraval Bhavnagar Porbandar Dhrangadhra 6 Chemical Fertilizer Complexes

Chemical and Petrochemicals Industry in Gujarat

Large Petroleum Refineries (57.2 + 30MMT) IOC RIL Essar 5 Petrochemical Complexes IPCL RIL ONGC IFFCO GSFC GNFC KRIBHCO Baroda Jamnagar Jamnagar Baroda & Dahej Hazira & Jamnagar Dahej Kalol & Kandla Baroda & Jamnagar Bharuch Hazira

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Source: Industries Commissionerate, Government of Gujarat and CMIE

Gujarat: An Investment Destination

Feedstock for Chemical Industries Oil (418 MMT) & Natural Gas (34 MMCD) Resources Lignite (1072 MMT) Mineral Reserves Bauxite 105 MMT Bentonite 105 MMT Limestone 11,860 MMT Castor oil 237,000 MT (45% of world production) Least man days lost due to industrial unrest Quality Workforce Large pool of skilled technical personnel available 39 Engineering Colleges offering undergraduate courses having 12,500 seats 49 Polytechnics offering diploma courses in Engineering having 16,500 seats Rationale for Investment Opportunities Excellent Infrastructure Proximity to feedstock Conducive Industrial Environment Petrochemicals Key Growth Areas Basic Chemicals Specialty Chemicals Knowledge Chemicals Agrochemicals
Source: Industries Commissionerate, Government of Gujarat and CMIE

Petroleum refining (57.2 + 30 MMT) and petrochemicals Salt 10 MMT

Progressive policies Large potential market

Engineering Thermoplastics compounding Large plastic crates/ pallets PVC profiles for doors and windows Plasticizers Pigments

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Gujarat: The Way Forward

Analysis of chemical and petrochemicals industry segments in domestic and global context suggests that following factors play an important role in competitiveness and consequently investment decision in respect of the different segments.
Basic Chemicals Domestic Demand Access to Global Markets Cost Competitiveness Economies of Scale Common Industrial Infrastructure Research & Development Government Policies Speciality Chemicals Knowledge Chemicals

Major Drivers for the Industry Growth

High domestic demand potential, Limited exports due to domestic market focus Low cost competitiveness as compared to the other countries

Gujarat: Key Development Initiatives

Development/ Upgradation of Infrastructure Special Incentives for backward area units Special projects financial assistance for R&D

Source: Industries Commissionerate, Government of Gujarat and Economic Times

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Special Economic Zone (SEZs)

Gujarat has 51 SEZs; highest in India

Multi-product / Multi-services (10) Textiles & Apparels (4) IT / ITes (10) Pharmaceuticals (4) Chemicals (3) Engineering (9) Biotechnology (1) Power (2) Handicrafts / Artisan (1) Gems and Jewellery (1) Port based Multi product SEZ (1) Others (5)

Chemical SEZs

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Chemicals / Petrochemicals Investment Locations

Eight Chemical Product Cluster
Location
Jamnagar Mehsana Anand Vadodara Bharuch Ahmedabad Bhavanagar Valsad

Fourteen Industrial Estates

Name of the Estate
Odhav, Ahmedabad Naroda, Ahmedabad Vatwa, Ahmedabad Nandesari, Vadodara P.C.C. , Vadodara Dahej, Vagra, Bharuch Panoli, Ankleshwer, Bharuch Jhagadia, Bharuch Ankleshwar, Bharuch Vilayat, Bharuh Pandesara, Surat Sachin, Choriyasi, Surat Sarigam, Umergam, Valsad Vapi, Valsad

Area (Hectares)
127.88 362.94 534.41 271.67 666.38 6130.96 1037.37 1605.97 1611.65 1000.00 218.27 770.90 395.00 1163.77

Three SEZs
Name
Jubilant Chem SEZ,Bharuch Jayant SEZ, Bharuch Gujarat Hydrocarbon and Energy SEZ, Bharuch

Area & Location

160 Hec, Formally Approved 106 Hec, Formally Approved 450 Hec, In-principal Approved Source: Gujarat Industrial Development Corporation., GoG

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Chemicals / Petrochemicals Clusters

Chemical/ Petrochem SEZs (3) Chem Industry Complexes Petrochem Industry Complexes Chemical Industrial Estates (GIDC) (14) Chemical Product Clusters (8) Petroleum, Chemicals & Petrochemicals Investment Region

Mehsana

Ahmedabad Anand Jamnagar Rajkot Bhavnagar DAHEJ Vilayat Vadodara

Jambusar

Area 310 Sq. Km including existing Estate and SEZs 210 Sq. Km under Land Acquisition
Vadodara

Surat Surat HAZIRA PIPAVAV Valsad

Dahej

Alia Bet Narmada River

Source: Industries Commissionerate / iNDEXTb, Government of Gujarat, 2007

A h m ed ab ad M u m b ai

Mum District baiMumbai-Ahmedabad Ahm NH8 edab adDelhi BG Rail Bharuch Line

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Chemicals / Petrochemicals Investment Locations

Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR)
PCPIR Master Plan
Baroda

VAGARA

Gulf of Khambhat

Vadodara District

VILAYAT

BHUKHI CREEK

Dahej

Mumbai-Ahmedabad NH8

BHARUCH TALUKA
RAHIAD

LEGEND
HOUSING OPEN,GREEN,RECREATION UTILITY TRANSPORT ZONE,WARE HOUSES. COMMERCIAL EXISTING ESTATE EXPANSION AREA OF EXISTING ESTATE UNDER ACQUISITION. CHEMICAL INDUSTRIES

N armada River

DAHEJ ESTATE

Bharuch

DAHEJ ESTATE
NARMADA RIVER

Total Area 29,500 Hectares

Chemical & Petrochemical Industries Related Engineering Industries Green Belt Roads, Rail and Corridor Housing & Social Infrastructure - 11,700 Ha - 2,200 Ha - 3,600 Ha - 6,000 Ha - 1,000 Ha Transport & warehousing Recreational zone Power, Water, Infrastructure SEZ Ports - 1,000 Ha - 500 Ha - 500 Ha - 1,800 Ha - 200 Ha

400 km north of Mumbai 30 km from Mumbai - Delhi National Highway and Railway 110 km from Airport
Source: Gujarat Industrial Development Corporation., GoG

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DMIC Industrial Area Locations In Gujarat

DAHEJ BHARUCH INVESTMENT REGION

PCPIR DELINEATED BOUNDARY VILLAGE BOUNDARIES

VILAYAT INDUSTRAL ESTATE

Region taken up under Indian Governments Petroleum Chemical & Petrochemical Investment Region (PCPIR) Policy
DAHEJ INDUSTRAL ESTATE

Brownfield area - least displacement issues Existing GIDC estates at Dahej & Vilayat total area of 55 sq kms within site
Source: Gujarat Industrial Development Corporation., GoG

PROPOSED ONGC PETROCHEMICAL COMPLEX

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Key Foreign Players in Gujarat

Company Business Description Cheminova a Denmark based company is a manufacturer of fine chemicals. Its main business area is within plant protection products. Cheminova India Ltd.s production facilities are situated in Bharuch district in the state of Gujarat. Products portfolio includes agrochemicals and agrochemical intermediates. Transpec Silox is a joint venture between Silox S.A of Belgium and Transpek Industry Limited of India The company has a production base in Vadodara, Gujarat. Transpec Silox Industry Limited produces and supplies zinc and sulphur based chemicals for paints, textiles and dyes industries

Ciba (SWX: CIBN) is headquartered in Basel, Switzerland Ciba Specialty Chemicals (India) Ltd. has manufacturing facility at Ankleshwar. The company operates in three market-focused segments: Plastic Additives, Coating Effects and water treatment. Ciba Specialty Chemicals (India) Ltd. is also an international supply point for several Ciba products such as Chemicals, Industrial Chemicals, Dyestuff intermediates, Dyestuffs and Textile Chemicals

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Key Foreign Players in Gujarat

Company Business Description Sakata Inx, a Japan based company primarily manufactures and sells printing inks Sakata Inx India is a 100 per cent subsidiary of Sakata Inx Corporation Sakata Inx Corporation is setting up its second manufacturing gravure and offset inks manufacturing plant at Panoli in Bharuch district, Gujarat The plant will be one of the largest ink-making units in India. It is expected to produce 20-25,000 tonnes ink per annum. LANXESS is a leading chemicals group with production sites and agencies all over the world: a global player in the fields of chemicals, plastics and rubber Lanxess ABS Ltd has three production units in Gujarat located at Kalol;Panchmahals, Nandesari; Vadodara and Savli;Vadodara The product portfolio includes performance polymers, advanced intermediates and performance chemicals BASF is the worlds leading chemical company:Its portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas. BASF Styrenics Private Limited the Indian subsidiary and has its production facility at Dahej, Gujarat BASF Styrenics Private Limited is the only global polystyrene manufacturer operating in India

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Key Foreign Players in Gujarat

Company Business Description Huber Chemicals India Ltd is a subsidiary of JM Huber Corp, Germany. It is in the chemicals and engineering business and has a facility at Jhagadia, an industrial estate in Bharuch, Gujarat. The company specializes in the production of printing chemicals Bayer AG, the German chemical giant, is a Fortune 500 company with global sales of US$ 33 billion Its business operations are the responsibility of the subgroups - Bayer HealthCare AG, Bayer Crop Science AG and Bayer Material Science AG. In Gujarat, the company operates through Bayer Crop Science Ltd in Ankleshwar. The products portfolio of Bayer Crop Science AG includes insectisides, fungicides, herbicides, seed treatment and plant growth regulators The Dow Chemical Company is the second largest chemical manufacturer in the world A memorandum of understanding (MOU) has been signed between Gujarat Alkalies & Chemicals Ltd.and Dow Chemical Canada Inc. to synergise and cooperate with each other. The two companies are expected to set up a greenfield unit in Dahej in Jan 2008 with an investment of INR 60 billions The products produced at the plant will be used by pharma, industrial coolants and dyes sectors

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Educational Infrastructure
Some of the major academic institutions offering chemical engineering course includes: Nirma University Of Science & Technology, Ahmedabad Government Engg. College, Valsad L.D. College of Engg., Ahmedabad There are 39 Engineering colleges in Gujarat offering course in Chemical Engineering. 49 Polytechnics offer courses in Chemical sector in Gujarat. Some of them located located at Rajkot Bharuch and Valsad Govt. Polytechnic, Rajkot K.J. Polytechnic, Bharuch Govt. Polytechnic, Valsad
Gandhinagar Ahmedabad Vadhvan Rajkot Bhavnagar Bharuch Nadiad

Locations of Major Educational Institutions in Gujarat

Surat Navsari Valsad

Source: Department of Technical Education, Department of Employment & Training

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Initiatives by Government

Licensing Policy
In Chemical Sector, 100% FDI is permissible. Manufacture of most chemical products inter-alia covering organic / inorganic, dyestuffs & Pesticides is delicensed. The entrepreneurs need to submit only IEM with the Department of Industrial Policy & Promotion

Customs Duty
The peak rate of Customs Duty on most Chemicals is 7.5% On basic raw materials like acid grade fluorspar, sulphur, rock phosphate, natural borates is 5% On most building blocks & feedstock the duty is 5% (ethylene, propylene, crude, naptha, benzene, On almost all chemicals the

Excise Duty

provided no locational angle is applicable. toluene, xylene, ethylbenzene) Only the following items are covered in the compulsory licensing list because of their

excise duty is 16% .

hazardous nature: Hydrocyanic acid & its derivatives Phosgene & its derivatives Isocynates & di-isocynates of hydrocarbons.

Source: Ministry Of Chemicals & Fertilizers Government Of India

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Government of Gujarat - SEZ Advantage

For SEZ Units
Income Tax Incentives 10 year corporate tax holiday on export profit 100% for initial 5 years and 50% for the next 5 years

For Developers of SEZs

Income Tax Incentives 100% tax holiday for a period of any 10 consecutive years out of 15 years beginning from the year in which the SEZ is notified Exempt from dividend distribution tax Tax exempt on Interest of long term finance Long-term capital gains arising on transfer of shares in developer company tax exempt No minimum alternate tax (MAT) Other Benefits Full freedom in allocation of developed plots to approved SEZ units on purely commercial basis Full authority to provide services like water, electricity, security, restaurants and recreation centres on commercial lines No net foreign exchange requirement imposed earning

Common Incentives
Indirect Tax Incentives Nil customs duty Nil excise duty Exemption from central sales tax Exemption from service tax Exemption from securities transaction tax Exemption electricity from for tax on sale of

Other Benefits Exemption of electricity duty 10 Years* Duty free procurement of capital goods (including second hand capital goods), raw materials and consumable spares from domestic market Full freedom for sub contracting Facility to realize and repatriate export proceeds within 12 months Facility to retain 100% foreign exchange receipts in the export earners foreign currency account

self

generated and

purchased power

SEZ scheme has been introduced to provide hassle free environment and state of the art infrastructure Gujarat has liberal labour policy providing complete flexibility in SEZs SEZ Development Committee monitors infrastructure development for each SEZ
Source: Industries Commissionerate / iNDEXTb, Government of Gujarat, 2007 , * Section 15 Sub Section II of GoG SEZ Act 04

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Investment Trends
3rd Vibrant Gujarat Global Investors Summit was held on January 12-13, 2007 31 MoUs & Announcements were signed in Vibrant Gujarat 2007
No. of MOUs 40 30 20 10 0 2003 18 13 2005 3645 2007 16740 20000 15000 31 10000 5000 0 Investments

for projects to be established in the chemical & petrochemical sector Proposed investment INR 13412 crore Scope of Employment Generation 14295 Projects primarily related to establishing industrial parks and production of: Basic & fine chemicals Specialty & performance chemicals Organic & inorganic chemicals Dyes and intermediates

13412

Year
Number of MoU Investment (INR Crores)

Source: Industries Commissionerate / iNDEXTb, Government of Gujarat, 2007

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Investment Opportunities
Chemical and Petrochemical Projects
Methanol Production Propylene Oxide and Propylene Glycol Cumene Production Phenol / Acetone Nitrobenzene and Aniline Diphenylmethane diisocyanate (MDI) and Bi-Axially Oriented Polypropylene (BOPP) Films BOPET Films Polyethylene (PE) Multi Layer Film Project Polyolefins Compounding and Masterbatches Polypropylene (PP) Ropes Fiber and Filament Plastic Crates Bisphenol-A Mono-Chloro Acetic Acid (MCA) Bromine Titanium Tetrachloride / Titanium Dioxide Chlorosilanes Synthetic Zeolite - Zeolite A Contract Research and Manufacturing Services (CRAMS)

Toluene diisocynate (TDI) Polyvinyl Chloride (PVC) ABS Resin Polycarbonate Resin Polyethylene Terephthalate (PET) Chips Styrene Butadiene Rubber (SBR)

* Detailed Sector/ Project Profiles for investment opportunities available at www.indextb.com

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Connecting Further.

Industries Department, Govt. of Gujarat iNDEXTb -Industrial Extension Bureau Gujarat State Fertilizers & Chemicals Limited Gujarat Industrial Development Corporation Gujarat Infrastructure Development Board Gujarat Narmada Valley Fertilizers Company Ltd. Gujarat Alkalis and Chemicals Limited

http:// www.gujaratindustry.gov.in http://www.indextb.com http://gsfc.gujarat.gov.in/ http://www.gidc.gov.in http://www.gidb.org http://www.gnvfc.net/ http://www.gujaratalkalies.com/

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Knowledge Partner